ldoherty

The work of ShelterBox

Speaking with Insurance Business, ShelterBox CEO Sanj Srikanthan noted that the charity was formed in the year 2000 at a time when the need for emergency shelter after disaster and conflict was widely unmet.

“Only about one-in-five families would receive shelter and a roof over their head when everything had been taken from them,” he said. “This was recognised by our founders who were Rotarians as something that nobody else was really interested in. People were providing food aid, water aid and medical aid but shelter was almost one of those things where we left people to their own devices. And they felt this was wrong.”

It was driven by that conviction that the founders created ShelterBox which started out providing ‘shelter in a box’. Although the green boxes are well-recognised, Srikanthan said, ShelterBox no longer provides aid only in boxes. The charity works with disaster-affected communities and local partners to understand what people need. Support is provided in many ways and includes different combinations of emergency shelter items and training that are locally appropriate to make the biggest difference for communities after a disaster.

He noted that the charity has been going for 22 years now and unfortunately is seeing the demand for its services ever-increasing as disasters become more unpredictable and severe.

“It’s also important to recognise that [shelter] contributes to other things,” Srikanthan said. “It also reduces the likelihood of sexual violence. It provides shelter and protection for children as well as an opportunity for them to reintegrate into the school system. When you haven’t got a roof over your head, schooling is not the thing you’re thinking about.

“But most importantly, it recreates the family unit under a common location where they can start to think about how to get back to work or in some cases to start a home business from their shelter as we’ve seen in the Minawao camp in Cameroon. So, it’s about so much more than just a roof over your head.”

Building strong charity partnerships

As a long-standing advocate of the charity partnership between ShelterBox and Arch Insurance, Patrick Palmer, head of marketing, communications and CSR at Arch Insurance International has seen first-hand how the organisations working together has provided a mutual benefit. Touching on how the partnership first came about he noted that as Arch has grown significantly in recent years it has also sought to broaden and deepen its community impact.

“We’re fortunate to be able to make an impact through areas such as volunteering and providing financial support to charities,” he said. “For us, one of the critical things when working with charities is to find partners who can have the greatest positive community impact with the support we’re able to provide.

“Equally, we’ve sought out charities with whom we feel we can build genuine partnerships. There are so many wonderful causes out there that it can sometimes be quite difficult to make that selection. So, when we set about the process, we established a set number of criteria to help us find the right partnerships. ShelterBox genuinely ticked every single box in terms of aligning with our purpose, our values and our key areas of focus.”

Above and beyond that, Palmer and the Arch UK CSR Committee were blown away by ShelterBox’s commitment to building a truly integrated partnership. The passion and drive that imbues every person within that organisation are completely infectious, he said, and when the Arch team asked its people to select the charities they want to support, both ShelterBox and Arch’s other key charity partner Insurance United Against Dementia (IUAD) won the vote by a country mile.

Examining what has made the link-up between the organisations really stand out, Srikanthan highlighted that ShelterBox’s concept of partnership is to truly immerse its partners in what the charity does.

“If you want to understand the issues behind the cause you’re supporting, that’s what we offer at ShelterBox,” he said. “We really want you not just to contribute your time or your resources, but also to understand where those resources and that time are making a difference around the world.

“The multiplier effect that you have on people you’ve never met is huge. And for any organisation looking to have that impact around the world, beyond the scope of what you do in our day job – we can give you that and, I hope, give you that experience to understand why it’s important to do it.”

Being part of the shelter ‘solution’

That true partnership approach has been met with incredible enthusiasm from Arch, Palmer said, as that level of focus and engagement on where the resources end up benefitting is the real proof of concept of any charitable initiative. In addition, he said, ShelterBox actively seeks engagement regarding which areas the team would like its support to localise in. When Typhoon Rai impacted Arch’s colleagues in the Philippines, Arch was quick to allocate funds, along with the ongoing crisis in Ukraine.

Having that integrated approach to a charitable partnership is not something that he had experienced before, Palmer said, and it speaks to the collaborative nature of what ShelterBox is doing – and why more organisations should look to align themselves with this charity.

“We’re very lucky that the nature of the insurance market is itself collaborative,” he said. “Compared to other industries, we’re much more used to working together- as evidenced by IUAD which is a great example of where the insurance industry has collaborated. It’s something that we do well. I think ShelterBox is a wonderful example of where you’ve got thematic alignment with what our industry does and is also a wonderful cause.

“I would personally love to see many more of our partners and peers in the industry getting involved. So, I would 100% recommend this.”

ShelterBox provides emergency shelter and other essential items to families who have lost their homes to disasters. The charity is currently supporting people affected by conflict in Ukraine, Yemen, Syria, Cameroon, Burkina Faso, Nigeria, and Mozambique. It’s also helping people in Pakistan after monsoon flooding left large swathes of the country underwater, and people displaced by the most severe drought in East Africa for forty years. For more information about ShelterBox visit ShelterBox.org.

Source

What trends are sweeping the HNW insurance market?

Offering insights, he noted that, from a claims perspective, the team is seeing less incidents of fire. Given that high net worth (HNW) properties can be equipped with home cinemas, multi-media systems and under floor heating etc, he said, when these do happen, they can bear relative expense. Many HNW properties have hard wired fire alarms which include early detection devices meaning fires can be extinguished sooner. Nevertheless, significant damage can still occur.

“Specialist contractors are reporting continued trends in HNW development projects such as the installation of home leisure facilities which include basements and indoor pools,” Fairmann said. “A study mapping the 7,328 basement conversions approved by 32 boroughs and the City of London between 2008 and 2019 found the majority of these developments were built for affluent professionals rather than oligarchs, with researchers commenting they’ve become as ‘usual as loft conversions’.

“According to an analysis of planning applications by researchers at Newcastle University’s School of Architecture, Planning & Landscape, the schemes were found to contain 532 swimming pools, 814 cinemas, 1,695 gyms, 689 wine cellars, 607 games rooms, 342 steam rooms or saunas and 154 staff quarters.”

Escape of water and flood claims are on the rise, he said, which is due to the increasing number of adverse weather events. Meanwhile, alternative accommodation for HNW clients is becoming more challenging to source, particularly when there are localised incidents in wealthy areas. In addition to sourcing suitable accommodation, some landlords are reticent to offer short-term lets.

Another key trend Fairmann’s team is spotting is that HNW customer needs have evolved in line with digitalisation of the claims process. This, he said, responds to the increased demand for self-service and online communication channels.

Inflation – its impact on the HNW insurance space

It’s difficult to have a conversation in Q4 2022 about market trends without touching on the impact of inflation and Fairmann noted that building material costs and labour rates are continuing to rise due to the impact of COVID-19, the war in Ukraine, the relative weakness of the pound, and increased shipping costs. Also, he said, some materials more frequently found in HNW properties, such as hardwoods, are scarce.

“HNW clients are more likely to own a higher proportion of listed buildings,” he said. “For these properties we expect costs to be up to 50% higher given the complexities associated with reparation. Given the higher quality of materials commensurate with HNW properties, our contractors report costs of these being 20-30% higher. Labour costs have also increased by at least 20% due to many Eastern European tradesmen having returned to their home countries. This issue appears to be particularly acute in London and the Southeast.”

Although some HNW individuals will be more immune to the effects of inflation than others, he said, along with rising interest rates, its impact nevertheless remains an area of concern, especially for those who are retired. The increase in cyber-crime is also becoming more of a concern and HNW clients and their families are aware of the need for specialist risk management advice.

This is where the team at Sedgwick is really able to shine, as its services are available 24/7. This service is complemented by a dedicated third-party administration team that handle day-to-day claims processing and other administrative duties, he said, with seamless integration to Sedgwick’s private client loss adjusters and specialists.

“We provide a highly personal and unwavering commitment to customer care,” he said. “Our expert adjusters guide customers step-by-step through the claim, using all available solutions to achieve the settlement most appropriate for each individual. Sedgwick’s private clients team tailors professional services to meet individual needs — a bespoke solution for each claim we manage, supported by digital tools.”

What’s next for the HNW insurance sector?

Despite the challenges facing the market, Fairmann said he is not seeing any significant gaps in HNW policy coverage as it stands. Given the increase in entrants to the HNW market, and a drive to offer product differentiation, he said, coverage has developed to be expansive. However, HNW clients are seeking additional lifestyle advice due to the impact of rising prices covering wine, jewellery, watches and classic cars, as well as how to manage their exposure to cyber-crime.

Looking to 2023, he said that he expects that 2023 will be another challenging year for the HNW industry. With the increase in indexation and premiums, disposable incomes will be compromised, and some clients may look for alternative insurance arrangements, or to self-insure. Under-insurance is already an industry issue, and this may become more apparent.

“Whilst fraud in the HNW sector is less frequent, a 2023 uplift would not be unusual given predicted economic conditions,” he added. “As HNW clients continue to seek out insurance and investments that meet their principles environmental, social and governance (ESG) will remain at the forefront for the HNW industry. In addition, HNW insurers will see flood resilience as a priority in 2023, given the increased frequency of flooding in the UK.”

Source

The challenge presented by these vacancies is clear to any business looking to attract new talent but there’s strength too in entering a recessionary period armed with a low unemployment rate. For insurance businesses, in particular, the talent crunch facing firms of every size does not have to ring too many alarm bells if they are proactive in addressing the concern and flexible about the approach required to bridge this gap.

In a recent interview with Insurance Business, Freedom Services group’s Chantel Emilius shared some of the secrets behind the group’s impressive talent attraction and retention figures. At the core of its recent success is taking a human approach to developing your culture and engagement, she said, and having faith in your people. Having trust in its people is what has allowed the insurance business to roll out advanced sick leave policies, a completely flexible remote working initiative and, most recently, a four-day working week.

Of course, what works for one business may not necessarily be right for another but the underlying principle behind the work Emilius and her team rolled out is a valuable lesson to business leaders – well-placed empowerment will pay back dividends.

Fail fast, learn faster has long been an underlying tenet of innovation and it’s time that companies embraced a change management approach to the question of talent. All across the insurance chain, firms are implementing new digital-first practices and incorporating data-driven modelling to leverage new opportunities. Post-COVID, in particular, increased innovation has become a must-have even among businesses traditionally resistant to change.

Yet, for many, there’s still a certain reticence about evolving the way people work alongside the changes happening around the work they actually do. Change is happening certainly, the move to hybrid working models by so many insurance companies is alone proof of that. But the time is right for insurance businesses to move faster and take every action necessary to future-proof their talent pipelines.

Forward-thinking policies, structures and programmes will go a long way to retaining talent and, as seen from Freedom Services’ experience, have a significant part to play in talent attraction as well. But they’re only one part of the solution and the other major element is rejuvenating the overall external perspective of what a career in insurance entails.

Even from my own conversations, I know that there remains formidably little understanding of what insurance is, does and can do. And until insurance businesses do everything in their power to change that perspective, I can’t see that changing. The work of associations like Airmic and the CII has been integral in moving the dial to where it is today, but they need the support of the broader sector if they’re to continue that evolution.

Airmic’s ERM forum saw speakers from the railway, nuclear and construction sectors all coming together to discuss the critical role that insurance and risk management play in the operational success of their respective industries. The message is clear – insurance touches everything. And if insurance was to truly adopt that messaging as standard, you’d soon see it among the industries least likely to have trouble attracting great talent.

The chance to change how insurance is seen is in the hands of everyone who works in the sector. So, have genuine pride in what you do and take every opportunity presented to talk about it. By doing so, the insurance profession has the chance to lead discussions around talent retention and attraction rather than finding itself listening in to these conversations, hoping to pick up hints and tips.

There’s no time like the present to get started. Because, with over one million vacancies and with the UK employment rate standing at 75.5%, insurance firms are no longer competing with just their own market peers or the financial services sector more widely – the playing field has been blown wide open.

Source

Chipman was chief executive of Grant Thornton US and Radius, while Hunt’s credentials span time spent at the likes of Aviva, Hibernian Group, PwC, RSA, Standard Life, Prudential Plc, and Allianz. Tomczyk previously served as vice chair of corporate operations at Toronto-Dominion Bank and as president and CEO of TD Ameritrade.

Meanwhile current directors Brendan O’Neill and Linda Rabbitt have given notice that they will not be standing for re-election at the 2023 annual general meeting due to other commitments and in furtherance of the succession plan.

“On behalf of the board, I would like to welcome our three new directors and to thank Brendan and Linda, our two outgoing directors, for the many years of dedicated service that they have given WTW,” said board chair Paul Thomas.

“We are delighted to have identified such strong incoming candidates in Stephen, Jackie, and Fred, each of whom has significant experience leading dynamic professional and financial service firms as well as broad financial and operational expertise.”

WTW board directors include former Lloyd’s chief Dame Inga Beale, who joined in January 2022.

Source

“I learnt a lot from her as to culture and how we behave with each other, and how she wants a business to run,” she said. “And she wants that human approach, she doesn’t want it to be transactional. I saw first-hand for 14 years how culture influences your organisation so I’m always banging the drum of it being at the foundation of any organisation. How we treat our employees comes back to us – if we treat our people well they’ll in turn treat our customers well and provide a good service.”

Rolling out a four-day working week policy

When she was appointed to her current role in January, one of Emilius’s first areas of focus was on raising the idea of the four-day working work – which she had seen getting a lot of attention in the news. Knowing that it was something that insurance didn’t seem to be doing, she said, she realised that the opportunity was there to really do something different, particularly in light of how Freedom had already capitalised on COVID’s lesson in the need for flexibility to roll out remote working to all its people.

“People have the option to work from wherever they want, as long as they’re doing the job and hitting their KPIs,” she said. “So, off the back of that approach, the four-day working week was discussed with the exec team. It took us about five-to-six months to pull it all together because we needed to make sure we had the right foundations in place in terms of KPIs and the structure to ensure a successful launch.

“We launched our six-month pilot scheme on July 1. Of course, some people were sceptical and said they couldn’t see it working in the insurance space. But I’m pleased to say it has been more of a success than any of us could have imagined.”

The key results of the four-day working week trial

Outlining some of the key outcomes of the trial, Emilius revealed that Freedom has seen:

• Staff turnover drop from 31% to 6% since the trial was implemented
• Productivity increase 12.4% in ops areas – including increased performance in customer service areas
• An uptake of 80% of the four-day working week option by the Freedom workforce – up 5% since its inception
• 51 new starters in the last quarter – with feedback indicating that the four-day working week and other flexible work arrangements were key factors behind their choice of Freedom over other insurance businesses.

Emilius noted that hearing the feedback from new starters has been fantastic but it has also been great to hear the responses from the current team – and to hear how their work-life balance has changed since the trial was implemented. People have more time to be creative now, she said, and it’s encouraging them to spend more time doing the things they love with the people they love. Freedom’s culture is very much human-led and at the core of this initiative has been a simple question – “how do we make our employees’ lives better?”

“Obviously, this kind of push has got to be a two-way street because it has to work for the organisation as well,” she said. “But it’s something we were really passionate about making work and it has [paid dividends]. Our customer service has seen an uptick of 12.4%, and all the back-office staff and support staff have [renewed] strategic focus because they’ve still got the same amount of work to do, just in a shorter period of time.

“They know they’ve still got to hit the KPIs and still get the work done. But this is just giving them better focus on that work while offering them a work-life balance – and everybody who has taken this up has said they would never want to go back now to a five-day working week.”

Moving to a four-day working week, permanently

With the blueprint for success so clearly laid out during the trial, it is with confidence that the business is moving to enact a four-day working week permanently. Freedom is currently creating the correct policy to go around that, she said, and it will of course be monitored on an ongoing basis but, from January, it will be a permanent fixture. Looking back on the trial, Emilius highlighted what made it really work is the buy-in from Freedom’s team.

“I think the culture as a whole in Freedom is fabulous,” she said. “And people have really bought into this and made it something special. I can’t see the four-day working week ever not working for us because people have really bought into this journey, everybody’s been with us on it and it’s very collaborative. It’s not a one-way street where all our employees love working with us, we love them working with us too.”

Recommendations for firms considering a four-day working week

In terms of recommendations, Emilius emphasised the importance of a flexible approach when rolling out such an initiative. The majority of Freedom’s sales team, for instance, didn’t take up this opportunity because they didn’t want to miss out on a day when they could be contacting prospects but they still have the option to opt-in if they want to at any point.

In addition, she recommended getting the right structures in place as early on as possible to make sure that somebody from the right team is always available if required. In accordance with this, she said, when Freedom moves the four-day working week to a permanent basis in January, its schedule will run on a rotational basis. This will ensure somebody from each department is available when necessary – because the insurance sector doesn’t shut down on a Thursday evening.

Getting the right plan in place is critical, she said, but her other key recommendation is to “just go for it.” If implemented on a trial basis, if it doesn’t work out for a company, they can always reverse it but, from her experience, if the right plans and structures are in place and you have the right culture of self-empowerment within your organisation, then you’re on a good footing for success.

“I don’t see any downside,” she said. “And the news in the press [recently] about the success of four-day working week trials and how a lot of firms have looked to permanently adapt to this lets me know that we’re very aligned. Everybody that has done this seems to have had massive benefits. And bringing new talent to your door is massive, particularly for us as we’re on a growth trajectory over the next three-to-five years.

“So, it has been really important for us to find that offering that sets us apart and gives us that competitive edge. And I think we’ve found it and I think it’s a real gem.”

Source

“This is what gives the property insurance market the mechanism required to bifurcate between the types of events they can cover as standard, and those that they need to treat a bit differently,” he said. “We think we need an equivalent professional for the digital world. We need to be able to agree on exactly what a ‘cyber hurricane’ looks like.”

Laying the foundations for a cyber cat market

“In recent months, CFC have advanced plans to support the creation of such a solution. We started out some months ago by commissioning a legal feasibility study into the establishment in the UK to have an independent body which would exist to identify, define and categorise cyber events. The findings of that study stated that this was doable, it found no legal or regulatory reason as to why a body couldn’t be set up.”

With that confirmation in place, CFC has started work on determining what this body would need to look like. Recommendations posit a CLG structure, he said, which is typically used by charities and non-profits wherein members can fund the establishment and operating costs of the body but the body is a legal identity distinct from those members. As it stands, CFC is acting as the initial sole sponsor and is keen to encourage broader stakeholder support from both within and outside the insurance industry.

“Once established,” Burns said, “the board of the body will oversee the setting up of the technical committee drawn from non-insurance backgrounds in IT security, research, academia and law and whose job will be to identify, define and categorise cyber events. To do this, they will need to assess inputs from a range of data feeds and analyse them within the framework of an objective methodology.”

The four tasks of the proposed technical committee

The construction of that methodology is where the bulk of the work going into this new initiative is currently focused. So, CFC is engaging with a broad range of experts to create a methodology that is rigorous and robust while also being practical and workable. The team will shortly be able to provide a high-level overview of the first iteration of this initiative with wider stakeholders, he said, and as it stands, conceptually the technical committee will have three primary tasks.

Their first job is to identify potential cyber events as they start to develop. To support identification, he said, it’s likely that an event alerting system will need to be established and given its role as a frontline responder, the cyber insurance industry is well-placed to be the primary supplier of data feeds into any such event alerting system.

Burns highlighted that the second job of the technical committee would be to identify the specific nature of the events by a thorough analysis of technical indicators of compromise and the tactics, techniques and procedures deployed in order to accurately define the events. Systemic scenarios might range from malware outbreaks to mass extortion events, major data breaches to cloud failures.

“The technical committee’s experience and expertise will be required to make an assessment of what’s happening quickly and accurately,” he said. “For this second phase, third-party contributors to the event alerting system will also provide additional data to support the definition of the event… Importantly, we propose that once defined at this stage, the body should also assign an official name to the event. Creation of a commonly agreed naming convention feels like an important step forward in the space to make sure that everyone’s on the same page as these events arise.”

The third and final task of the technical committee should be to categorise the severity of the events according to two factors – how widespread it is and how significant its overall financial impact is. By assigning a rating based on the size of the affected population and combining that with an economic impact rating, he said, the event can be ascribed a catastrophe rating – with one being the lowest and the five the highest.

Once complete, Burns said, CFC believes that the entire process of identifying, defining and categorising cyber events could be completed within a 30-day window.

“We know that this initiative is ambitious,” he said. “It’s a model that is simple in concept but complex in execution. But that simplicity of concept is what we think makes this avenue worth pursuing.”

The solution will look to create a simple delineation in cyber policies between attrition losses and true catastrophic events, which should facilitate the development of a thriving event-based cyber reinsurance market. In all CFC’s ongoing conversations with insurers, reinsurance and third-party data providers, he said, there does not seem to be a real lack of appetite for cyber cat risk. Rather there is a real frustration at the lack of agreement around precisely what cyber cat risk actually entails.

“This solution will solve that problem and provide the mechanism by which a cyber cat market can fully develop so that customers will buy back cover for extreme scenarios should they wish to,” he said.

The next steps in the development of this cyber cat market

In terms of the next steps, CFC is close to having the CMG set up with articles of association drawn up, he said, and a proposed detailed methodology ready to circulate by the end of this calendar year. While this will take time, the group is keen to see something operational towards the end of the next calendar year, even if it’s not useable for insurance purposes right away, and to hopefully create a model that can be replicated in other territories and jurisdictions.

“The initial feedback from everyone – from insurers, reinsurers, brokers and government – has been overwhelmingly positive,” he said. “And seeing so many different stakeholders all so excited about the same thing is incredibly motivating. We’re using that motivation to act as a catalyst to get something going here.

“Even if this body ends up as an inspiration for something else, or as a precursor to a different, similar end solution, that’s OK. By definition, this cannot be a CFC or even an insurance market-owned initiative. It has to be independent in nature to work, but we can push it forward to get to something that might benefit not only the insurance market but hopefully wider society as well.”

Source

Aon plc (Aon), a leading global professional services firm, has appointed Marshall Bailey OBE, CFA, as its non-executive chair of the Aon UK Limited Board, effective January 31, 2023.

Bailey has several non-executive roles, including the chair of the Financial Services Compensation Scheme, MUFG Securities EMEA, and MUS (Asia) Hong Kong. He is also a member of the Board of Governors of the CFA Institute. He has also held other non-executive positions in financial services and insurance, including at the London Stock Exchange Group, Chubb, and CIBC World Markets plc.

Source

A vast majority, or 96%, of the claims managers surveyed reported an increase in the number of properties that are underinsured in the past 12 months, with rapid inflation in the cost of building materials often mentioned as the cause of the rise.

To back the research findings, Gallagher cited an October 2022 official government data showing a 16.7% increase for ‘all work’ year-on year. More specifically, the cost of cement had an increase of 18% between September 2021 and September 2022, the price of steel went up by 13%, and the cost of timber rose by 35% year-on-year. 

Gallagher’s research also found that more properties are also underinsured in part due to rising labour costs, according to 61% of claims management experts. When it comes to what’s causing construction labour cost rises, 85% cited inflation, and just over three-quarters, 77%, said that Brexit was a major factor due to the decreased availability of labour.

Unfortunately, the majority (65%) of business leaders who own their premises have not reviewed their commercial property insurance during the past year, indicating that many could now be at risk. Some have gone even longer without looking at their policy, with one in six (16%) not having reviewed their insurance at any point in the last five years.

The most common reasons among business owners for not reviewing their property valuation was thinking that nothing had changed since last time they checked (29%), trying to keep insurance costs down while inflation is causing budget constraints elsewhere (23%), and simply being too busy with other priorities (20%).

 Despite this, many who own their premises said that one or more of their properties has needed major repairs (18%) in the past 12 months.  

Claims managers also noted that it is taking longer for commercial property repairs to complete – taking an average of an additional 33% compared to this time 12 months ago due to supply chain delays and the lack of available construction workers.

As a result, eight in 10 (805) claims managers said many businesses may have too short a term specified on their business interruption cover – the insurance that pays for loss of earnings while a property is unusable.

“Property underinsurance is at a record high currently because of issues, such as inflation and the rising cost of materials,” Gary Fletcher, Gallagher’s managing director for the South in the UK, said. “However, business owners also often make the mistake that the valuation of the property is based on what it would sell for – and as property prices haven’t changed a great deal over the last year – that the valuation is the same.

“In fact, the valuation is based on rebuild costs which have unfortunately risen dramatically over the last year. As a broker we advise our clients on their insurance, and the need to review their cover when issues like this arise, but some businesses won’t necessarily realise the extent of the issue.”  

Fletcher added that business leaders have a range of increasing costs to cope with, as inflation remains stubbornly high.

“The knock-on effect of inflation on commercial property and business interruption insurance shouldn’t be ignored,” he stressed. “Your insurance broker can advise how to go about a valuation to ensure that cover is valid.

“With construction and labour costs as they are – and supply chain issues meaning businesses who need to repair or rebuild might be closed for longer than expected – it is currently very important to make sure you take time to check your cover.”

Source

Geopolitical uncertainty, energy issues, and other challenges have caused rough sailing in the marine insurance industry. However, Insurance Business UK’s (IBUK) 5-star marine insurers for 2022 have remained resilient in the past 12 months, helping brokers either increase their premium volume or maintain it at the same level.

IBUK selected the best marine insurance providers in the UK for 2022 by sourcing feedback from insurance brokers. The research team conducted a survey with a wide range of brokerages to determine what brokers value in a marine insurer and asked 100s of brokers across the country to rate the marine insurers they had worked with over the past 12 months.

Source

1. Where do you think UK PI market is heading in 2023?

An interesting question. After the hard market years of 2019 and 2020 (made worse by the pandemic) and 2021 the UK PI market has seen signs of significant softening in the last two Quarters of 2022. This has mainly been within the SME sectors albeit there has been more competition in the larger mid-size sectors especially Excess of Loss/Cat markets where softening usually first starts when a cycle changes. Softening usually then starts with broadening of coverage followed by premium pricing reductions.

This year we have seen inflationary pressures affect the cost defence litigation especially within the construction sectors where the cost of raw materials and labour costs have risen dramatically, this has made insurers review upwards their initial claims reserving.

Global interest rates have shot up since the summer, few would have foreseen base rates move north at the pace they have, with more rate rises forecast in 2023 to try to dampen inflation. Interest rate rises will have an adverse effect on employment. Commercial insurance policyholders will see their margins pinched and will expect their PI broker to search the market to provide fair value at renewal in 2023.   It is interesting that the equity markets have stayed pretty much flat over the past few years and have bounced back after the initial drop in equity prices in the spring of 2020.

2. How are these market conditions likely to impact new entrants to the market?

Some new entrants to the market in 2023 will not have the legacy tail that current insurers live with, so there is a significant chance that there might be a “dash for cash” where new entrants will undercut existing market pricing with the logic that they can sit on cash for some years as their liability tails lengthens. Negligence claims can take up to five years to settle/close. Complex claims can take even longer with the costs of mediation and eventually litigation in the Courts. Investment income will become an important tool in return on capital.

Lloyd’s of London has posted some attractive numbers recently so the worst underwriting years of 2016, 2017 and 2018 are clearly behind the market now.

3. What would the impact of a prolonged economic recession be on the development of this market?

Should the UK suffer from a prolonged recession, history tells us that negligent litigation follows but there is usually a time lag before the tail catches up with the dog. At MGB we monitor claims triangulations closely. So as far as MGB is concerned, we see nothing unusual now.

4. Where does trading in the PI market stand going into 2023?

The Lloyd’s & London marketplace is back to pre-pandemic normal trading (face-to-face) and the market’s 334-year-old history is getting back to some form of normality. The frozen marketplace of 2020 and 2021 is over as we see people coming together again to discuss risk transfer.

5. What changes can policyholders coming to the market expect to see?

Policyholders who come to the market and purchase Cat towers of £100 million to £200 million protection are unlikely to see much price change in the market but there will be competition at SME firms where there is Primary capacity competition and abundance of Excess of Loss capacity.

With two or three profitable underwriting years behind us, it is hard to see why the UK PI market would not turn a softer in 2023 but one thing we can be certain of is the economic uncertainty we all face.

At MGB, we do everything we can to keep our customers informed on all market developments and MGB remains a leading PI market maker.

You can find out more about MGB and how it continues to build enduring relationships with clients, broker partners and insurers here

Source