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Given the very close and collaborative relationship between the US and UK insurance markets, APCIA’s head of international and counsel Steve Simchak said the association was “excited” and “encouraged” by the UK government’s inquiry into the market’s global competitiveness.

APCIA’s submission to the House of Lords select committee urges the UK Prudential Regulation Authority (PRA) to rely on the group risk management systems at the corporate level of US insurers and reinsurers, rather than requiring a separate risk management plan for each UK subgroup of those organisations.

“The relationship between the US and the UK insurance markets is the closest in the world,” said Simchak. “This is an issue that affects a lot of US insurers and reinsurers – how their subsidiaries in the UK are treated relative to their parent company headquartered in the US.”

Read next: PRA’s Sam Woods: “A changing world requires a tough but flexible regulatory regime”

Specifically, the APCIA has recommended that the PRA utilise the Own Risk and Solvency Assessment (ORSA) of the group at the parent level, rather than requiring additional ORSAs for each legal entity in the UK.

The association believes that would be a more effective use of regulators’ resources, and it would reduce the burden of regulation for US companies doing business in the UK, while maintaining the strong prudential outcomes that the PRA requires.

Since 2018, there has been a bilateral “covered agreement” between the US and the UK, in which both governments recognise the appropriateness of group supervision for large international insurers and reinsurers.

Global ORSAs are developed with the oversight of global supervisory colleges, and the PRA has been an active participant in those supervisory colleges for US insurers and reinsurers with operations in the UK. This means the PRA already has access to most (if not all) of the information it requires through the global supervisory colleges.

“The covered agreement represents a high level of confidence in the group supervision that’s been done in each other’s markets,” Simchak told Insurance Business. “It indicates that the UK authorities have a high level of confidence in US group supervision, and that the US authorities have a high level of confidence in the UK group supervision. So, there’s already a foundation there to build upon, and I think that [our submission] builds on the strong commitments that the US and UK have already made to each other in the ‘covered agreement’.

“The covered agreement also requires a very comprehensive level of information sharing, and also dialogue and discussion between UK authorities and US authorities, in addition to the other bilateral dialogues that occur between US and UK authorities. So, we’ve got this great foundation of cooperation and information sharing that already exists between the US and the UK. It seems to us that this is just a natural extension of that really solid foundation that already exists between the authorities.”

Read more: ABI chair on Solvency II: “Our ambition is for sensible reforms”

APCIA’s suggestion for the PRA to rely on the group risk management systems at the corporate level rather than requiring a separate risk management plan for each UK subsidiary would not require an amendment to the covered agreement.

“What we’re recommending is not inconsistent or violative of the covered agreement,” Simchak stressed. “In fact, I think that what we’re suggesting is very much in keeping with the spirit of the covered agreement, and in keeping with that strong foundation between the US and the UK.

“We haven’t suggested that there be a formal agreement between the US and the UK to implement the use of the global ORSAs. But in response to the interest from the UK government, we think this is something that the PRA can do unilaterally, consistent with the goal of the UK government to be more competitive post-Brexit.”

The US, under the leadership of the National Association of Insurance Commissioners (NAIC), recently developed a coordinate national standard for group capital and group supervision.

The NAIC Risk Management and Own Risk and Solvency Assessment Model Act, which went into effect on January 1, 2015, allows companies to meet the US ORSA requirement with their global ORSA, as long as the global ORSA represents the same information that the US regulator would require.

“This has already been done in the US,” Simchak commented. “I‘m not sure that we need a formal bilateral agreement to bring this about – though if the PRA wanted to, certainly we wouldn’t object. I think the PRA could do this on their own.

“We believe this is a straightforward, relatively easy way to improve the competitiveness of the UK market. Our impression was that was what the select committee was going for. They’re not necessarily looking for proposals to totally overhaul the regulatory system. They’re looking for concrete, straightforward ways to improve the competitiveness of the UK insurance market, and we think this fits the bill.”

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“Twenty (20) years ago we started the business in Altrincham, in quite a dingy little premises on the high street,” he said. “But it served a purpose, it was the foundation for us as we are today and it has been a really interesting journey as the principles that we had back then are still true now. That’s the way we attract clients and the way we want to do business with people. And it extends through to the insurers we’re prepared to transact with – those with a decent reputation and a good financial standing.”

PHP’s exacting standards have served the broker very well, he said, as it has not suffered from the inevitable demise of insurers that occurs over the course of decades in business. As an independent broker, the firm operates on the delineating proposition of ‘fine margins’, a terminology often used by elite sportspeople. Fine margins are about identifying how the attention to detail a broker pays their client can make a huge difference in whether or not a claim gets paid correctly or at all.

“I don’t think clients always appreciate that until you take the time to explain how this industry works,” he said. “[Insurance] shouldn’t be commoditised to its lowest common denominator, which is what’s happening in personal lines and is creeping into the micro-SME space.”

Being able to showcase the value proposition of having a broker on your side comes back to PHP’s focus on selecting the right kind of clients. Shawcross noted a recent example wherein he spoke with a referred prospect who realised that he was overpaying to the tune of some £27,000. It’s not often you get to say that to someone, he said, but what was interesting was that the referred contact had a good interpersonal relationship with his former broker. 

While its approach to doing business has never changed for PHP, in recent days the broker has proved that it is willing to undergo a transformation journey when it comes to its aesthetics. The time was right for the rebrand, he said, as it followed on from the firm’s acquisition of Bradshaw Bennett in November 2019 – and offered the opportunity to support all its clients under one cohesive banner.

Read more: FOCUS marks rebrand under new parent

“We might have changed it a little bit sooner but the old COVID chestnut got in the way,” he said. “So, we thought we’d put it off to the eve of being 20 years old. Now we’ve got that message that [we’re] one brand, we’ve been here 20 years, these are our values. We want to build on that to attract new targets, new acquisitions and potential prospects. Now we’re in the phase of wanting to kiss some frogs and see who turns into a princess.”

Organic growth and acquisitive growth are equally on the agenda for PHP. The broking business has a “list of suspects” that it will look to convert into a list of prospects over time. Acquisitive growth is a numbers game in that regard, Shawcross said, as it’s about measuring whether or not each of those prospective vendors represents a meeting of minds and whether it’s the right fit for both sides of the equation.

It’s a seller’s market and there’s a lot of capital flowing right now, he said, and PHP is not looking to compete simply on a top-drawer consideration but rather with those businesses who are thinking in a considerate and measured way about the next step they want to take. Of course, the financial consideration is important to sellers who want to see the fruits of their labours, but Shawcross believes the wider market needs to think more carefully about some of the multiples that are being discussed and understand how they translate into short-term value.

“It seems to me it’s just arbitrage,” he said. “You’ve got private equity companies and venture capitalists who are basically playing the arbitrage game, which is fine and we’ll leave them to that. But we’re giving broker principals, teams of people, teams of account executives, and ARs who don’t want to be ARs anymore, the opportunity to fit into a positive culture and do things the right way.

“[We’re offering them the chance] to look after their clients, to look after themselves. If they want to develop, they’re in the right place as we’ve got the [structures] in place to look after them and develop them. Certain broker principals, and account handlers, etc. will want to buy into that and not just look at those multiples.”

Offering a safe pair of hands to prospective vendors is a valuable proposition, he said, and PHP has got the infrastructure and market credence required to onboard an incoming team and its clients in a calculated and steady manner. It’s a safer bet to ensure that retained clients and staff alike are happy in their new home than trying to pass that consideration along to a consolidator who may want to close the office or get rid of the workforce, or move systems going forward.

“That may damage years of goodwill that has been generated with the client base and the internal team,” he said. “I think we give people an option that’s a little bit more considered, and less about the money and more about the value and the long term returns and what’s important to them.”

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Independent insurance broker Blue Rock Insurance Brokers has announced that it is expanding its operations into Bellshill with a new office.

Headquartered in Ayrshire, Blue Rock Insurance Brokers said that it made the strategic decision to expand into Bellshill in order to continue to serve its growing client base in the Lanarkshire area.

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The focus on available schemes calls for an examination of the experience of the individuals who take up these opportunities. Ellie Jones (pictured), senior account handler at Hazelton Mountford, has become an ambassador for the cause.

Discussing her broking trajectory to date, Jones noted that she first found her way into insurance essentially by chance. She was introduced to the Worcester-headquartered firm via its associated referencing company for an IT apprenticeship that she was looking at. After having a meeting with the MD, she said, it emerged that an IT apprentice wasn’t something they needed but the team liked her and enquired if an insurance apprenticeship would be of interest instead.

“I was 16, not long out of school, with no idea what I wanted to do and I was given a chance by Hazelton Mountford – something most kids crave,” she said. “I spent some time looking into the industry to make sure it was for me before accepting, but looking back now it was the best decision I ever made.”

Read more: Hazelton Mountford reveals acquisition

Jones started as an apprentice in the let property department, dealing with residential property and tenants’ contents insurance, and it was in that department that she completed her apprenticeship and passed her IF1 module. She then went on to obtain her certification and worked in let property for two years as an account handler.

“After [this], I was promoted to a junior commercial account handler and claims handler,” she said. “I worked this split role for 12 months, then moved full time into a commercial account handler role, becoming a senior once I obtained my diploma. The initial move from let prop to a commercial/claims role was a big milestone as I needed to improve my technical knowledge significantly, along with assisting my exec (now branch director) in starting up the new branch in Evesham as this was a big responsibility to take on.”

Examining what it is that has held her interest in insurance broking, Jones highlighted how much she enjoys the variety that her role offers her working day. From haulage to equine, she said, you’re always doing something different. What she likes the most, however, is working for her clients, getting to know them and coming to understand how different industries work while also being their voice with insurers and fighting their corner.

Looking back at how she made her start in insurance, Jones said she would thoroughly recommend insurance apprenticeships to anyone.

“My dad did one when he was young and recommended me to go down that route,” she said. “It’s an achievable way of getting into a career without having to go to university/college – starting from the bottom and working your way up and consistently earning a wage while you learn and grow. By the time my friends were leaving university, I had a career and was earning a good wage. And did you know that the diploma is equivalent to a degree qualification?”

There’s a gulf that exists between a business that offers a great apprenticeship opportunity and one that offers a substandard programme, and, for Jones, the key differentiator is the commitment displayed by a business. It depends on the responsibility a company is willing to give you, she said, and their commitment to your continued development. A great apprenticeship is one where a company makes it clear that, should your time with them be a success, then you’ll be taken on permanently. Knowing that you’re working towards a career and not just finishing the apprenticeship is key.

“For me personally,” she said, “it was also really encouraging to see the level of trust and responsibility from the directors grow throughout the apprenticeship and to be given the chance to prove yourself with how well you’ve progressed and how much you’ve learnt and not to be treated as a child incapable of doing anything a little complex.”

For other young people looking to make the most out of their apprenticeship, Jones has some crucial advice. Perseverance and communication are critical, she said. Apprentices should try not to be too daunted by how much they have to learn or how far away they seem from being in the role that they want. They also need to work hard and not be afraid to do so, to be willing to go the extra mile in order to succeed, and to not be afraid to ask for help if they’re struggling.

“A company isn’t always going to know when you need help, they’re not mind readers,” she said. “So make sure you find a way to communicate your feelings with managers/directors – a company would rather you speak up and ask rather than say nothing and mistakes be made.”

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In November 2020, the reinsurance giant Swiss Re forecast a 2021 turnaround and its expectations have proven to be correct. The group, which today joined the ranks of its peers and announced its full-year results for 2021 has revealed a spike in net income, which rose to a profit of US$1.43 billion after a net loss of US$878 million in 2020. Meanwhile, GWP for the reinsurer rose 9% to US$46.66 billion from US$42.95 billion in 2020, and 2021 saw the group report a return on equity of 5.7% and a combined ratio of 94.7%.

Across its property and casualty reinsurance (P&C re) arm, Swiss Re reported a net income attributable to shareholders of US$2.097 billion, up from a loss of US$247 million in 2020. GWP for the segment rose 8% to US$23.246 billion while its combined ratio dropped to 97.1% from 109% in 2020. The reinsurer credited the results to the improved quality of the portfolio and rates increases, in addition to favourable investment results.

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Charlie Nunn, chief executive of Lloyds Banking Group, now has his feet firmly under the desk in what is one of Britain’s most high-profile roles.

Having joined last summer and focusing on simply steering the banking giant through the COVID-19 pandemic, Nunn has now outlined its long-term strategy – with insurance a key focal point.

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Life insurers in both the UK and EMEA regions are “under significant pressure” from regulators and management to improve their financial reporting, so many have made automation technology their key priority – a new survey from WTW has found.

Over 90% of the life insurer survey respondents to WTW’s EMEA-wide Life Financial Modelling Survey said that the application of automation technology – which includes business process automation, elastic cloud computing and Software as a Service (SaaS) – is a key priority of theirs to address the demand for reporting speed and efficiency.

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Unsurprisingly, LMHC’s revenue increased during both periods, with the Q4 revenue totalling US$12,221 million (up 3.6% from US$11,796 million during the same period in 2020) and FY21 revenue totalling US$48,200 million (up 10.1% from US$43,796 million in 2020).

David H. Long, Liberty Mutual chairman and CEO, said the insurer’s excellent financial performance during the last quarter and the whole of 2021 was driven by the exceptional returns over the past year in its partnerships, LLC, and other equity method investment portfolio, which produced US$916 million of pre-tax income in the quarter.

“We also continued to make progress in the quarter against our objectives of profitable growth in global retail markets, profit improvement in global risk solutions, and expense management, with net written premium growth in GRM of 8.5%, core combined ratio improvement in GRS of 2.6 points to 91.3%, and a 0.6-point decrease in the group’s expense ratio to 29.6%,” Long continued.

Looking ahead to 2022 and beyond, Long said Liberty Mutual will continue to focus on its objectives of profitable growth and build upon its progress to date.

As part of its plans this year, Liberty Global Transaction Solutions (GTS), part of Liberty Mutual Insurance, will retain its underwriting capacity of US$200 million per risk for transactional risk protection for all product lines: warranty and indemnity/representations and warranties, tax liability, and contingent legal risk.

“Our appetite for this risk class remains as strong as ever in 2022,” Liberty GTS president Rowan Bamford said in a recent statement. “Our consistent capacity will allow us to support our clients in what is likely to be a bumper year for the M&A market, following the surge in demand for M&A insurance we saw in 2021.”

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Dublin-based Marine & General was established in 1972 to provide bespoke solutions to individuals and businesses through a varied offering of general insurance, financial services, and life and pension products. It has remained true to its founding principle of the client being central to every company-made decision.

“Marine & General Insurances DAC has built up an enviable reputation over the years as a broker providing exemplary service and striving to put their clients’ interests at the heart of everything they do,” said Aston Lark Ireland chief executive officer Robert Kennedy. “[T]here is an excellent cultural fit between our businesses, and I’m delighted to welcome them into the Aston Lark family.

“We are keen to continue growing and acquiring like-minded brokers in Ireland as we look to deliver on our ambition to become Ireland’s leading independent insurance broker.”

Director at Marine & General, Colm Tyndall added that he had never entertained changing the successful business model of Marine & General since he joined them in 1982. “However, after chatting with Robert Kennedy, it became very apparent that our shared values and principles, particularly regarding staff and clients, were closely aligned, allowing for a perfect fit for the future growth of our business,” Tyndall said.

Co-director Gavin Kennedy added: “With the ever-changing insurance market in recent years, it became very apparent if I wanted to secure the future for our clients and staff, the opportunity to join Aston Lark could not be missed.

“This will afford us access to markets and expertise we never previously had in our arsenal, giving us an opportunity for future expansion and opportunities for staff and clients alike.”

Aston Lark Ireland previously acquired North County Brokers, O’Loughlin Insurance, McMahon Galvin, Brady Burns & Associates, Principal Insurance Ireland, Abbey Murphy Insurance, and Brassington Insurance.

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Read more: Chaucer, Moody’s join up for ESG scorecard

“We fundamentally believe that insurance is providing societal good,” he said. “I think it gets a bad press at times, but we are there as a force of good, we’re here to step in when things go wrong and to help. And the way we can influence and make a difference is to help incentivise our counterparties to move forward and help the transition [towards sustainability]. And there are other players in the market who have similar views to us, so I think there’s definitely a migration towards that way of thinking.”

Tighe highlighted that Chaucer’s recent collaboration with Moody’s was an organic extension of the strong relationship that already exists between the firms across multiple aspects of the group. In early conversations about Chaucer’s ESG journey, it was realised that the big challenge the market faces is getting reliable data from counterparties in order to accurately assess ESG risk.

“We identified you’d have to go to 10 to 15 different providers to get the different type of metrics you need to really understand the ESG profile of your counterparties,” he said. “When talking to Moody’s it became clear they have an extremely large database of information on a lot of companies.”

In addition to the wealth of data that Moody’s can provide across all these companies, it became clear from Tighe’s conversations that the risk management firm is committed to ESG and had an ethos heavily aligned with Chaucer’s. That ensured both parties were clear in their vision for what they wanted to achieve, he said, and underlining that is the ambition for real change.

“We want to help the whole transition,” he said. “We want to work with partners, we don’t want to walk away. We don’t believe in walking away from partners because we believe real change can be driven by us helping the people we work with moving towards a more sustainable future. We want to enable that and help that, and the way to do that is to use this scorecard to identify gaps, to bring those to our [partners’] attention and to help them on that journey.”

While accepting that there are certain things Chaucer just can’t do, he said, the group is determined to provide its insight and expertise across the entirety of the ESG spectrum – not limiting its remit to the ‘E’ of this concern that garners so much attention. The firm wants to help companies become more sustainable as it believes that those companies will be around for a lot longer.

This view was shared by Moody’s, he said, and so the scorecard has been applied across the entirety of the group. Chaucer wants to apply the scorecard on every single counterparty it’s working with, across both its underwriting operations and its investment portfolio. Looking at the wider market, Tighe said, there’s a maturity curve among which businesses are ready for this and which are more hesitant to embrace what it means.

However, he said, the demand for such tools is clearly there and growing all the time.

Read more: Chaucer introduces dedicated renewable power team

“We get a lot of questions from our brokers and reinsurers on this,” he said. “The market is definitely moving that way, and our customers are expecting this from us now. It’s going to be part of the criteria of how an insurer chooses who they place their business with now and who they decide to go with.”

In addition to how ESG is rapidly becoming a deciding factor in how insurers choose their partners going forward, having the right sustainability emphasis will also prove integral in the war for great talent going forward, Tighe said. So, it’s integral to how a business evolves and grows, which is why it’s so important that everyone across an organisation is brought into the process – from the top down.

Chaucer has been very lucky in that it has had buy-in from the very top from day one, he said, as CEO John Fowle is the sponsor of this project and has really driven it forward. The entire C-suite has thrown its weight behind the move and is fully embedded in the ESG process, which he believes is critical to the success of such an endeavour.

“Collaboration is an absolute necessity in managing ESG risk,” he said. “Our opinion is that insurance companies can’t rely on a third-party view of ESG risk. We need to have our own opinion of risk and to do that we need to collaborate with the right partners and access the information and data to make these decisions and to move forward.

“You’ve got strength in numbers, so by collaborating with a company like Moody’s we are creating something that we know has the right fundamentals behind it, and the scale that we think will be a game-changer for the insurance market, and we think will be a positive force to move the transition forward. Because our entire goal with this is to help with the transition and to push it forward – and to do that we need to partner and to collaborate as a market.”

Read more: Chaucer names insurance head

Tighe and his team would love to see the scorecard become the tool of choice and to promote further collaboration across the insurance market. He hopes that the rest of the market will take up this mantle and look to build their own balanced scorecard in a bid to continue to move the transition to sustainability forward. The beauty of this tool, he said, is that it is truly flexible and will continue to evolve and grow in anticipation of the requirements of the wider market.

“I don’t want it to be reactive, I’ve always wanted it to be proactive and, while at times we will have to be reactive, it has been developed with innate flexibility built into it,” he said. “It has been a real labour of love for me, and something I’ve put a lot of time into. I’m delighted the Chaucer team have bought into it as well and put so much time into it. It’s great that it has been recognised and taken up…

“Now we just need to keep pushing forward, I don’t want to stand still. This has never been about ‘one and done’ – that’s not it, it’s not how ESG works. We’ve got it done, but now we’re going to move forward and keep pushing the envelope further. Because as soon as you stand still you fall behind, and that’s not our aim on this.”

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