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Sharing his insights, Jon Walker (pictured left), CEO of AXA Commercial, highlighted why he hopes collaboration will be a key area of focus as the sector works towards the Consumer Duty deadline in the middle of next year. Firms will need to work together to deliver change, he said, and insurers should be putting themselves in their customers’ shoes to really get to grips with the requirements.

“Within intermediated business, brokers are essential in doing this,” he said. “With an in-depth understanding of their customer base, brokers are best placed to identify, evaluate and communicate a customer’s needs and work with insurers who are, in turn, designing, producing and servicing the products that meet their needs.”  

The Consumer Duty rules are entirely consistent with running a business oriented towards the customers it exists to serve, Walker said. Working in partnership towards this end throughout the distribution chain will not only help insurance businesses deliver more value for their customers but it makes strong business sense too. Consumer Duty will enable insurers to further ensure the best possible customer outcomes and we welcome the opportunity to place a greater emphasis on consumer protection.

Adding his perspective, Matthew Edwards (pictured right), consulting actuary at WTW, noted that the FCA’s Consumer Duty has ramifications across all product lines, and it will be important for firms to ensure their approach to this on the in-force is well thought through – it’s not just about new business pricing.

“[Meanwhile], for savings products, demonstrating the ability to cope with high inflation in a way that offers value compared with non-insurance investment alternatives,” he said. “For post-retirement, the challenge is finding a good ‘half-way’ between drawdown and annuitisation. The current higher interest rates help make annuities look more attractive, but the problem remains. Various firms are considering new approaches to longevity risk pooling.”

Will 2023 be a difficult year for the insurance industry?

The winds that buffeted the insurance sector in 2022 did not dissipate with the tolling of the New Year, and Walker emphasised how with the enduring cost-of-living crisis and ongoing uncertainty throughout the UK, 2023 may sadly be another difficult year for many. Following the pandemic, he said, the emergence of new risks and issues shows no sign of relenting and our customers continue to face substantial obstacles.

“I expect rising inflation to continue to have an impact across the insurance sector, from pricing and claims, to repairs and procurement,” he said. “The rise in claims costs across this sector has been driven by a number of factors including COVID-19, the geopolitical situation and Brexit causing global supply chain disruption and skills shortages.

“Unfortunately, there is little sign of this letting up. At AXA, we will continue to work with our customers to manage this impact and ensure our customers are treated fairly and claims are dealt with promptly.”

The outlook for mortality and longevity has remained highly uncertain, Edwards added. Insurers had hoped, during the pandemic, that things would revert to some form of ‘new demographic normal’ post-pandemic, but the mortality experience of 2023 is proving hard to decipher.

“The outlook for future longevity improvements is also more uncertain, especially given NHS and related pressures,” he said. “We’re hoping that, by the end of 2023, insurers will have made whatever changes are appropriate and have found good evidence for such changes.”

Insurance challenges in 2023

Assessing the challenges awaiting the market in 2023, Walker spotlighted the continued issue presented by talent attraction and retention. These are not new challenges for the insurance industry, he said, but the specifics of the issue change year on year.

“We can’t continue to blame the spike in vacancies and rising salary costs on a post-COVID ‘lifestyle’ narrative,” he said. “We’re a people business and, if anything, we, along with our competitors and brokers, have to put extra effort and investment into attracting and developing the next generation of industry talent and leaders.”

Looking at the regulatory challenges facing insurance this year, Edwards noted that for many firms, 2022 has been the year of IFRS-17 preparation. 2023 will correspondingly be the year of making IFRS-17 work as BAU, he said, ensuring all relevant internal and external stakeholders understand the results – and reasons for variation from the previous reporting regime – and thinking through knock-on impacts of the new reporting regime.

Insurance opportunities in 2023

There are plenty of opportunities for the market too, alongside these challenges, however, and Walker emphasised that 2023 has the potential to be a great year for the insurance industry. With the rapid uptake in digital solutions and technology across the personal lines market, he said, he hopes to see commercial lines catch up this year.

“I believe digitalisation of commercial lines is already accelerating and the crux will be to keep pace and maintain the rate of change,” he said. “As we move beyond modernising internal processes, the next step will be to enable more digital interaction, more self-service and more innovative products. The key will be anticipating customer requirements before they have happened as well as upskilling our experts with the tools that will allow streamlined processes to become the norm.”

Looking forward, Walker said, he believes the market will see customer expectations evolve and insurance will increasingly need to focus on personalisation, prevention, sustainability and digitalisation. It’s up to each market player to embrace these opportunities to remain competitive and continue to serve their customers.

“Much of the talk during the late 2010s of the opportunities offered by good use of analytics, unlocking the patterns in data and doing so in a way that helps shareholders and policyholders, was deprioritised due to the pressures of the pandemic and IFRS-17,” Edwards added. “This year could be the year firms ‘re-find’ their ambitions regarding broader use of data analytics, with corresponding systems redesigned to better allow the use of new data-driven insights.”

For Edwards and his team at WTW, the key area of focus in 2023 is supporting clients in navigating the challenges facing the markets while accessing all available opportunities. It’s a similar story for Walker and his team at AXA Commercial and besides continued growth and profitability, they’re focusing on areas such as service delivery, regulatory response, delivering for our customers and change and transformation.

“Over the past few years, we have established an expert Governance, Risk & Conduct function,” he said. “Moving forward, we must continue to build on integrating good customer outcomes into our working practices and business culture. We have a number of regulatory commitments to fulfil, with Consumer Duty as a top priority for 2023.”

Walker highlighted how delivering for customers sits at the heart of the Commercial team’s ambition to help their customers’ businesses thrive today and tomorrow. The business will be focusing on continuing to offer strong service that makes it easy to do business with, he said. This year, it has been working to ensure account managers and underwriters alike are available to brokers both face to face and in a ‘smart working’ setting.

“We want to make sure brokers and business insurance customers have the opportunity to communicate directly with underwriters, giving everyone a more in-depth and detailed understanding of needs and requirements,” he said. “We will also be progressing with our transformation programme.

“We’ll be looking at more ways to ensure decision-making is as close to the customers as possible, making our underwriters more accessible by providing them with improved tools and processes, and use data to enable better customer outcomes.”

What do you think 2023 will bring for the insurance sector? Feel free to add your thoughts in the comment box below.

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For the study, WTW polled 600 industry leaders in the health and life sciences sector. Participants were asked to rank what they felt were the top risks to business success in the next three to five years:

Internal risks

1. Data privacy/informed consent (46%)
2. Labelling and packaging (44%)
3. Product safety failure/product recall (40%)
4. M&A risks (39%)
5. Talent acquisition and retention (38%)

External risks

1. Environment/climate change/extreme weather (44%)
2. Cost and availability of inputs including materials and energy (43%)
3. Cyber risks (40%)
4. Changing or increasing legislation (39%)
5. Social inflation/rising cost of litigation (36%)

Collaborations and M&A

The study found that firms are focusing on collaboration and M&A over new products.

“Industry collaborations emerged as the sector’s greatest opportunity over the next two years, named by 35% of respondents among their top five business priorities,” WTW said. Thirty percent named strategic acquisitions and industry collaborations among their top three strategic objectives.

Conversely, only 15% said launching new products was among their top priorities, while only 12% named IPOs.

“This could reflect a desire to pause and recover after a high period of activity, including the rush to develop new vaccines,” WTW said.

ESG risks

Data privacy and informed consent issues were top of mind for many in the sector, WTW said.

“As the sector becomes more dependent on data to inform strategy and drive innovation, firms are also more conscious not only of the opportunities but also the risks this brings,” WTW said. “With the rise of digital healthcare, life science companies are coming under increasing scrutiny from regulators, courts and the public for how they use patient data and how they obtain their consent.”

Fifty-two percent of survey respondents said that improved data and data access were among their top five opportunities from digital transformation over the next three years. However, 46% said data privacy and informed consent were among the top internal factors posing the greatest risk to their business over the next few years, and 38% named data privacy as one of their top three ESG risks.

Health and race equity is also becoming a more pressing issue for the sector. Fifty percent of respondents said health and race equity was among the top three emerging themes that will have a positive impact on the sector over the next three to five years, and 42% said issues related to health and race equity and access to medicine were among their top three ESG social risks.

Have something to say about this story? Let us know in the comments below.

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Steve Moore, who has more than three decades of industry experience, has joined the sports and entertainment team at Miller in his capacity as an account executive.

The London-based hire made the switch from Towergate where he worked from 2017 as area director and commercial broking director. Prior to that, he was with SBJ (now Marsh Commercial) for 27 years.

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To operate with confidence in this environment, your tech clients need to have the right insurance cover in place to give them the freedom to pursue opportunities without delay as they navigate challenges. Being proactive can pay off: According to PWC’s 2022 Global Risk Survey, 39 percent of business leaders who responded to the survey said they were making better decisions and achieving sustained outcomes by consulting with risk professionals early. Brokers can be valued partners to tech clients by helping them manage existing risks and anticipate new ones, providing the security they need as they expand into new territory.

What to look for when securing global cover

We advise clients to look for these five elements when securing global cover:

1. Seamless protection. When problems occur in the course of conducting business, the knowledge that you have the right protection is a relief – and helps ensure operations can proceed with minimal disruption. Without such protection, a business can be exposed to surprise costs and interruptions: An overseas car accident involving a UK-based employee, for instance, could generate significant expense if the local auto insurer refuses to cover the accident based on how they apply policy exclusions in the local policy.

To help tech clients avoid this kind of scenario, Travelers has controlled master program options that are designed to create seamless worldwide protection for the foreign exposures of UK-based technology companies. We also offer customised local policies that comply with an individual country’s insurance requirements. They ensure that tech clients aren’t inadvertently exposing their business to expenses and disruptions due to misperceptions about their cover.

2. Protection at home and abroad. Today’s global marketplace means a tech company must be covered wherever it develops, makes, distributes and sells its products. If, for example, a product that the company sells overseas allegedly fails to perform as intended, causing a fire that destroys a customer’s commercial building in another country, having coordinated foreign and domestic coverages can help protect the business, its employees and customers.

3. Single-policy option in Europe. If a tech company’s product were to injure people across several European countries, the coordination of claims across multiple jurisdictions could easily take significant time and energy. A Freedom of Service policy can combine general liability and property insurance under one policy, covering any combination of the European Economic Area member states. This approach can streamline cover and billing, as well as help reduce premiums.

4. International technology expertise. Tech companies are evolving continuously – and their cover must keep pace with the changes. As your tech clients expand their business overseas, they will need to understand what insurance cover is needed in foreign countries to make sure they are properly protected. At Travelers, our international specialists consult on product structure and risk analysis for technology companies with foreign operations or sales. This helps tech clients understand how to best protect their business as it changes.

5. International Network of Insurance (INI) membership. Any tech company planning to expand operations in new countries must make sure their existing cover will apply in those jurisdictions, and that they are getting guidance from people who understand the risk of operating there. Working with an insurer that has partnerships with trusted insurers around the world can help.

That’s why Travelers is a member of INI, a global network of more than 120 insurance companies. Membership in this network allows us to coordinate underwriting, claims and risk control services through local providers in the country where an insured is operating. Our clients gain the dual benefits of accessing local expertise and knowing we are also making sure they receive the information and assistance they need when securing cover, managing current business risks or resolving a claim.

Mind the gap

In the past couple of years, running a technology company has become more complex as business leaders have had to manage constantly shifting dynamics – both internally and externally. Those dynamics are all the more complicated when a business operates on a global scale. Risks related to overseas operations, sales and employee travel can generate significant costs and disruptions. You can help ensure your clients are aware of any gaps in their cover and have suitable protections against their risks. By doing so, you will empower them to seize the new opportunities for growth that global markets can provide.

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Among the issues it looks to address are:

• The potential to signpost customers towards more suitable products when they are facing financial difficulties
• Waiving cancellation fees to help facilitate switches in these circumstances
• Removing fees associated with adjusting customers’ policies

According to Sheldon Mills, executive director, consumers and competition at the FCA, maintaining access to insurance “is vital”.

“By extending our guidance we are helping consumers keep that safety net, and ensure they’re properly supported when they claim, even as the cost-of-living increases,” Mills said.

The update comes on the back of the FCA urging both brokers and insurers to be fair to customers, such as not undervaluing items, and avoiding charging unnecessary add-ons or applying unfair penalties that would increase costs for those in difficulty.

The FCA’s actions are part of its strategy to deliver good outcomes for consumers across the financial services industry.

In reaction to the latest guidance, Branko Bjelobaba told Insurance Business that the move was “timely” but more was needed.

“I would be appalled if any insurers, brokers or premium finance providers were exploiting customers right now,” he said. “We had rules come into force last year to ensure that renewing motor and home products were priced the same as the equivalent new business and we’ve also had round one of the product value assessments process which has been a lamentable failure as most insurers simply did not do what was required to evidence that their product could be signed off as providing fair value once they had also considered the broker’s own assessment of the services that they, and anyone else in the chain, was providing (and whether these also provided fair value).

“What has disturbed me is that some are resorting to high charges for administrative changes that the commission already paid should be covering and are continuing to drive up the costs of finance. Those rules are there to ensure that fair value is provided and apply equally to everyone in the chain. Financial difficulties will be experienced by many and this is not the time to exploit these vulnerabilities and while the FCA is to be applauded they really need to bottom out what we already have in place which is a core part of the incoming Consumer Duty.”

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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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