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“We believe we can collect 100% of our judgment against Tokio Marine and the reinsurers in the United States, and we intend to proceed not only to judgment, but, if necessary, with collection efforts around the world,” Steve Marks, Podhurst Orseck attorney, told Insurance Business.

What does the Chapecoense ruling mean for Aon?

The reinsurers, which supplied reinsurance coverage for a US$25 million policy placed by insurer Bisa, may have had their injunction scrubbed, but the judge took a different approach to reinsurance broker Aon, also named as a party.

As a result, any action against the broker – not the group’s “principal target”, according to Marks –has to take place in the English courts. Aon declined to comment for this article.

“It was an alternative theory that if there’s no coverage then the brokers failed to make sure that the coverage was in place that was needed, and that would require a new trial; we would have to prove negligence on their part,” Marks said.

“That was our secondary theory, and we can still pursue that – we just have to do it in the UK if we were not successful against Tokio Marine, but we can’t prevail on both – we can only get our recovery one time, we can’t get a double recovery.”

While Marks remained upbeat on the Aon injunction ruling, it is understood that reinsurers in the suit are likely to see this as a significant blow to the victims’ action in Florida.

Who has been involved in the legal action?

The reinsurance policy at issue was underwritten by a 13-strong panel of London underwriters, with Tokio Marine Kiln syndicate 0510 named as a lead party in court documents. It was placed via insurer Bisa through Aon Benfield Argentina and Aon UK, according to court documents. Tokio Marine Kiln declined to comment for this article.

The 43 individuals involved in the action include the six sole survivors of the crash, in which 71 people were killed. The aircraft was found to have run out of fuel, with later investigations suggesting that LaMia staff were “at fault in permitting this to occur and in failing to declare an emergency in time”, according to the English ruling.

Other parties to the defence included LaMia CA; aircraft owner Kite Air Corporation; Kite’s owner (named as Mr Albacete); and a Mr Rocha, said to have been an officer of LaMia. Bisa was also a defendant to the TMK Action.

Battle lines drawn

The next steps for the victims, according to Marks, will be to continue the Florida action.

Under Florida law, it is possible to pursue an insurer for damages amounting to more than the policy limit if it fails to defend an insured in bad faith, as the judge in the English case found.

Factoring in interest, the suit could now be worth US$920 million and could end up breaching the US$1 billion mark, representatives of the victims have alleged.

Points at issue are likely to include the role of a US$25 million “humanitarian fund” that was set up by the reinsurers in 2017 – none of the victims in the current suit have tapped into this, Marks said; reinsurers may contend that this does not mean there has been zero interest expressed in the fund by represented families – despite a denial of coverage by the reinsurers and Bisa.

There was no legal obligation for this fund to be set up, Insurance Business understands, and some affected families have accessed support through this. Accessing this fund would not prevent families or victims from making claims against Aon.

The victims’ attorneys have contended in court filings that the fund was set up to allow reinsurers to “circumvent their duties” to defend against claims.

Reinsurers are expected to argue that there was no coverage due to unpaid premium, Marks said, and the victims will look to Bolivian law, which they have argued governs the policy, to argue that such a defence is “not valid”.

Reinsurers are also expected to claim that Colombia was excluded from the policy, with the victims expected to argue that despite this they had “repeatedly” authorised cover for flights to the country, Marks said.

Reinsurers did make some “powerful points”, the English judge said in his ruling, including that:

• Bisa had released all claims under the reinsurance policy prior to proceedings in Florida
• LaMia had accepted a declinature in writing
• There was an exclusion in place for flights to Colombia without prior consent, though flights to Colombia had previously been permitted on request
• LaMia did not request that Bisa or the reinsurers intervene to defend proceedings
• Settlement agreements to which the individuals have sought to join LaMia, the reinsurers, and other defendants stipulated and acknowledged there was no insurance coverage for the accident

“If it were my task to try the Individuals’ claim against the reinsurers on the papers and submissions I have heard, I would have no hesitation in dismissing it,” Mr Simon Salzedo KC, the judge presiding over the English case, said in the ruling. “However, I remind myself that that is not my task.”

The ball will now be in the Florida court’s hands.

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Specialist lender Enra Specialist Finance has named Preben Prebensen (pictured) as its new chairman.

Prebensen was chief executive at Close Brothers Group from 2009 to 2020, when it tripled the size of its specialist lending business. Following his success at Close Brothers, he assumed a number of other corporate roles, including chair of specialist insurance firm RiverStone International, as well as serving on the board of British Land as senior independent director.

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The original ransom demand was later removed from the hackers’ blog, leading to speculation that the company may no longer be under threat. However, in a since deleted Lockbit 3.0 blog entry added in late December and updated on January 2, the business was threatened with an updated January 4 deadline to pay, else data – including on brokers – would be leaked.

SSP allegedly offered $400,000 to pay ransomware claim

In the dark web blog post, in which SSP and its advisors were accused of behaving “like children”, hackers appeared to take issue with SSP’s alleged $400,000 ransom payment offer.

“Mr. CEO [of SSP] your insurance company or lawyer or negotiator is giving you very unfortunate and bad advice or they are just being very greedy,” representatives for the Lockbit group said in the update.

“You are offering $400,000 for data that is worth much more and will cost your company and individuals reputational damage.”

The hacking group called for SSP’s business partners to prepare “class action” lawsuits and labelled it “the worst platform for brokers and insurance to keep confidential information”.

Brokers “will find their information too”, it said.

The reported comments made on the Lockbit blog were detected and shared by an automated ransomware victim information dark web scraper developed by RedPacket Security, which has said it is not affiliated with or involved in any activity that its tool relays information on.

Despite the January 4 deadline threat, no data has been published by Lockbit at time of writing and the blog post has since been removed. SSP’s website returned to functionality in the early hours of Thursday following a period of downtime.

SSP usability not affected, broker says

SSP’s platform continued to perform well during the incident and there has been no disruption to service, according to one of its broker partners.

Systems and services have been “working perfectly fine” for his brokerage, Andrew Willows, Dervensure Insurance Brokers CEO, an SSP client, said on Wednesday. Willows said he had last heard from SSP regarding the cyber incident in November.

SSP Worldwide website, captured Wednesday 4 January 2023

SSP has been owned by Volaris Group, part of Toronto Stock Exchange listed technology business Constellation Software, since 2021. Volaris and SSP did not respond to requests for comment.

In 2016, a two-week outage of SSP’s platform left brokers reeling, with some feeling the effects months later. The outage led some firms to move to other software houses, Insurance Business reported.

Hacking group Lockbit hit headlines this year for its New Year’s Eve apology and pledge to unlock data stolen from SickKids, a children’s hospital in Toronto it had targeted. The move was perhaps unprecedented for the group, which takes a slice of affiliates’ profits from the use of its malware, cyber experts told the Canadian Press.

On its blog, the gang claimed to “formally apologize” for the attack on the hospital and said it had “blocked” the partner responsible for a rule violation.

The ransomware threat

High profile insurance businesses to have been hit by past ransomware incidents have included Chubb, Gallagher, and CNA Hardy. The latter paid a $40 million ransom in 2021 after hackers accessed its network, Bloomberg reported.

Cyberattack risk and prevention has become a big issue for businesses, with insurers, brokers, and suppliers among them.

“It’s a number one priority,” Steve Whitelaw, Applied Systems Canada VP and general manager, told Insurance Business at the insurance software company’s Toronto symposium in October, which was prior to the data breach at competitor SSP.

“We wake up every morning and hope that everything that we’ve done is good enough, and then we get up again and make it better,” Whitelaw said.

Ransomware frequency has dropped in recent months, but the severity of attacks has increased and ransomware-as-a-service is likely to pose a growing threat, according to cyber insurance experts.

Ransomware incidents made up 75% of cyber insurance claims in 2020, according to AM Best. Cyber insurers are a key part of the ransomware solution, The Geneva Association found in a 2022 report.

“With ransomware we see an example of the important ‘prevention and mitigation’ role insurers play as risk managers,” Jad Ariss, The Geneva Association managing director said in July on the report’s release.

The UK’s financial services regulators have been consulting on rules for tighter scrutiny over third party critical service providers. The Bank of England, Prudential Regulation Authority, and Financial Conduct Authority launched a joint discussion paper on operational resilience and sought stakeholder feedback last year in response to the Financial Services and Markets Bill.

SSP stepped away from FCA regulation in July 2021, when it ceased to offer contracts under the scope of credit agreement regulation.

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As finance and operations director at Alternative Risk Management Limited (ARM), the largest independent captive manager in Europe, Neil Brennan (pictured) has a front-row seat to what’s happening across the captives market – and it has a fascinating parallel with popular culture.

Discover more about ARM’s unique approach to insurance today

“The Beatles White Album included a song called “Helter Skelter”, at the time Paul wanted to show that he could write a song louder, with a grittier sound, than The Who’s “I Can See for Miles”,” he said, contextualising the space. “For the longest time the soft insurance market allowed the industry to predict premium well into the future but the Helter Skelter of an unpredictable world really hit home in 2020.”

He noted that the general insurance market has experienced increased competition, escalating claims costs and turbulent investment returns. This, he said, has resulted in a marked decline in its profitability. The last number of years has seen increasing market rates, the imposition of progressively more onerous terms and conditions and a reduction in market capacity,  with some insurers exiting the market completely.

“This can be evidenced by the stratospheric rate increases applied to professional indemnity cover, if you were fortunate enough to even get a quote. This trend is expected to continue well into 2023,” he said. “In this climate, the captive sector often comes to the rescue in the form of additional capacity.

“The 2023 captive space will no doubt continue to be fast-paced and increasingly evolving, with both existing and new clients seeking to find dynamic and creative solutions to their insurance procurement dilemmas, which have been brought on by the more volatile, less stable global insurance market.

Assessing the implications of a hard market on the market, Brennan highlighted how necessity is so often to be the mother of invention. Clients, and by extension policyholders, have appreciated that in order to obtain the cover they require, he said, they need to reconsider how they view their risk. In the last few years, ARM has seen a significant increase in captive enquiries as clients are realising that the same tried and tested route may no longer be an option.

By redirecting some of the risk to their own insurance vehicle and thereby creating a formalised self-insurance model, he said, new captive owners have benefited from:

• Obtaining the coverage they need, and possibly even reducing their overall insurance premium;
• Instilling an element of certainty and controllability to their own costs; and
• Through retention of underwriting profits, the creation of underwriting capacity, thereby reducing future reliance on the unpredictable insurance market.

As to how he’s seeing captive owners react to the hard market, Brennan highlighted that the recent uncertainty surrounding the commercial insurance industry has seen many companies turn to the strategy of the captive.

“Captives as a concept are nothing new to the insurance world,” he said. “They have existed in Guernsey for over 100 years and are an intrinsic tool within the insurance industry. They account for in excess of 10% of the industry’s overall premium.  Between 2020 and 2021, annual captive premiums have grown from $54 billion to $61 billion.

“A lot of captive owners appreciate that the insurance industry is cyclical and when you get to the bottom you don’t always know when you’re likely to get back to the top, only to do it all again…. The attraction of a captive is your fate is more in your own hands.”

Assessing some of the key challenges facing captives at this time, Brennan emphasised that a “captive is not just for Christmas”. In truth, he said, it is rare that it is used as a short-term solution to say, an inability to obtain cover in a hard market. That’s not to say that it will not do the job but to get the best out of a captive it should be viewed as a longer-term prospect within an overall insurance programme.

“An additional consideration is capital,” he said. “The minimum capital requirements will flex with the premiums, risk written and the captive structure chosen e.g. standalone company or a cell within a Protected Cell Company. However, one aspect that may be overlooked when considering setting up a captive is the projected return on capital employed. Our experience is, that more often than not, this will exceed that of other market investments, some considerably so.”

Alongside these challenges, opportunities also abound. A critical opportunity is presented by having skin in the game, he advised, as having a captive in your armoury, irrespective of the market conditions, will play to your advantage. If you have faith in your business and a robust risk management approach, it is far easier for insurers to get on board and work with you. If a market insurer sees that you are willing to take some exposure, your interests will become aligned and you will become less of a risk.

“Self-insuring the attritional layer of a programme, which may include high volume and lower value claims, can result in a disproportionally higher saving in market premium,” Brennan added. “In a hard market this could be considerable and can be the difference between obtaining full cover and no cover at all.

“In addition to the “Pure Captives” where the entity insures the parent’s risk, we have seen large growth in third-party insurance and reinsurance vehicles. A number of our clients have seen the opportunity to earn underwriting profits which have outweighed the profits commission they were receiving through previous arrangements.”  

As an insurance manager, ARM actively works to support captive owners irrespective of market conditions, he said, and the team are happy to discuss a client’s overall insurance requirements and establish whether a captive is appropriate and feasible for anyone who is curious. Sharing how this process works, he noted that it generally involves analysing a company’s current insurance programme, risk management, claims history and premium spend, and suggesting how they might structure an insurance programme to their best advantage.

“A captive entity will need to make several decisions including what lines of cover best fit it, how much risk should it retain, what levels of reinsurance are appropriate and what is its long-term strategy,” he said. “As time progresses these needs also develop, and we see it as our role to help flex the programme in line with the parent’s requirements. Additionally, we assist with the day-to-day operating of the captive which includes underwriting, accounting, secretarial, compliance and administrative functions.

“ARM is Europe’s largest independent captive manager. By independent, we mean we are not affiliated with any broker or insurer. We are not beholden to any insurance group dictate, we are free to provide our clients with the best advice tailored purely to their needs alone.”

Discover more about ARM’s unique approach to insurance today

Neil Brennan gained his BA in Accounting and Finance in 1994 and qualified as an accountant in 2001. He has worked with the ARM Group and its predecessors since 1994. Over this time he has developed a wealth of experience in managing, accounting and administrating captives, PCC and non-regulated companies.

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Allianz Holdings has appointed Laurence Townley (pictured above) as chief actuary for its UK business.

Townley steps into his new role after over 10 years as director of financial risk at Direct Line, where his key achievements included setting up financial risk functions, internal model approval, and advising the board risk appetite, model validation and climate change scenario modelling. Prior to this, he held several roles at Zurich Insurance UK, including chief actuary. He is also a fellow of the Institute and Faculty of Actuaries.

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“Since March 2021, it has been well documented that the PFS Board has been under tremendous stress and pressure from the CII from threats such as de-registering the PFS and flooding the PFS Board with Institute Directors,” she said. “This pressure and stress has increased exponentially since the CII appointed further Institute Directors to the PFS Board on December 21, 2022, with the intention to appoint a majority after a 30 day consultation period. All done under the guise of alleged ‘governance failings’.”

Stuart stated that she and her fellow member directors “fully refute” all allegations made by the CII and said that over the course of her time with the PFS, she and her fellow member directors had performed their fiduciary responsibilities with diligence, professionalism and integrity. She alleged that the CII’s accusations are baseless and condemned them as “a clear attempt to justify accessing PFS funds to support a failing CII.”

She added that she has spent over 440 hours over the last 12 months volunteering on a pro bono basis across a range of PFS-related activities and that this has been to the detriment of her own business and family life. Stuart also asserted that the pressure currently facing the PFS board has been to the detriment of her health – and as a result, she has decided to step down.

Stuart that the CII has created challenging circumstances for members of the PFS board for almost two years now, Stuart alleged that these: “include numerous instances, in my opinion, of unprofessional and hostile behaviour of CII appointed persons, coupled with a failure of Institute Directors to attend PFS Board meetings, threats to make PFS Board meetings inquorate, ‘flood’ the PFS Board with Institute Directors, and to ‘de-register’ the PFS.”

Stuart also alleged that while the PFS has gone from strength to strength in recent years, she believes the CII is “running out of money”.

“Since RDR, the financial planning profession has grown, evolved and seen a significant raising of professional standards,” she said. “The PFS has been a key driver of this… In my view, the same cannot be said of the CII. As the delivery of insurance products to consumers has evolved and innovated over the last ten years, the CII [has] arguably failed to keep up with these changes. It is my view that a disastrous combination of arrogance, complacency and misguided business priorities by the leadership of the CII has potentially led to a catastrophic failing of the CII.”

She cited declining membership numbers, a “dated” exam and learning proposition, a lack of investment in exam delivery as key drivers of the CII’s alleged financial difficulties – coupled with a supposed massive overspend on failed transformation and IT projects.

“However,” Stuart said, “rather than being transparent about the causes for the financial situation, they have sought to lay the blame on the PFS through the allegation that the PFS has underpaid their share of group costs, a myth that was clearly dispelled when in 2022 the then PFS Board appointed a well respected accountancy firm to undertake a thorough and independent review of the recharge and services provided.

“Despite what I believe to be the very worrying state of the CII finances, they have professed that the action they have taken is ‘not about money’. However, it is crucial for members to be aware that based on legal advice received , claiming that there have been “governance failings”, is the only way in which the CII could justify to members the addition of further Institute Directors to the PFS Board to create a majority.”

Strongly refuting the allegations made by the CII in respect of governance failings, she said she believes these allegations are “blatantly the only avenue remaining for the CII to access the funds I believe they need to prevent the organisation completely failing.”

“As a member of the PFS and the PFS Board, I cannot support the actions taken by the CII and by implying they are forming the majority without consultation, they have treated members with utter contempt,” she said. “Furthermore, I am disgusted with the way the CII has behaved towards the PFS, the PFS members, and the PFS Board.

“I believe they have attempted to gain access to the PFS reserves through bullying and intimidation of the PFS Board, and when the member directors stood firm and these tactics failed, through the only option remaining to them – in my opinion, a cynical, disingenuous and autocratic takeover of the PFS Board using unfounded and spurious allegations as the reason.”

Stuart said that while it has been an honour to represent members on the board, she will no longer be looking to further the paraplanning and financial planning profession by volunteering with the PFS – and will look to do so in alternative ways. She said she will continue to give her support for the PFS in any way she can and encourages other PFS members to do the same.

However, she said, as these actions will all members, she calls on every member of the PFS and the CII to scrutinise the position of the CII so they can “hold the leadership team of the CII to account for what is in my view is a list of major failings:

• The state of the CII finances and the potentially reckless squander of millions of pounds under the leadership team’s stewardship over the last six years
• The poor quality of the services provided to members, including exam and CPD provision, SPSs, renewal of membership fees, all underpinned by an arcane and failing CRM system
• The complete lack of any corroborating evidence to support their allegations,
• What I believe to be the misinformation and misdirection from the CII to draw any and all attention away from their own potential governance failings.”

Stuart went on to state her belief that the CII is hoping to: “access and move some or all of the PFS reserves to the CII and are relying on member ‘apathy’ and disinterest to enable them do this.”

She finished her statement with the following entreaty: “I therefore implore all members of the PFS, to take whatever action you can to help prevent the wholesale strip-mining of the PFS and its reserves, by and for the benefit of propping up what I believe is a badly run, financially exhausted CII. Demand an EGM, use your voice and protect your PFS and its reserves from being consumed by the CII forever.”

This feature will be updated later with any statement from the CII.

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ADR has been on something of a rollercoaster ride. Use of mediation was accelerating rapidly until the Covid-19 outbreak, but the pandemic saw mediation numbers drop by over a third during the first six months of lockdown, despite the rapid adoption of online meetings.

The wider deployment of remote technologies should certainly deliver further long-term benefits, enabling more streamlined processes and cutting travel time. However, it’s the underlying goals of cutting court costs and backlogs that have increased the appetite for alternatives to court and tribunal proceedings.

While most people think about formal mediation meetings, when asked about ADR, various processes have been developed over the years, to meet the needs of different legal actions.

For example, an Employment Tribunal claim, must usually be referred to the Advisory, Conciliation and Arbitration Service (ACAS) before it can reach an actual tribunal hearing, and anyone trying to bring an action in the Family Court will generally need to attend a Mediation Information and Assessment Meeting (MIAM).

Covid-19 created a unique set of problems for landlords and tenants that inspired ARAG to develop its own, alternative process for resolving tenancy disputes. But the benefits of this new approach have survived the pandemic and the solution has been enhanced to offer a less adversarial mechanism for helping both our landlord policyholders and their tenants to reach better and more amicable outcomes.

The approach is proving just as important to landlords and tenants who find themselves facing similar dilemmas to those created during the pandemic, as a consequence of the cost-of-living crisis.

ADR is typically much less formal than a court hearing, but a fundamental element in the success of ARAG’s new process has been recognising that a single approach will not be suitable in every case.

As well as the raft of information and resources that our Landlord Legal Solutions policyholders can access, we provide them with customisable digital correspondence and documents that they can use to initiate discussions with a tenant in a measured, structured and, above all, legally sound manner.

If necessary, a landlord can even draft a Deed of Variation online, to spell out any alterations in the terms of a rental agreement that might be agreed with the tenant. This array of tools is supported by ARAG’s industry-leading legal advice helpline which handles thousands of calls from landlords and tenants, each year.

In those cases where it isn’t possible for the parties to come to a mutually satisfactory solution without professional help, solicitors are available to negotiate a legal agreement between the parties.

While the Coronavirus Act may no longer be in force, evicting tenants can still be legally and morally challenging, especially given the current economic situation. However, there are some tenants who may need to bring an end to their tenancy if, for example, they may be relocating or have alternative accommodation to move into. In such circumstances, it can often be possible to negotiate a Deed of Surrender between the two parties, to bring the tenancy to an end on terms agreed between them.

Feedback ARAG has received from both brokers and policyholders shows that the steps we took to create a workable and equitable new process provided a lifeline in the impossible circumstances of the pandemic, and has proved extremely useful ever since.

ARAG has long been a strong advocate of ADR, in whatever form and wherever it can help parties to resolve a legal dispute. It is almost always quicker, less costly and typically less adversarial than going to court.

As backlogs in all areas of the court and tribunal service continue to grow, the value and benefits of ADR are only likely to increase.

Find out: Explore ARAG UK’s full suite of services today

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Heading into 2023, I would encourage the insurance industry to think about openings and closings through the lens of ‘Auld Land Syne,’ which was written by Scottish poet Robert Burns in the late 1700s. 

‘Auld Lang Syne’ roughly translates to “old long since” or “times gone by”. The poem and popular folk song starts with the following verse:

Should auld acquaintance be forgot

And never brought to mind?

Should auld acquaintance be forgot

And auld lang syne?

It questions whether the “old long since” or “times gone by” will be forgotten as we head into a new year. After the years we’ve had from 2020 through 2022, I believe we must not forget “auld lang syne”. The insurance industry must hold onto the old as we embrace the new. 

The past three years have been marred by the global COVID-19 pandemic and the related socio-economic challenges that came with it. While many countries are through the COVID tunnel, others like China are still firmly in its grips. The insurance industry must not forget the lessons learned through the pandemic as it builds new foundations for the future.

COVID impacted everything from the global economy to international supply chains. It reminded businesses and individuals worldwide of the fragility of “normal” existence and the importance of resilience, risk mitigation, and effective risk transfer. That’s a door to important lessons that the insurance industry should never close for good.

The pandemic also changed how insureds engage with their insurance, especially personal insureds. Now more than ever, people are seeking out digital insurance solutions, and they’re more comfortable using insurance apps on their mobile phones to complete simple administrative tasks.

Innovation and new insurance technology is also making waves in the commercial lines arena, and this will continue in 2023. While every year brings new, exciting, technological advances, the industry should be careful to remember the underlying promise of insurance.

With a value proposition set in stone in ‘auld lang syne,’ insurance is about providing financial security and helping businesses and individuals to navigate through the risks of everyday life. That does not change from year to year, no matter how much the industry evolves. That, once again, is a door that cannot be closed or forgotten as the industry embarks on exciting ventures in 2023.

Talent is another area where this idea is relevant. Attracting, training, and retaining talent will be of the utmost importance for the insurance industry worldwide in 2023. While many companies are looking to open new doors to fresh talent, it’s important not to overlook the legacy of talent gone by.

“Auld acquaintance [should not] be forgot.” Seeking the guidance, support, and mentorship of experienced insurance professionals – and providing those services to less experienced colleagues if you’re in a position to do so – will be more important than ever in 2023.

Finally, 2023 could very well be a year of changing market conditions. In commercial lines, rates seem to have stabilised through 2022, meaning insureds are no longer seeing huge back-to-back price increases upon renewal. While that’s positive for insureds, the industry should not close the door on that hard market chapter. There’s a lot of work to do to regain the trust of insureds who feel let down by perpetual rate increases and coverage restrictions.

I believe that is a huge opportunity for the insurance industry in 2023. By learning from ‘auld lang syne’, tapping into the experience of others, and using innovation to transform the industry for the better, the insurance industry can build a bright and bold future.

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“The pandemic brought about a growing demand for digital services which hasn’t lessened, and customers are increasingly – and rightly – dictating the pace of evolution required for our industry,” she said. “This is one of the reasons we soft launched Moja, AXA Retail’s first digital-only brand, earlier this year. Moja is a direct response to customers’ increased requirements for digitally-led and on-demand interactions.

“Developed entirely in-house, which required a massive effort from our teams, Moja has been benchmarked against tech innovators such as Monzo, Klarna and Amazon so that we could deliver a truly seamless, flexible, and simple customer experience. Expect more great things from Moja in 2023.”

For Matthew Edwards (pictured below), consulting actuary at WTW, regulatory reform has played a pivotal role in 2022, especially the thinking and consultation done by HMT and the Bank of England on Solvency II reforms, where – thanks in part to industry lobbying by the ABI, whom WTW supported – the proposed new reforms feel like a “broadly sensible and positive” step forward for insurers.

The return to ‘real not virtual’ people, has been a milestone, he said, with the majority of insurance and consultancy staff back in the office two-three days a week on average. With so many events not done in person since 2019 restarting, a landmark for the team at WTW has been the return to its actuaries’ life and non-life conferences and the WTW Life2022 flagship client event. In addition, 2022 saw WTW open a new office in Edinburgh, in conjunction with nearly 40 hires over the year, including several actuarial apprentices.

The challenges facing insurance in 2022

Foley noted that 2022 was a year of challenge for the insurance profession with uncertainty and constant change buffetting the sector. Coupled with inflation and the cost-of-living crisis, she said, this has caused significant issues for customers which show no sign of relenting. These factors, combined with the FCA pricing reforms and the upcoming Consumer Duty regulations, have placed even more responsibility on insurers to provide customers with the best possible service and products at fair prices.

“AXA’s latest Future Risks Report found that almost half the UK public feel vulnerable in everyday life,” she said. “So, as we all face these challenges, AXA Retail will continue to look at how we can take an active role in supporting and protecting our customers.”

High inflation became a major factor early in 2022, Edwards said, followed by the market tumult of September/October owing to the short-lived Truss policies. Operationally, finding compromise hybrid meeting arrangements that work, rather than meetings which hitherto had been either almost all in person, or entirely virtual. Also operationally, there has been significant resource strain – and there’s been a huge amount of activity across the sector with commercial pressures (e.g. yet more BPA deals) on top of IFRS-17 preparation.

The opportunities  facing insurance in 2022

However, amid these challenges, Edwards said, the year did bring some opportunities for the market.

“The challenge of IFRS-17 implementation was seized on by some insurers to overhaul their financial reporting processes,” he said. “We were particularly pleased to help one multinational insurer move its reporting on to our enterprise-wide automation platform Unify, replacing most of the spreadsheets previously used with a much more robust and manageable interconnected system of workflows and storage.

“We helped another multinational implement a new and extremely useful reporting analysis system, allowing users to drill down into the results across different dimensions to better understand what is driving any changes in the reported results.”

Foley emphasised that despite the challenges faced by the market, the insurance profession is living through a “truly transformational period” which offers a great opportunity to better serve its customers.

“As an industry, we can help bring vibrant growth to the UK economy and benefit wider society in key areas such as the fight against climate change, improving access to insurance and doing more to prevent and protect people from everyday mishaps and accidents,” she said. “There is now a huge opportunity for the industry to revolutionise the services we provide, how we provide them and how we reach people.

“To achieve this, we also need to widen the industry’s talent pool, offer new digitally focused jobs, and upskill our people to ensure the products and services we provide continue to remain relevant for our customers’ evolving needs.”

How the insurance profession fared in 2022

Amid a year of such challenges and opportunities, there were plenty of things the insurance profession did well and other areas that stood out for improvement. Exploring the latter, Foley highlighted how firms across the sector should focus on improving their digital capability in 2023. The last few years have shown just how much we can leverage and incorporate technology and use it to be more innovative for our customers, she said.

“There is plenty to learn from other brands and industries, particularly the tech sector, so insurers should be taking learnings from this space to develop and improve the overall customer experience,” Foley added. “The majority of people use online services in their everyday lives, so they increasingly expect efficient, easy and even enjoyable interactions with the organisations from which they obtain their services and products.

“The insurance industry isn’t quite there yet, but I’m confident that huge strides will be made in 2023 which will not only be great for our customers but will also help lay the foundations for the sector’s continuing success.”

As to what the insurance industry did especially well in 2022, Edwards spotlighted how insurers are now engaging heavily with ESG, with climate being a tangible and large component of that, but with many other areas involved.

“By way of example,” he said, “an IFoA climate working party survey found that all responding participants explicitly cover climate in their risk framework, and explicitly cover it in their ORSAs (albeit that is now compulsory). In a similar vein, the larger insurers are demonstrating increasing care about defining their broader social purpose and contribution to society beyond fulfilling their core insurance offering (which is itself a valuable thing for society).”

From her perspective, Foley said, while the insurance industry has experienced a plethora of challenges in 2022, she believes it has responded well to all of them.

“While there were lots of successes I could call out, one key achievement has been the implementation of the FCA pricing reforms,” she said. “The huge efforts made to meet the deadline earlier this year were worth it, and it has been great to see customers benefitting from more transparency and a level playing field. This in turn has provided them with a better overall experience and gives insurers a greater opportunity to build loyalty for the long term.”

What did 2022 bring for you and your business? Feel free to share your experiences in the comment box below.

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“BAU is fine but how do we then express, learn and stretch ourselves – and how do we get ourselves into the best position to really push on to that next stage?”

That is the question that energises and motivates Michael Williams (pictured), Simply Business’s head of MGA pricing, data and analytics, and his entire MGA team. And so, it holds them in good stead that it’s never a once-and-done question for Simply Business but rather a constantly moving target.

Find out more about the unique range of products and services available from Earnix today

Since joining the team eight years ago, Williams has seen the company go from strength to strength – with the MGA team alone increasing from four to 20 colleagues, while the wider group has increased from fewer than 300 people across two offices to over 1,000 employees across four offices in two countries. It has been a whirlwind journey, he said, and successfully navigating such a phenomenal rate of growth requires considerable strategic planning.

“With the [MGA] team growing at such a pace, we decided to do a strategic review at the tail end of 2017 to find out what we needed to do to be best-in-class, and to enable us to scale, and to have that agility and flexibility piece,” he said. “Having done that, we realised we needed to have a bit more focus around our technical pricing element. Our portfolio management, our underwriting and everything else is best in class, so how can we make sure that our whole MGA [offering] is best-in-class?”

With Simply Business’s technical pricing functionality identified as the key driver to Simply Business reaching that USP, the team entered into discussions with vendors across the market – and quickly zeroed in on Earnix as a potential partner. What stood out about Earnix, Williams said, was not just the solutions on offer but also the partnership-first approach they take to providing those solutions and ensuring they remain relevant and fit-for-purpose.

Earnix both recognised and rose to the challenge of creating a useable, scaleable product for the commercial lines space, given the lack of data that traditionally exists within it, he said. But the Earnix team also went one step further, identifying the governance and audibility considerations that go along with any such solution.

“That’s really key to us,” he said. “Because you have your static methods and manual documentation, but actually having that rigour and that true audit piece, that’s what set this apart as a great all-in-one solution that we could work with. One of the USPs that Earnix brings us is that everything is in one package, you don’t have to bolt-on additional modules.

“With some other vendors in the market, you’ll buy one package to build out your technical model and then you have to buy another module in order to deploy to the market. But it’s all in-house and in one place with Earnix which is beautiful as it gives us one scaleable package that we can deploy to market really quickly.”

Simply Business has not looked back since the partnership began, he said, and has been deploying Earnix’s groundbreaking pricing solution with remarkable success since 2020. The MGA team’s deployment time has come down from months of requiring cross-functional support down to weeks – and in some cases even to a matter of hours.

Williams noted that having that end-to-end ownership of your pricing capabilities and not being reliant on other changes having to go live first is a “complete game-changer”. What’s been especially impactful for him and his team is having this functionality in place during the rapid upheaval of COVID and the ongoing tumult of the inflation spike.

“Inflation has definitely been the challenge for this year,” he said. “We are literally pushing the button with some further changes this week to allow our products to combat inflation but we’re well geared up for the inflationary challenges just due to how much work we did over the COVID period because we deployed and went live at the beginning of the pandemic.

“[It’s interesting] building models where you’re trying to predict customer behaviour and their tendency to buy at different price points because the understanding of customer behaviour essentially goes the window when you have a pandemic thrown into the mix! So, we’ve had that journey from how often we thought we’d have to optimise to how often we ended up having to optimise in order to react to changes in the market and government announcements.”

Simply Business has a substantial ‘high street book’, he said, which was especially impacted by the constant COVID-related shutdowns and as such, demanded great proactivity from insurance pricing to navigate rapidly shifting consumer demand. Being able to be so proactive, and to build such advanced predictive models and track consumer demand and behaviour has been integral to the company’s continued success.

“It has been a fun, but challenging time and a massive learning curve at the same time,” he said. “Because there was so much happening all at once across all of the market, it was all hands on deck. And that tooling allowed us to react to that market and come out of it in a really good position.

“We were one of the few insurers that were actually able to really grow in that space. Naturally, it was not at the rate we would have liked to but our books weren’t as severely impacted as some of the market has been. And it was great to be in a position to come out of that go into the [post-COVID] period and kick on from there.”

Working with a partner so keen to both shape and support your ambitious growth trajectory has been critical to the success of Simply Business in the last few years, Williams said, and has allowed the insurance businesss to really zero in on its core value proposition – that of delivering a valuable product to the customer. With Earnix’s proactive, predictive model capability strength behind it, Simply Business is well-placed to truly tailor prices to its customers based on their unique risk profiles, a proposition that is translating extremely well across the insurance ecosystem.

“What we’re able to do is be really fair to our customers and make sure we’re targeting the right cohorts of customers so they get the unique offering that they deserve,” he said. “One of our mantras at Simply Business is that we appreciate that every small business is different. And trying to provide cover to so many different businesses online is really a challenge but we’re here to make sure we can do that and provide an accurate price for that risk.

“And Earnix have been instrumental in working with us on that… It has been a long process but it has been a pleasurable experience…. They definitely push along to that next avenue and that next stage, and they’re always keen for us to test new solutions that they’re bringing to the market and we’re always happy to embrace that as well. I have nothing but good things to say about the partnership. And for anyone who tries to get me to move to another platform, I’m afraid I’ll have to humbly decline.”

Find out more about the unique range of products and services available from Earnix today.

Michael Williams joined Simply Business eight years ago. He now serves as the firm’s head of MGA pricing, data and analytics.

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