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With yellow weather warnings in place in early July, and data from the Environment Agency revealing that the UK saw a record 4,858 flood alerts and warnings in the first four months of 2024, it’s little wonder that flooding is on the minds of businesses, individuals and the insurance industry.

For insurance brokers in particular, flood risk presents a significant challenge as they look to provide the right insights and solutions to clients but also an opportunity to showcase the power of specialist advice. Instrumental to providing timely and applicable advice is staying up-to-date with the latest market evolutions – and the innovations that might prove a game-changer for the industry and the clients it serves.

What is parametric insurance?

As defined by Swiss Re, parametric is a form of insurance that covers the probability of a predefined event happening instead of indemnifying actual loss incurred. It consists of a triggering event which engages a pay-out mechanism if the pre-agreed parameter or index threshold is reached or exceeded, regardless of the actual physical loss sustained.

In the context of the insurance industry, parametric solutions bring a range of advantages including increased speed of payouts, clarity around coverage and simplification of administration as they do not require detailed loss assessments.

Parametric also brings a host of slightly more secondary benefits for clients, according to Ciana Kenny (pictured), senior distribution manager at FloodFlash, including increased climate resilience and flexibility in terms of how the payout itself is used. Assessing what’s happening in the market, she noted that policyholders have been facing large excesses from insurers who were previously happy to write full flood cover.

“We’re seeing large excesses, increased premiums and sometimes capped limits, where the insurer is happy to cover maybe £1 million of flood damage, and we’re in conversation to quote for damages above that £1 million mark,” she said. “And, of course, having a solution which can pay out within days of a flood event makes all the difference.”

Parametric payouts and business interruption – what’s the connection?

What has been interesting to see, Kenny said, is the increased conversation about how these payouts can be used as-and-when clients see fit, and to cover the initial business interruption their businesses face after a flood.

At its best, insurance and risk management is about effectively ‘de-risking’ an organisation. A key strength of parametric flood solutions is how closely they line up with existing risk management measures put in place to make a client a better risk, whether that’s flood gates, rain gardens or ‘green roofs’.

It’s this flexibility of use which Kenny believes differentiates parametric as an especially exciting insurance innovation. It can be easy to think of parametric as being a one-size-fits-all option, but the reality is it can be incredibly bespoke to a client’s specific requirements, and tailored to work alongside and complement the investments they’ve already made with regards to risk management.

The client-centric nature of the way these solutions are designed is a central element of what should make them so attractive to insurance brokers. “We speak with a such wide range of brokers, from high-street brokers dealing with single business owners, right up to the multi-nationals dealing with corporates,” Kenny said. “From that scope, we are seeing that policyholders are now asking for parametric insurance solutions which, for me, shows how this market has started to grow.”

The key challenge for brokers is how to be there to support their clients in an undulating risk and pricing flood risk environment. With insurers now using more sophisticated data and risk models, it’s making it more difficult for brokers to place flood coverage, even in areas that were previously considered low-risk.

Whether through resilience solutions or more innovative methods of risk transfer, brokers are actively looking for new ways to help their clients improve their long-term resilience to flooding, beyond just securing insurance coverage – and parametric is fast emerging as a key tool in that toolkit.

With the MGAA annual conference in full swing today, what better time could there be to discuss the talent pipeline in the managing general agents (MGA) market with somebody who has come up through the sector?

Having grown up in a large, close-knit family, Kaj Pankhania (pictured), director at DA Strategy found a natural home in the insurance industry with its heavy reliance on relationships, collaboration and strong interpersonal skills

Describing her journey into the sector as “serendipitous”, she highlighted how her passion has underpinned her career trajectory to date, including her move to chair the Managing General Agents Association (MGAA)’s Next Gen Committee.

It’s a role which underscores her commitment to nurturing the next generation of talent in the MGA sector, as exemplified by the launch of the MGAA Next Gen Mentoring Scheme in 2023. “The [scheme] was born from our committee’s collective experiences working in small MGAs and the recognition of a crucial need in the industry,” she said. “When I was starting out at an MGA, the guidance from external mentors was invaluable.

“I’m not shy to admit when I do not know something and ask for help; however, I realised that not everyone is as outgoing or has the opportunity to seek mentorship independently, especially in the fast-paced environment of a startup.”

Pankhania emphasised that with a significant proportion of the market set to retire in the next few years, there’s a collective responsibility to pass knowledge and experiences to the next generation. The dynamics of post-COVID work, with many companies operating on a hybrid model, further limit in-person interactions, she said, and the natural mentorship that occurs in an office setting.

How mentoring in the MGA market has evolved

There has been a “significant” evolution of mentoring in the MGA market, Pankhania said, not least because it’s grown to be about so much more than just traditional one-to-one support structures. There’s also group mentoring, reverse mentoring and speed mentoring to consider, with younger people keen to learn from established individuals and so many people wanting to give back, because everyone has had someone who has helped them.

In order to support opportunities for enhanced networking and professional development, it’s essential to keep a close ear to the ground regarding what young professionals actually require in terms of support.

Looking across the market, Pankhania highlighted that these individuals are facing several challenges and opportunities today. “One major challenge is the tension between traditional methods and the adoption of new technologies,” she said. “Embracing advancements like AI, data analytics, and alternative distribution methods can drive significant progress and should be embraced by nimble MGAs who are at the forefront of innovation and customer success.

“Developing broad knowledge is also challenging in a market where young professionals often have limited exposure to other elements of our industry. Our MGAA Next Gen ‘Insight Series’ addresses this perfectly, giving both a general oversight and deep insight into different specialisms.”

The MGA sector offers limitless opportunities for fresh, innovative thinking, she said. Young professionals can move between roles, from data, to claims, to underwriting, or transition from being a broker to an underwriter or vice versa. The sector is at the forefront of innovation, providing solutions that benefit the entire insurance value chain.

“It is really encouraging that MGAs are investing in their talent pool, offering training and advancement opportunities, and ensuring that young professionals are exposed to significant deals and high-impact projects early in their careers,” she added. “My advice to young professionals is to seek and take every opportunity and to use your voice to express fresh alternative perspectives, while also learning from those who have the experience and knowledge.”

Future for young MGA talent

Pankhania said she feels “absolutely” positive that the future of the MGA talent pipeline is bright. The insurance industry has evolved, she said, attracting individuals from diverse backgrounds who choose this career path informedly rather than by chance. The real challenge lies in retaining this talent.

She warned that MGAs, known for their nimbleness, must continue to innovate in how they nurture and retain their younger team members. Offering clear career paths, aligning individual goals with organisational objectives, and providing exposure to diverse opportunities are key strategies for retention.

“It can be a lot to think about in a startup environment, but planning for long-term talent retention is critical,” she said. “And with this kind of forward planning in place, I firmly believe that the MGA sector, with its dynamic and innovative environment, is well-positioned to attract and retain the next generation of insurance professionals.”

Gallagher has entered into a partnership with The Law Society of England and Wales to offer members an exclusive industry-specific cyber insurance product.

The independent professional body for solicitors in England and Wales, The Law Society represents all practising solicitors and is dedicated to promoting excellence in the profession, upholding the rule of law, and providing extensive support services. Through the tie-up, The Law Society will facilitate cyber insurance access for its members.

The insurance solution is designed for practices of all sizes but primarily targets sole practitioners and firms with up to four partners, where cyber cover is notably scarce. Gallagher pointed out that legal professionals are particularly vulnerable to cyberattacks due to the extensive client data they handle.

Recent research from The Law Society highlights this vulnerability, revealing that over 70% of firms currently lack cyber cover, exposing them to significant financial, operational, and reputational risks. Alarmingly, 65% of these firms have already experienced a cyberattack.

Gallagher Specialty executive director of professional indemnity Ben Waterton (pictured) noted: “I have worked closely with the legal profession for many years providing specialist insurance to the sector, and I have become increasingly aware of the need for accessible cyber cover.

“Take-up with the sector remains incredibly low, despite the threats facing legal firms continuing to grow. Whether it is from sole perpetrators to serious organised crime groups, cybercriminals are becoming ever more sophisticated.

Waterton said the “much-needed cover” provides a cost-effective solution, especially for small, high-risk firms. It has also been developed specifically for the legal profession, ensuring it suits the industry’s needs.   

“And with the backup of an experienced cyber broker like Gallagher, they can be confident they have the right protection in place,” Waterton highlighted further.

Meanwhile Fiona O’Mahony, head of sales and partnerships at The Law Society, had this to say about the tie-up: “Our members’ exposure to cyber risks is a concern, and this partnership with Gallagher is a significant step forward in helping them get access to cyber insurance designed to cover the specific problems facing the legal profession.

“Solicitors are a prime target for cybercriminals because they hold extensive personal and company data. There are more than 9,000 private practice firms in England and Wales, making the legal profession a significant part of the UK economy.

“Cyber insurance has become an inescapable necessity for businesses operating responsibly in a world where most fraud is now carried out online. Solicitors should consider their exposure and add cyber cover to their insurance portfolio.”

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Bridge Insurance Brokers Ltd has announced the appointment of Robin Gleeson (pictured) as managing director of its London office.

Gleeson, who brings 20 years of experience in real estate insurance, will begin his role in July. He joins Bridge from Towergate Insurance Brokers, where he led the real estate division for 14 years.

In his new position, Gleeson will be responsible for developing and implementing strategies to enhance the value of the London office, collaborating closely with colleagues at Bridge’s Manchester headquarters.

“Bridge has an enviable reputation within the insurance market,” Gleeson said. “The team has been providing a premium service to a diverse range of clients across different markets for over 50 years. It will be a privilege to help build on its legacy, supporting the team as it develops the client portfolio and ensuring we continue to provide that bespoke level of expertise as we grow.”

Alex Cohen, director of Bridge’s London office, also noted that Gleeson will oversee the daily operations of the London office while driving the company’s growth and team development goals.

“Robin will manage the day-to-day running of the London office and deliver the vision we have for company growth and team development. He will play a key role in our ongoing success as one of the UK’s leading independent insurance brokers, and we’re delighted to have him on board.”

Bridge Insurance Brokers, founded nearly 55 years ago by Mike Backner and Gilbert Cohen, now employs over 115 people across its Manchester and London offices. The company is one of the largest privately owned brokers in the UK.

Recently, the broker also discussed the growth of its professional indemnity (PI) team, bolstered by the addition of Peter Spengler to the practice.

“Independent brokerage means a lot. We’re not tied to any one insurer, so can get the best for our clients by working with a wide range of insurance providers. This leads to a lot of happy clients and strong referrals. It’s testament to the service we provide,” Spengler said.

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The American Club has published its Annual Report and Accounts for 2023, marking a year of significant transition as disruptions from recent years began to subside.

Accoridng to the report, tonnage and premium saw substantial growth, and pricing power improved. Claims for members’ own accounts moderated, though exposure to other clubs’ pool losses increased from the unusually low levels of the previous year.

Investment returns were solid, reflecting a market recovery from the lows of 2022. Loss prevention and sustainability initiatives continued vigorously within a post-pandemic, seafarer-focused and evolving claims environment.

The club’s compliance processes adapted to meet the increasing challenges associated with navigating multi-jurisdictional sanctions amidst ongoing and new geopolitical turmoil. Eagle Ocean Marine also made progress, maintaining careful risk selection and prudent premium rates. Supplementary calls were levied to strengthen the club’s finances.

Despite ongoing regulatory demands and geopolitical uncertainties, the American Club stated that it is optimistic about the future.

The positive renewal season for 2024, despite challenges including an S&P rating downgrade, reflects a steady transition into more stable operating conditions.

The club also released an outline for its 2023 highlights:

• Record levels of premium and tonnage
• Claims environment remains challenging with moderated own account performance and a return of deterioration in pool claims
• Geopolitical turmoil in Ukraine, Israel, and the Red Sea challenged trade routes and complicated the regulatory landscape
• 2023 performs better than 2022 as the generally elevated claims environment is tempered by adequate premium levels
• International Group Pool exposures increase from the drastically low levels of 2022
• Investments see an 8% return, up from the historical lows of 2022
• Final call of 25% and closure of the 2020 policy year
• Policy year 2021 faced significant challenges due to social inflation and pandemic-related reinsurance costs, leading to an additional 40% supplementary call
• Eagle Ocean Marine enjoys stronger performance and stable market presence
• Standard & Poor’s adjusts the Club’s rating to BB+/Stable after a revision of the rating model
• Loss prevention and sustainability remain priorities in a seafarer-centric and evolving claims landscape
• 2024 renewal marked by stability with a 93% retention rate; rising reinsurance costs continue into the new policy year
• 2023/2024 policy year combined loss ratio at 99%

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Freddie Scarratt, deputy global head of insurtech at Gallagher Re, said that while artificial intelligence (AI) accounted for 28% of first-quarter 2024 funding, the adoption curve for its pricing is longer than anticipated.

When asked about the impact of generative AI in revolutionizing insurance during an interview with AM Best, Scarratt said that the transformation is still in its early stages. He highlighted claims and fraud as areas where C-suites see significant returns on investment.

“Some of the areas we thought were really interesting was in the claims and fraud area, that seems to be where c-suites are seeing the most amount of return on their investment, companies such as Shift Technologies, and we are seeing that really come in and be used, especially in the London market, as well as here in the US. It just seems an area where people need to be prepared to take risks and take that big step forward, as there is absolutely going to be applicability for that sort of technology moving forward,” he said.

Gallagher’s Q1 Insurtech report, which focuses on AI, addresses several challenges the reinsurance industry faces in implementing AI. Scarratt pointed to data accuracy as the top concern, noting the importance of structured data for AI technologies.

“And a couple of the other challenges around that is, are there any biases within that data? And it’s something we’re really conscious of. You need to have good data and you need to know where it’s from and how it’s going to take effect,” he said.

“And the reason that’s so important is, as personalization of pricing comes into the market, which we expect to with AI and gen AI, again, a topic we discussed in the panel, we are very worried about the uninsured customer. If personalization of pricing comes to such an extent that people fall outside, what happens to those risks which are esoteric or cannot be covered,” Scaratt said.

Insurtech funding reaches new lows

The report also noted that global insurtech funding fell to its lowest level since the first quarter of 2020, dropping below $1 billion. Scarratt attributed this to the absence of mega-round funding, with no single company receiving $100 million or more.

“That said, it has since 2021 been coming down year on year investment numbers. Part of that is because of a reset in valuations, which you’ve seen since the peak in ’21. So really, I would say it’s a continuation of what we’ve been seeing over the past year, but also an effect of those mega-round fundings,” Scaratt said.

Scarratt highlighted that AI funding made up 28% of Q1, with AI deals averaging $2 million more than non-AI insurtech deals.

“We expect that to increase. By that, what I mean is, those companies who don’t have AI products will soon be bringing them out, and those who do are going to make a much bigger song and dance about it. AI isn’t new but people are sure making a big song and dance about it,” he said.

Regarding the role of AI in insurance and reinsurance, Scarratt discussed its application in distribution, personal lines, chatbots, embedded insurance, and analytics. He noted that while AI has not yet significantly impacted pricing due to the importance of human underwriting, its adoption will eventually drive substantial changes in the industry.

“The adoption curve is going to be longer than I think people expect, but the AI pricing is going to move forward and it’s going to be really powerful [in] our industry,” he said.

Scarratt also observed a positive trend of increasing corporate venture capital investments in insurtech. He noted that 2023 saw the highest number of such investments, with Q1 2024 continuing this trend.

“So, I think we had 150 single investments last year and 14 Q1s. We’re definitely on trend there and the more people with a real understanding of our industry invest in our industry. I think that’s an only positive force going forward,” Scaratt said.

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A recent change implemented by British Triathlon is said to be leaving non-UK residents in a bind as they now face the difficulty of securing their own insurance in order to compete in events.

“We are only able to provide public liability insurance as part of membership to UK residents,” British Triathlon notes on its website. “If you live abroad permanently, no public liability will be provided by British Triathlon through either our membership packages or through a Race Pass.”

A report by Triathlon Magazine cited Paul Weston, a British passport holder who resides in Canada, as having been notified of the change in June. Weston is looking to participate in this year’s Ironman 70.3 Weymouth but now must have his own £5 million public liability insurance policy.

According to the publication, Weston has not been successful in getting himself covered. Similarly, another Canada-based athlete is having the same insurance troubles ahead of their planned participation at Ironman Wales.

“No one has been able to offer a solution,” it was noted.

Meanwhile both Ironman and British Triathlon are said to be working hard to come up with a solution for overseas participants.

As for those living in the UK, they have the following options that come with £15 million public liability cover: Race Pass, Essential membership, Core membership, Ultimate membership, Core Coach membership, and Ultimate Coach membership. The coach membership options both include £10 million professional indemnity cover.

Except for the Race Pass, which only provides public liability insurance during the event, membership covers athletes for a whole year while they are training and/or racing. Personal accident cover is also provided under the Core and Ultimate options. Additionally, British Triathlon members get access to discounted bicycle insurance.

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Car insurance premiums in the UK are showing signs of decline, with the average cost of a policy now at £447, according to Go.Compare’s data.

The comparison site’s recent price index indicates that the average premium in the first quarter decreased by £18 from the corresponding figure in the fourth quarter of 2023.

Here are the numbers, as published by Go.Compare:

Go.Compare motoring expert Tom Banks remarked on the findings: “It’s an encouraging sign to see that car insurance premiums have started to decrease. With the recent price rises hitting headlines, the cost of car insurance has been a hot topic – so this is news that will be welcomed by many.”

Regionally, motorists in Greater London face the highest insurance costs, averaging £650 – 78% more than the premiums paid by drivers in Wales and the South West.

Meanwhile, aside from retirees who have the lowest average premiums at £389, administrative assistants enjoy the next cheapest rates, averaging £490. Civil servants and shop assistants follow closely, with average premiums of £492 and £525, respectively.

Commenting further, Banks added: “While it’s good news that premiums are starting to stabilise, the current cost of car insurance is still £100 more on average than it was this time last year. This means it’s more important than ever for policyholders to get the best deal.

“We always recommend taking some time to shop around well in advance of your renewal and consider all your options in order to get the best cover for less.”

According to recent research from Go.Compare, 55% of UK consumers now make sure to compare options when renewing their policies.

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The Council of Lloyd’s is searching for a market-connected member of the Lloyd’s Enforcement Board (LEB), which has initial jurisdiction over all proceedings alleging misconduct.

Established under the Enforcement Byelaw and operates independently of the Council, the LEB currently consists of a chair, a deputy chair, and one market-connected member.

Lifting the lid on who is eligible to become a market-connected member, Lloyd’s noted: “Under section 7(1A) of the Lloyd’s Act 1982, a market-connected member of the LEB must fall within one of the following categories: a working member of the Society (for example, a non-underwriting working member); a director of a corporate member of the Society; an officer or employee of a managing agent, members’ agent, or Lloyd’s broker who is an approved person under section 59 of the Financial Services and Markets Act 2000; or a person who has gone into retirement but who immediately before retirement fell within paragraph (b) or (c) above.”

The Council’s nominations & governance committee will oversee the recruitment process for the additional market-connected LEB member.

“The committee would welcome expressions of interest from qualified individuals who would be interested in joining the LEB, especially from those with experience of legal, regulatory, or compliance matters,” Lloyd’s said.

“Lloyd’s success is integrally linked to the diverse composition of its workforce and the promotion of an inclusive culture. This applies to Lloyd’s governing bodies as much as it does to any other area of its business.”

Those who are interested have until July 19 to send any expression of interest to [email protected].

Lloyd’s added: “The nominations & governance committee would be grateful if you could include in your expression of interest: a brief statement of any experience that you consider relevant to the role; and an explanation of your eligibility to serve as a market-connected member of the LEB under section 7(1A) of the Lloyd’s Act 1982.”

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