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Among the key concerns voiced by industry witnesses are:

• That the regulator takes a “one-size-fits-all” approach to commercial insurance and reinsurance, requiring London Market firms with “sophisticated clients” to comply with unnecessary consumer protection requirements.
   
• That there is a lack of proportionality which can hinder the development of new forms of insurance in the UK.
   
• That there is a “very demanding regulatory regime” that involves a significant body of requirements and large numbers of information requests and meetings with the regulator.
   
• That the regulators “take a risk-averse approach and operate very bureaucratic systems, contrasting this with other jurisdictions that manage to operate high regulatory standards in a more pragmatic, business-friendly way”.

The inquiry saw industry members highlight the different approaches taken by regulators in other jurisdictions, notably Singapore and Bermuda, which seek to support new businesses through collaborative, open dialogue.

“This was contrasted with the approach of the UK regulators,” the letter stated, “who were said to be more likely simply to point new businesses to a website and ask them to make their own judgement on the requirements.”

This difference in approach was also highlighted in relation to stakeholder and practitioner panels that the regulators operate, with witnesses suggesting that these panels – particularly in the case of the FCA – are selected by the regulators and meet in relative secrecy, with meetings often consisting of the regulator outlining its approach rather than taking on feedback from stakeholders.

The UK industry would likely benefit if UK regulators would adopt a similar and more collaborative approach, the letter stated. However, despite these concerns, the committee recognised it is important to distinguish between dissatisfaction with the outcome and dissatisfaction with the process. In those cases in which the industry did not secure its preferred outcome, it said, this is not always necessarily a sign that the process was poorly run.

“The PRA and FCA stated that they aim to act in a proportionate manner and take into account their impact on the industry,” the letter stated. “However, it is understandable that they focus on their current statutory objectives, which prioritise safety and soundness and make no reference to competitiveness.”

Proposed solution

The industry’s proposed solution to the above issues is a “competitiveness objective” for the regulators that encourages them to be less cautious and to give thought to their impact on the industry. However, many contributors said the proposal of a “secondary competitiveness objective” may be insufficient and argued it may need to be a primary objective instead.

The PRA and FCA argued in favour of a secondary objective, the committee stated, and witnesses from the regulators suggested that they would try to take competitiveness into account when assessing the impact of new rules.

Many witnesses called for clear metrics to be established around this objective, as well as some form of annual reporting to drive cultural change within the regulators and to allow others to hold them to account.

“We heard suggestions that this could include comparing numbers of new applicants, entrants, flows of capital and services to the UK market with other regulated territories each year, reviewing UK regulators’ performance relative to other major regulators,” the committee said, “and monitoring the UK’s performance against international metrics.

“We share the PRA and FCA’s view that the primary objective should continue to be the safety and soundness of firms. Indeed, we agree with those who emphasised that a robust and rigorous regulatory framework contributes to both the competitiveness and the reputation of the London Market and would be concerned at any initiative which could unintentionally dilute this.”

Committee recommendations

The committee agreed that there were strong arguments in favour of adopting a secondary competitiveness objective but noted that this alone may be insufficient. Concerns around the inflexible and sometimes unnecessarily complex processes identified by witnesses require a broader reassessment of regulatory culture, it said, and there is a need for current rules to be applied more proportionately and effectively.

“The FCA and PRA should regularly review their rulebooks to ensure that they are maintaining high standards in the most efficient way possible to enable the competitiveness of the UK financial industry; such reviews should focus on the scope for more efficient and proportionate as well as less cumbersome and mechanistic engagement between regulators and industry,” it stated. “The PRA and FCA should consider formalising such reviews on a regular basis.”

The letter also advised the following:

• The importance of open and transparent communication with industry.
   
• The need for regulatory stakeholder panels to offer two-way dialogue.
   
• Discussions in stakeholder panels to be more transparent and public.
   
• The need for the PRA and FCA to regularly look at other successful financial centres to develop and sustain best practice.
   
• That, alongside, introducing a competitiveness objective for the PRA and FCA, it will be essential to establish clear criteria and appropriate performance measures.

Regarding the last point, the committee stated: “The evidence we heard suggested that industry practitioners have some ideas for what such measures might be and would be a useful source. Publicly disclosed performance criteria would provide an opportunity for both the Government and Parliament, through this committee and others, to monitor performance and hold the regulators to account.”

The committee welcomed Glen’s agreement on the importance of strengthening the role of parliamentary committees in holding regulators to account as they are granted greater rule-making powers. It added it will consider issues of remits, responsibilities, performance measurement and accountability more generally in forthcoming inquiries and looks forward to Glen’s response to outline the Government’s thinking in this area.

Industry reaction

Responding to the recommendations, the London Market Group (LMG) welcomed the letter and noted that, having listened to market leaders and stakeholders – including those from the LMG – the Committee agrees that it is possible to have a properly functioning competitiveness duty without compromising safety and soundness.

LMG highlighted the letter’s call for a more proportionate and efficient implementation of the current rules and the acknowledgement of industry concerns around the ‘one-size-fits-all’ approach by regulators, and the need for more openness and transparency, so that they are open to constructive challenge.

Caroline Wagstaff, CEO of the London Market Group, commented on the letter and said: “This inquiry was an opportunity for the industry to show Parliament its value to the UK economy, but also the challenges it faces. We are delighted that the committee agrees with us on the impacts that regulation can and does have on the future success of the market.”

She highlighted LMG’s five-point plan to identify the regulatory and legislative changes it believes are necessary to enhance the market’s competitive position and that the recommendations of the committee align with many of the key points this plan raised.

“Growing global competition means that the London Market’s place as a jewel in the UK financial services sector is under threat, and it is vital to take action by producing a regulatory framework that makes us fit for the future,” Wagstaff added. “These recommendations are a step towards a regulatory system which boosts our competitiveness, brings in new investment and allows our market to fully contribute to the UK’s recovery and future prosperity.”

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In the report, WTW saw that the scales were finely balanced in all markets, with most portfolios returning to profitability. However, it found that the absence of any fresh underwriting leadership and a reluctance of insurers to “break ranks” are preventing brokers from forcing through any fundamental changes in market dynamics.

Graham Knight, head of global natural resources at WTW, advised the energy sector to come to terms with the consequences of the energy transition that may be accelerated by the recent events in eastern Europe.

“Now, we have a new factor to add to the mix – a significant future loss of energy market premium income from Russian business. It really is too early at this stage to predict with any accuracy what effect this withdrawal of premium income will have on market conditions,” Knight said. “On the one hand, insurers may use this factor to insist on recouping lost premium by re-imposing stiff rating increases; on the other, they may be inclined to compete more aggressively for the remainder of the premium income pool.”

WTW’s report expects a short-term fossil fuel “binge” due to the crisis in eastern Europe that will alter the balance of the broader energy trilemma of affordability, availability, and reliability.

“It is probable that some assets may need to ramp up production, and/or other mothballed assets may be brought back online. The big question, of course, is whether maintenance and capital expenditure have been maintained for these facilities; if not, perhaps we can expect a future escalation of the current loss levels affecting the energy insurance markets, which may fuel a return to hard market conditions,” Knight said.

“How the markets react to premium income depletion as a result of sanctions and a short-term increase in fossil fuel activity remains to be seen. In the meantime, the energy transition will wait for no one; every risk manager involved in the industry will need to address the uncertainties arising out of both the new geopolitical landscape and the mounting momentum towards achieving net-zero emissions targets.”

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And so it is perhaps unsurprising that the insurance profession has so keenly embraced the aims and ambitions of the Insurance United Against Dementia (IUAD) campaign. In a recent interview, the fundraising and awareness-raising initiative’s new chair, Aon’s global head of climate strategy Richard Dudley (pictured), noted that since the campaign launched in 2017 it has gone from strength to strength.

Since its launch, IUAD has raised around £7 million and has set its sights on the £10 million mark, but Dudley believes it will likely stretch its ambitions beyond even this reputable goal. Most of the progress that has been made in the five years has been primarily driven by relationships, firms and individuals who are either in or related to the London and international insurance market. This has largely been a result of the makeup of the board, he said, and the people who have driven the campaign’s corporate or individual fundraising.

“A lot of those networks have been in this part of the business effectively, it’s where Chris and I are based, our home offices are both in the City of London,” he said. “So I think for the next stage of the campaign, what we’re really keen to do is to expand on the good work we’ve already done in the commercial lines market more broadly in the UK… and we’d like to do more in the personal lines space, the protection and health space – which is something we haven’t really touched at all.”

IUAD is delighted to welcome two new board members from that side of the business – Rose St Louis from Lloyds Banking Group and Peter Hamilton from Zurich. Both are passionate about the topic, he said, and are keen to get stuck in and help expand the initiative across different parts of the industry. Tapping into the reinsurance market is another part of Dudley’s strategy as chair, with Ian Branagan of RenaissanceRe Holdings also joining the board.

Read more: How can insurers support those impacted by dementia?                                           

“We know that having those three people on the board is going to help us to extend our reach,” he said. “But also I think there are a few things we haven’t done as consistently as we could have. One of those is to have a more regular and proactive approach to making people aware of the campaign because we’ve traditionally tended to do it in bursts.

“We have events, we have the Insurance Day of Giving, but we need to [raise awareness] consistently across the year as well. It’s almost like filling a bath. We tend to fill the bath then pull the plug out for a bit and then refill the bath again. What I’d like to see is the water level of awareness rise on a more consistent basis.”

In addition to this, a core focus for IUAD going forward will be driven by the former chair, QBE’s Chris Wallace, who will be taking on a new role in order to focus on the legacy aspects of the campaign. That’s how the industry thinks about, engages and looks after those who are impacted by dementia, he said, and that’s the people who suffer from it themselves and those who care for them. That has always been an element of the campaign – but going forward this will be further elevated.

Looking to the future of the campaign, Wallace said he can see there is a wonderful opportunity for the insurance sector ahead as IUAD enters its next phase. The progress made by the initiative has been fantastic to date, he said, but there is always more to do. The opportunity presented now is to promote greater connectivity and greater awareness of the work that is being done and the impact it is having.

“And we’ve been looking to push into the non-commercial sectors of the industry for a little while,” Wallace added. “I think the work that Richard has done in a very short period of time gives us a nice platform to extend the reach, the awareness and the connectivity of [IUAD].

“If you join those different pillars across the industry together, the power of the industry in driving awareness of dementia, of the services available, and of how to treat employees, families and customers in that predicament is really something. It’s also just a wonderful opportunity for the insurance industry to prove, yet again, that it cares and it can make a difference.”

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SCOR Syndicate has appointed Marie Biggas as active underwriter and chief underwriting officer of SCOR UK.

Biggas will report to both SCOR P&C EMEA and SCOR Syndicate CEO Stuart McMurdo, as well as SCOR global CUO single risks Olivier Perraut.

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Based on its analysis, S&P reported a negative outlook on the global reinsurance sector, reflecting its credit trend expectations over the next 12 months, including the current distribution of rating outlooks, existing sector-wide risks, and emerging risks.

As of March 31, 2022, 29% of S&P’s ratings on the top 21 global reinsurers had negative outlooks, 57% were stable, and 14% were positive or on CreditWatch with positive implications.

The rating agency predicts the top 21 global reinsurers to assume around half of the potential losses in the insurance sector on aggregate, varying by lines of business because certain lines are more reinsured than others. It also expects the Russia-Ukraine conflict losses to be an earnings event for most reinsurers. However, the losses could turn into a capital event for a few outliers, given the significant natural catastrophe losses already accumulating during the first quarter of 2022, even before the Atlantic and Pacific hurricane seasons arrive.

Over the past five years, elevated natural catastrophes and pandemic losses, adverse trends in certain US casualty lines (general liability, professional lines, and auto liability), and a competitive environment have driven weak underwriting results in the sector. As a result, reinsurance pricing has hardened over the past years through to the January 2022 renewals, according to S&P.

However, the rating agency explained that the extent of the price increases has varied by lines of business, loss experience, and regions. And, because of these price rises, the accident year combined ratio, excluding natural catastrophe losses and reserve developments, of the top 21 global reinsurers has improved by around 4 percentage points since 2017.

For the rest of 2022, S&P expects the positive momentum in reinsurance pricing to continue, with tightening terms and conditions further influenced by the magnitude of the Russia-Ukraine conflict losses.

“We could revise our sector outlook to stable from negative if we believed reinsurers could sustainably earn their COC. This will depend significantly on reinsurance pricing improvement through 2022 and the sector’s discipline and preparedness in managing volatility from natural catastrophes and man-made losses, including the Russia-Ukraine related claims,” S&P said.

Aside from specialty lines, cyber insurance is another type of insurance product most likely to take a hit from the Russia-Ukraine conflict.

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Allianz Global Corporate & Specialty SE (AGCS), the corporate insurance carrier of Allianz Group, has announced the appointment of Vanessa Maxwell as global head of financial lines. Maxwell (pictured above) succeeds Shanil Williams, who was promoted in January to join the AGCS board of management as chief underwriting officer, corporate. In her new role, Maxwell will report to Williams.

Williams served as global head of financial lines for AGCS from 2019 to the end of 2021, and will continue to oversee this line of business on an interim basis until Maxwell joins AGCS. Maxwell will take up her new role in June at the latest, the company said. Both Williams and Maxwell will be based in AGCS’s London office.

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Company veteran Fintan Mullarkey is taking the helm at AXIS Specialty Europe SE (ASE).

Subject to regulatory approval, Mullarkey has been appointed as ASE chief executive after serving as finance head for a decade. The promoted leader was head of finance not only of ASE, but also of AXIS Re SE.

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“We were asked if we could assist in any way,” she said. “Originally, we said ‘right, we can send one van or maybe two’, and we put out the call for aid, both for financial aid and for practical aid – that’s clothes, washing machines, fridge freezers, toiletries, medicines, baby stuff etc. We’ve already received a lot of financial donations, in total about £29,000, and £10,000 of that has already gone to Poland.

“[…] The response was just mind-blowing. The amount of aid and financial contributions we received across the community was unbelievable, as well as the assistance we received in trying to sort it all out and box it up. Everything was boxed up and labelled so that when I got to the refugee sites, it was obvious who everything was for. In the end, we were able to send five vans across and we had two drivers in each. It was a completely cross-community effort, and the generosity of people was phenomenal.”

The open-heartedness displayed by her colleagues across McLarens and the wider sector has been so remarkable that The Joy Foundation is now planning a second trip over the Easter weekend because, even after five vans, there are still enough donations to fill at least two more. It just keeps coming, she said, and the publicity the charity has received has been incredible, allowing it to widen its scope and help so many individuals and families.

It doesn’t end here, she said, and The Joy Foundation is already planning further trips. While the team have worked with two of the camps to date, others require support – and the foundation is being kept up to date with pastors on the ground to determine what aid is required.

“Our second trip is going to be aimed specifically at what they need,” she said. “There’s no point in continuing to take reams of stuff if they don’t need it. One of the requests that has come through is that they need a lot of medicines, even things like throat lozenges etc. They’re asking for more medicinal [aid] and they’ve asked if we can try to get educational products.

“So, we’re trying to get documentation printed in Ukrainian that the kids can use because, obviously, their education is going to suffer while they’re relocated. All these things have to be taken into account and if we can sort it out, we will.”

The Joy Foundation’s JustGiving page is still open, McMillan said, and the financial factor to the aid required by the Ukrainian refugees is a key element of the next wave of support required. This effort isn’t a one-off and, as a result, it requires ongoing assistance. She highlighted the response the charity has received from local transport companies – particularly a company called McBurney Transport which sponsored all its vans and paid for its boat crossing.

“I got to be in the truckers’ lounge which was quite the experience! They were more than generous,” she said. “And it costs a lot of money to get the vans out there if you have to hire them, especially with the price of fuel at the minute. It costs us quite a few thousand to get them there and back again, so we’re hoping that financial contributions will continue because that’s what we’re going to need more of going forward.”

Read more: Russia-Ukraine war: CEO on what’s happening on the ground

When you arrive at the refugee camps, she said, you realise how much aid and support is required – but it’s also an incredibly gratifying experience. She recalled arriving on the first day and the initial wariness of the children gathered there. A friend, who is a child-minder, had the right idea, McMillan said, and brought along a giant bag of sweets and toys – the universal language of children – which quickly went down a treat.

“And the end of it all was that, before we left, it was interpreted to us that the people we were delivering aid to wanted to make us a cup of tea and cake,” she said. “We said ‘yes’ but when we went in we couldn’t believe it, in fact, I was mortified because these ladies had made us a full meal. They made us chicken soup and bread, and meat and potatoes. We were sat there thinking ‘do we eat this?’ And the pastor interpreted that if we didn’t, we would offend them. So, there was us coming to people who have nothing, and they were proud to give us what was essentially their last mouthful. It was very humbling.”

McMillan’s own experience is a testament to how rewarding it is to get involved with charitable works and she encouraged everyone to get involved. You don’t have to have any particular skills or be able to drive to Poland – donations or practical aid are both great ways to get involved.

“It’s a totally cross-community effort,” she said. “We’re a Christian charity but we’re non-denominational and we have people from all walks of life, all denominations. It’s literally just a case of getting stuck in and getting it done, and whatever you can do will be greatly received.”

The Joy Foundation is only one local charity, McMillan said, but there are so many people doing similar things, who have got themselves out of their comfort zone to rise to the occasion.

“It’s wonderful to see it,” she said. “And it just shows you that in a crisis, everybody will respond, whether it’s here, whether it’s in Poland, whether it’s in Ukraine. It doesn’t matter where the demographic is – human nature is good and will respond when required.

“It’s not hard to show kindness to somebody. It’s a tough world that we all live in. I’m at the other end of it. I’m 60 and watching my grandchildren growing up, and hoping that it’s going to be a better world for them. And if I can influence that in any way, that’s all I want to do.”

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Read more: Blue Rock Insurance Brokers opens new office

It’s something of a hallmark of the insurance profession that an off-the-cuff interview can lead to a three-decade plus career. But for Yorke, there is a great deal to enjoy about being an insurance broker, not least the huge variety that the role offers. Getting into the details of a client’s business and what makes them tick has always fascinated him. Whether you’re a people person or a technical geek, a team player, or prefer to fly solo, he said, there’s a position in insurance broking where you can add real value.

“We play a vital role in lubricating the wheels of industry and keeping things moving – I’ve always seen insurance as one of those vital keystones of commerce,” he said. “As a business, there are few better sectors to be involved in. Many of our clients have to go out and find brand new customers every single day. Our business is evergreen – if we look after our clients they’ll stick with us year in, year out.”

Read more: Broking MD offers advice to professionals looking to start their own firm

Looking back at how Blue Rock came to be, Yorke noted that he and his fellow director John McQuaid first met when they both worked at Giles Insurance Brokers. They’d talked about running their own business over the years, he said, and by 2012 he had become a partner of Murphy Insurance in Ayr. When he had the opportunity to buy out the founding partners, McQuaid came on board and they took over the business in 2015 – rebranding as Blue Rock Insurance Brokers in 2018.

“We’ve enjoyed strong organic growth and the business is four times the size it was when we took over,” he added. “Global pandemics aside, it’s been a great journey so far.”

At the core of that impressive growth, is the ethos at the heart of how Blue Rock does business. Yorke highlighted the team’s strong belief that business insurance needs to improve to produce better results for customers. There are far too many clients who have no real idea what they’ve bought, he said, and they completely misunderstand the role of the broker.

“During my career, since the 1980s, contracts of insurance have become longer, more complicated and with many more standard conditions and exclusions,” he said. “However, the broking sales and communication processes haven’t fundamentally changed to keep up.”

Blue Rock is trying to do something better. It’s not pretending that “like-for-like” quotes exist and the cheapest product is the best, he said, rather it is putting the specification first and looking for the best value solution.

“We often joke that we took over a successful business and then changed everything about it but that’s absolutely true,” he said. “As a business, we hold ourselves to an exacting standard and that can be difficult at times. But it’s something we deeply believe in and we’re determined not to compromise on quality.”

The question of what values or characteristics brokers require to be successful largely depends on your definition of success, York said. For Blue Rock it means profitably growing the business while not sacrificing its own standards. Tenacity and integrity are key to the broker’s team, and they don’t ever compromise or lower their standards, but rather state their values clearly and hold themselves accountable to the standards they’ve set.

“Some believe insurance is a commodity and cheapest is best, so our specification-first approach doesn’t appeal to everyone,” he said. “That’s fine, we don’t need to be everything to everyone. But we took the gamble that enough clients would value the way we do things and appreciate the difference, and so far that gamble has paid off.”

Blue Rock has celebrated several milestones in recent months, including the opening of a new office and the appointment of new talent to the team. Looking forward, Yorke highlighted that it has always been the plan of the business to grow beyond its base in Ayr. Acquisitions have been considered in the past, he said, but it can be difficult to bring the quality standards up to where the business would want them without the risk of destroying the financial value of the acquisition.

“We would never say never to the right acquisition but it’s not central to our strategy right now,” he said. “For now, we’re looking at bedding in our new Bellshill office and then looking at additional new branch offices further afield. Getting the right people is getting more and more difficult so, after a pause during the pandemic, we’ve restarted our trainee programme and will be looking at bringing new people into the industry through that route.

“This all presents challenges – but if it was easy, everyone would be doing it!”

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Meanwhile, Milnes is a qualified solicitor joining Arch from W/R/B Underwriting, where she was a claims adjuster specialising in international directors and officers (D&O) and financial institution (FI) insurance claims. She also held claim adjuster roles at AXA, Chubb, and Allianz Global Corporate & Specialty and was a solicitor at Kennedys Law.

In their new roles, Brook and Milnes have joined Arch’s FI claims team – with Brook specialising exclusively in PI claims, and Milnes managing claims across a broad spectrum of areas, including D&O, PI, and investment manager insurance.

A qualified solicitor, Hooda joins Arch from AXIS Capital Group, where she was most recently a senior claims specialist. Previously, she was a senior associate at Davies Group Ltd and a clinical claims manager at the NHS Litigation Authority. In her new role at Arch, Hooda has become a member of the company’s healthcare claims team to manage global claims.

Barbara Rizzi, head of third-party claims at Arch, has welcomed the three new hires to the company’s growing claims team.

“Their significant technical ability and collective experience in the market, both from a claims and legal perspective, undoubtedly strengthen our claims proposition. Their service-focused approach has also enabled us to further enhance our responsiveness to brokers and insureds,” Rizzi continued.

The entrance of Brook, Milnes, and Hooda to the claims team was part of Arch’s appointment spree this month, including the appointment of Linda Daly as its new senior underwriter for executive assurance and the promotion of ceded reinsurance senior vice president Krista Bonneau to chief reinsurance and exposure officer.

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