Insurance news

It has been a year like no other for Insurance Business – and we have you to thank.

Having broken a host of traffic records during the year, the IB team has enjoyed its most successful year to date, both in terms of sponsorship and industry support. For the third time in the last four years, Insurance Business UK scooped the Insurance & Risk Publication of the Year Award at the Willis Towers Watson Media Awards, and, on behalf of the team, we’d like to take this opportunity to thank readers and sponsors alike, and look forward to further raising the bar in 2022.

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Willis Towers Watson (WTW) has launched a new risk and analytics (R&A) model for the trade credit market. 

In a statement, WTW said that the model has been designed as a tool for both newcomers to trade credit insurance as well as seasoned users and analyses clients’ trade receivables to predict potential losses over a range of statistical scenarios.

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Global insurance broker Marsh has strengthened its global aviation practice with the appointment of Rick Howell (pictured) as its new aviation operational risk consulting leader, effective January 02, 2022.

In a statement, Marsh confirmed that Howell, who is based in Hong Kong, will report to Garrett Hanrahan, global head of aviation and space at Marsh Specialty. His responsibilities include advising Marsh Specialty’s aviation clients globally on best practices in operational risk management, safety audits, and governance, as well as in non-technical areas such as culture, people safety, and mental health.

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It’s been revealed that London Bridge Risk PCC (LBR PCC) – the protected cell company whose formation application was sponsored by Lloyd’s as part of the Future at Lloyd’s strategy – is the vehicle through which Nephila Capital funded newly launched Syndicate 2358.

“I am again delighted to see LBR PCC being used to support further ILS (insurance-linked securities) investments at Lloyd’s and to welcome such a prevalent ILS investor as Nephila to the platform,” commented Lloyd’s chief financial officer Burkhard Keese when the insurance marketplace made the announcement.

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Hiscox has appointed Paul Cooper as group chief financial officer, subject to regulatory approval.

The Bermuda-headquartered specialist insurer said that Cooper’s start date will be determined in due course. In October, Hiscox announced that Liz Breeze will take over as interim CFO on Jan. 1, when current CFO Aki Hussain will become CEO to succeed the retiring Bronek Masojada.

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“Our rapid growth is a reflection of our strategic drive to scale the business so that we can provide a really strong regional presence for commercial customers across the UK and across a range of industries,” said Attis director Keith Browne (pictured centre alongside fellow directors Neil Beck and Justin Chadwick).

“We are differentiating ourselves quite clearly from other brokers in the market, as a modern and dynamic business helping directors protect their balance sheets from risk with bespoke insurance cover planned properly by people who actually understand clients’ businesses and the sectors they work in.”

The trio are former employees of Henderson Insurance Broking Group, the independent brokerage sold by Henderson to Aon four years ago for £90 million.

The Attis operations currently span Leeds, Manchester, Halifax, Teesside, Lincolnshire, and Leicestershire. In 2022, the company is looking to set up an office in London, while also eyeing further growth through the organic acquisition route.

“As we continue to recruit, creating quality jobs, in Leeds and across the north and Midlands, we are very much aware that we are aiming to be an employer of choice, creating the best brokerage by attracting and retaining the best people,” added Beck (pictured left).

“We’re really proud of what our team have achieved in our first six months and by investing in people and their careers we hope to make the next six months and beyond even more successful.”

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Willis Towers Watson created the world’s first sovereign debt “catastrophe wrapper” for the transaction. The “catastrophe wrapper” provides insurance protection to cover Belize’s loan repayments after hurricane events. The wrapper strengthens sustainability and resilience to climate shocks, which have previously triggered downgrades in credit rating that have exacerbated economic hardship, WTW said.

“Volcanoes, earthquakes, and hurricanes repeatedly disrupt economic development in the Caribbean region, from households and communities to the sovereign level,” said Dr. Simon Young (pictured above), a senior director at Willis Towers Watson’s Climate and Resilience Hub, who led the design of the catastrophe wrapper. “That disruption leads to higher debt and a longer, more painful path to recovery. The parametric wrapper is a game-changer for the financial resilience of island and coastal nations, and will help to unlock the financing of nature-based solutions in achieving global net-zero and biodiversity targets.”

The transaction was marketed and placed by Willis Towers Watson’s alternative risk transfer team. Munich Re provided the best terms and conditions and was awarded 100% of the placement, which covers the first 31 months of the bond term.

As part of Belize’s debt restructuring program, the country purchased its only international bond with US$364 million of capital arranged by TNC and insured by the International Development Finance Corporation. The commitment enabled Belize to restructure about US$553 million of external commercial debt – an amount that represents 30% of Belize’s GDP – and reduce the national debt by 12%.

The Willis Towers Watson placement can be used as a template for integrated creditors and issuers as global development finance institutions consider integrating climate risks into their mainstream sovereign loan programs, WTW said. The parametric wrapper uses objective criteria to trigger the benefits and pays upfront for relief of debt servicing payments in the event of a disaster.

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“Endsleigh is a brand that needs to grow back into its shoes,” she said. “It’s got some great potential, and it’s very well-known – but to people of a certain age. What interested me is the question of how we can make ourselves relevant to students again while still protecting our commercial and B2B markets in education, where we’re very deep, and also in the charity and not for profit space. We’re a tale of two halves but what we’re increasingly seeing is that customers want the same thing.”

There’s no doubt that students want a more high-tech proposition from insurance services but now even more traditional lines are looking for a high-touch, high-tech approach from their brokers. For instance, she said, Endsleigh recently launched a parent portal to help streamline and digitise the administration of policies in a way that benefits schools and parents alike – and the positive reaction to this has shown that the high-touch element of the traditional broking model must now also embrace market expectations around tech.

Being able to adapt to the future is linked to the foundation of the business, which was founded in 1965 by the National Union of Students (NUS), a student lobbying body and charity, in response to the insurance protection gap. The independent and entrepreneurial spirit that went into creating the business has remained intact throughout its journey, which has seen Endsleigh move through a management buyout, ownership by Zurich Insurance and its acquisition by A-Plan in 2018.

The firm has had a varied history, Meckiffe noted, but its core ethos has remained the same, and NUS has remained stakeholders in the business’s success. The advantage of this is that it means Endsleigh has always stayed close to the market. Now, the next stage in the firm’s journey is to refocus on its core competencies – the student piece, the education piece and the charity piece.

Endsleigh is taking a ‘cradle to graduation’ approach to the education market, she said, servicing nurseries, service schools, independent schools, further education institutions and universities. Its work in the charitable sector is a natural extension of that, as the firm identified the link between individuals prevalent in student unions moving on to work in the charity and not for profit space. The firm has found a real foothold in that market, she said, and has gained a strong reputation which it is utilising to go further and deeper into that market.

The name of the game for Endsleigh now, she said, is “focusing on competencies within a 21st-century context.”

“Endsleigh actually used to have on-campus branches up to about 18 years ago and then a decision was made by former owners to close those branches,” Meckiffe said. “When I came on board I asked how we could make ourselves relevant and available to students, again within a 21st-century context, which has led to the development of our My Endsleigh app. The core proposition of that is around safety, security and wellbeing.”

Read more: Changing perceptions of purpose for the insurance profession

As a result of its relationships with universities, she said, the broker has a very high market share of serving the block hall accommodation providers that many students use. This has allowed enhanced accessibility in the rollout of this app, which students can download to get their insurance needs met. It’s in the interests of accommodation providers to make sure that students know they’re insured because they buy the insurance for them – a B2B2C operation.

“It was prior to my time, but there was a big fire at one of the Bolton block halls and the students didn’t actually know they were insured,” she said. “So we thought, ‘we’ve actually got a duty of care to make sure that students know they’re insured’’. An app seemed like a logical place to be, but it goes well beyond insurance.

“It also has a proposition around a 24/7, 365 wellbeing hotline, which really comes into its own for students at the moment. We had an instance recently at a block hall, where a student was on the brink of suicide. And that’s when insurance comes to life, that’s when you realise why you’re doing your job. [Our app] kicked in there with the initial intervention, but also with ongoing counselling as well.”

Looking to the next steps for this proposition, Meckiffe highlighted that since its launch in August, the app has received well over 100,000 downloads and has seen active utilisation. Its roadmap now is to hit one million. Within the charity space next year,the firm will launch its own product – which is a break in tradition for the business.

“The other area we want to go deep on is commercial insurance in universities,” she said. “We have a very high penetration in block halls, student unions but commercial insurance within universities is a bit like insuring a village because you’ve got science labs, you’ve got meeting halls, gyms and everything else. It’s a complex market, but I just think it’s something that Endsleigh should be competing in and so, we’re going to be looking seriously at that.”

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Participants included the likes of Ageas, Sampo Plc, AXA, Covéa, Allianz, and Generali.

“The capital component of the exercise confirmed that the main vulnerabilities for the sector stem from market shocks, and, specifically, from the decoupling of the risk-free rate and risk premia, the so-called double-hit scenario,” said the regulator.

“In the fixed balance sheet approach, where no management actions against the prescribed shocks could be enforced, the aggregate solvency ratio decreased by 92.1 percentage points to 125.7%, bringing nine undertakings under the regulatory threshold of 100%.”

Meanwhile, it was highlighted that, under the constrained balance sheet approach, results improved when participants were allowed to take reactive management actions. What this means, said EIOPA, is that the insurance industry has tools at its disposal to cope with adverse market and economic effects.

As for the liquidity component of the stress test, it was found that participants’ liquidity position appears to be a less significant concern compared to solvency positions, given large holdings of liquid assets. However, it was pointed out that insurers cannot rely solely on cash holdings to cover unexpected outflows.

“The stress test has shown that European insurers can maintain their financial health even amid harsh economic conditions,” stated EIOPA chair Petra Hielkema. “I’m pleased that at no point did participants report a post-stress asset position in which insurers’ commitments to policyholders would have been jeopardised.

“Below the surface of these positive results, however, is an often-heavy reliance on transitional measures, which are going to be phased out by 2032. In the months to come, we will turn our attention to the vulnerabilities that were brought to light in the exercise. We will also call on legislators to consider disclosures of individual results to become a legal requirement.”

Of the 44 participants, only eight consented to the release of their individual results.

The goal of the stress test was to give supervisors a valuable insight into the capital and liquidity positions of European insurers under a severe but plausible scenario. EIOPA said it also provides a useful basis for a follow-up dialogue between group supervisors and the participants to address vulnerabilities.

“EIOPA and the national competent authorities will analyse the results further to gain a deeper understanding of the risks and vulnerabilities of the sector,” added the advisory body. “EIOPA will also assess the need for issuing recommendations on relevant concerns identified in the exercise.”

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There are a lot of different elements that go into being a great insurance employer. From incentive programmes, to flexible work options, to employee benefits – all of these factors are critical to the wellbeing and satisfaction of the teams that make a business’s success possible. During the last 18 months, a spotlight has been shone on the need for employers to support their people and, across the UK, certain insurance businesses have stepped up to the mark.

These firms have been recognised by Insurance Business UK (IBUK) in this – the second annual Top Insurance Employers report.

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