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The move by Gibraltar’s regulator has been condemned by Edwards as not being in the best interests of policyholders or claimants and he noted that, upon taking advice, MCE strongly believes that the GFSC has acted negligently and in bad faith.

“I have independent witnesses to documented lies from the GFSC,” he said. “I have found myself speechless on a large number of occasions as these aren’t small fabs, they’re material lies that have led to a cessation order which, in turn, has led to the complete restructuring of the business where a high number of jobs have been placed at risk of redundancy. We’re in a consultation period on that now. But it’s not only the people who work for me that are being affected – MCE has a huge value chain… so undoubtedly some business partners of MCE are going through a similar process now.”

Examining the timeline of what has occurred, Edwards stated that MCE had been working on transitioning its portfolio out of Gibraltar into a UK carrier and set up its plans to do so transparently. The GFSC are aware that on the week leading up to 05 November, MCE expected to sign a new capacity provider the following week. The company had a go-live date of either the first of December 2021 or the first of January 2022 – a mere matter of weeks, he said.

The business was undoubtedly solvent, Edwards stated. The capital charges that the GFSC had applied to the business were on top of structures that they had either proposed and/or approved, and resulted in an MCR breach. Under that breach, an organisation has one month to put forward a proposal for remedy and Edwards highlighted that MCE put one forward in a matter of days.

“Now, once you put your proposal in for a remedy of a breach, you then have a period of time to complete that remedy.” he said “We were proposing remedying that with immediate effect – and that is in a written proposal to the GFSC. In addition to that, because of the capital add-ons that were applied to the business, that would have resulted in an SCR breach. MCE put in a robust recovery plan that would have resulted in an SCR surplus based on all the information we had to hand – information calculated by independent actuaries.

“And because it’s actuarially driven, that means the regulators can have complete confidence in the underlying numbers that are being presented… So we feel this is a vendetta against our business and the way we were transitioning out. And we feel the vendetta boiled over because we have genuine, bonafide complaints that are being registered with the GFSC and the finance minister of Gibraltar which detail corruption, coercion, cover-ups and, not for the first time to date, plain lies.”

Edwards asserted that he has senior Gibraltar people on the record confirming that this is common practice and “the culture of Gibraltar”, which he believes to be systemic. Insights have been gathered from senior members of the legal profession in Gibraltar and other professionals from regulated businesses. He has been warned that any complaints against a professional body in Gibraltar will go unresolved due to the structure of the Territory, he said, and he has heard from other firms facing similar challenges.

Read more: Substantial investment sees MCE double the size of tech solutions team

Looking at the next steps MCE will be taking, Edwards said: “The regulator is allowed to act without accountability because they work under this veil of immunity and that enables this culture. However, we feel that the GFSC has acted negligently. Negligence on its own isn’t enough to bring about proceedings but we do fundamentally believe that the regulator has acted in bad faith. We are preparing to file and we’re preparing to file imminently.

“There are certain complications about jurisdiction in Gibraltar and the UK. I’m naturally very apprehensive about bringing any proceedings in Gibraltar because [with this] I’m going right to the heart of Gibraltar – including the regulator and the finance ministry. And then you have to look at the structure of the courts in Gibraltar and who controls those, and who the connected parties are. With everything I’ve learned about Gibraltar in respect of corruption and coercion, I don’t feel there would be a fair platform for our hearing to be heard there. So that’s what we’re currently working on.”

It wasn’t an easy decision to speak out on his experience, Edwards stated, as he knows of other businesses going through similar turmoil who have decided that the risk versus reward of doing so is weighted too heavily towards the former. This is especially significant given how hard it is to find representation from a Gibraltar solicitor, he said – a challenge of which he has first-hand experience. However, his mind was made up by the “disregard” that was shown to MCE, its team, its policyholders and its partners.

“That is the most astonishing thing out of all of this,” he said. “There was absolutely no requirement for MCE-GibCo to have to file for administration. We had a structured and orderly runoff, we had very advanced calls in terms of our new capacity providers. This could have been absolutely seamless from a consumers point of view. That is why I so firmly believe that this is a vendetta and the sequence of events that the GFSC took is designed to scupper capacity negotiations.”

The MCE team is now working tirelessly to restructure the business and ensure that it can continue to provide consistency, continuity and customer-centricity to the market. This transition is happening successfully, Edwards said, and he is incredibly proud of how the team is working through this challenging time. Another positive to have come out of this turmoil has been the reaction of the wider industry, he added, as he had many industry veterans get in touch to discuss similar incidents and show support for him in speaking out.

“People have been incredibly supportive, and doing what they can do to help us transition as opposed to sticking a knife in and twisting it,” he said. “It has been a really warm feeling from individuals and entities alike, which I wasn’t expecting. I don’t know what I was expecting, I hadn’t given it too much thought. But there’s been a real sense of warmth coming out of people which has been wonderful.”

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While research carried out by the data and analytics company GlobalData revealed that the trust placed in insurers by small businesses increased after the business interruption court cases of 2020, the same firm has highlighted that the continued reporting of disputes is likely to upend this trend.

GlobalData believes that ongoing clashes between UK businesses and the insurance industry – such as the one between Greggs and Zurich – will risk reputational damage as insurance companies will be seen to be avoiding paying out claims.

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The men, who were brought to the UK from Hungary, claimed they were owed compensation for damages resulting from being employed in conditions amounting to modern slavery, causing them to suffer psychiatric injuries and one of the claimant’s legs to be amputated.

The judge, however, said that HLB’s failure to disclose the use of trafficked labour and misrepresentation of wage costs gave the insurer a misleading picture of the company’s employment practices.

“MPs have never restricted insurers’ right to ignore a policy for non-disclosure or tried to expand the rights of third parties so that they could bring claims where the policyholder could not,” May wrote.

Read more: Human trafficker who used victims for insurance fraud lands in jail

HLB went into insolvency in 2015. A year later its owner was jailed after authorities found he had employed trafficked labour. The workers sued in 2017 but a High Court rejected their case in 2020.

Lawyers for the claimants argued that the UK government’s goal of compensating victims of human trafficking should influence how the Financial Conduct Authority’s (FCA) rules on who is considered a policyholder, “so vulnerable victims don’t go uncompensated.”

But the insurer’s lawyers countered that FCA’s rules do not give third parties the right to claim compensation, and “there’s no special carve out for human trafficking victims” They added that “insurance would be untenable otherwise, as insurers would ever know the extent of the risk they faced.”

The judge agreed and wrote: “If public policy in relation to trafficked persons demanded that such significant changes be made to the law of insurance then … one would expect to find them in primary legislation.”

She added that existing rules state that the men could only claim what HLB and since the insurer can avoid paying the company’s claims, it was not entitled to pay the men’s claims, either.

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Andrew Stoneman and Geoff Bouchier, managing directors of the restructuring advisory practice at corporate investigations and risk consulting firm Kroll (Gibraltar) Limited, have been appointed as joint administrators of the company.

The Financial Conduct Authority (FCA) has also issued a statement on Monday stating that MCE Insurance operated in the country on a freedom of service basis, allowing UK-based customers to hold policies with the firm. The policies were sold through its Northamptonshire-based broker, MCE Insurance Ltd (MCE UK), which also provides various administration services, including claims management. MCE UK is not under administration, noted Kroll.

The FCA added that MCE Insurance has ceased writing new policies for UK customers on 05 November. Existing insurance policies, however, remain in force and are valid until their renewal dates.

“MCE UK and the joint administrators will liaise with the Financial Services Compensation Scheme (FSCS) in relation to eligible insurance claims and, in due course, other statutory compensation schemes of other countries as appropriate,” Kroll said in a statement. “The joint administrators understand that MCE UK is working closely with an alternative provider with the intention of being able to offer quotations for future insurances to existing customers.”

Read more: MCE Insurance announces Ireland exit – blames Brexit

In a separate statement, the FSCS said that any new policies taken out from MCE Insurance since 05 November have been underwritten by a different provider and were unaffected by the changes.

“We are in the process of identifying how many UK customers are affected by the failure of MCE Insurance Company Limited,” said FSCS chief customer officer Sarah Marin. “We are working closely with the administrators to make sure that all eligible policyholders are protected.”

“FSCS will protect the majority of UK-based customers of MCE Insurance Company Limited who are individuals or small businesses with an annual turnover of less than £1 million,” she added. “We want to reassure MCE Insurance Company Limited customers that their claims will continue to be considered against the terms of their policy and that FSCS will be stepping in to protect eligible customers.”

Julian Edwards, chief executive officer of MCE Insurance, has condemned the GFSC’s move, describing it as “the latest in what appears to be a vendetta against MCE UK-Co and an act to sabotage a successful portfolio transfer.”

“The GFSC has applied Capital Add Ons to Green Realisations No. 123 Ltd. (GR, formally MCE Insurance Company Ltd.), which has in turn led to an orderly and solvent filing for administration,” he said in a statement. “MCE UK business had already made the decision to restructure and transfer our portfolio to a UK insurer, the GFSC had been made aware of this.”

Read more: Analyst on why Sabre-MCE agreement is “an attractive deal”

“We have taken advice and believe the GFSC have acted negligently and in bad faith, which could result in the loss of jobs and potentially the insolvency of GR,” he continued. “The GFSC applied capital add-ons to financial structures that they had previously either proposed and or approved, then subsequently worked with MCE to implement.”

Edwards added that the GFSC’s position “is not in the best interests of policyholders or claimants.”

“Regardless of whether GR agree with the GFSC Capital Add Ons or not, MCE made proposals to immediately meet any shortfall in the MCR and provide a surplus in respect of the SCR,” he said. “These proposals were based on solvency calculations by Aon Global Risks Consulting, Robus Insurance Managers and the GFSC. MCE’s recovery program would have injected £20.5 million into GR. The GFSC have declined these recovery measures, for reasons we cannot understand.”

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Read more: Mosaic Insurance adds a second boss

“Transactional liability is a core focus of our model and growth strategy, and a product line we expect to grow exponentially, in North America and beyond,” commented Mosaic co-CEO Mark Wheeler. “The fast-paced development of our M&A platform, first in the US and now ramping up in London, serves the rising needs of clients in an unprecedented environment.”

To better build out its international transactional liability platform, Mosaic announced that it has hired two more professionals: Sam Whiteman and Andrew Gofton-Salmond, who are both based in London. Whiteman will serve as SVP, head of international transactional liability, while Gofton-Salmond will fill the position of VP, transactional liability manager.

With over a decade of advising on and underwriting M&A transactions, Whiteman joins Mosaic from Liberty Mutual, where he was most recently serving as head of London and emerging markets. As head of international transactional liability, he will manage Mosaic’s transactional liability underwriting outside of North America – with an initial focus on the UK and EMEA (Europe, Middle East, Africa) regions. Whiteman will report to Mosaic global head of transactional liability William Monat.

Gofton-Salmond previously served as a senior underwriter specialising in M&A at AIG, serving the UK, Europe and emerging markets.

“We’re thrilled to welcome Sam and Andrew to join the incredibly talented group of experts we’ve been building over recent months, and the timing couldn’t be better,” said William Monat. “Economic conditions are driving heavy deal volume and value, and insurance coverage has become vital to help buyers and sellers achieve timely closures. To meet that robust demand with specialised underwriting, we plan to add another dozen specialists by the end of next year.”

In addition to establishing a London M&A team, Mosaic has added to its New York M&A team with a series of new hires: Hannah Burnham, SVP; Edward Newton, SVP; Robert Bowne, VP; Brian Howton, VP; Casey Olden, VP; Shannon Westerlind, VP; Matteo Maroun, AVP; Tamar Katamadze, legal analyst; Griffin Genet, analyst; Yuqi Lin, analyst; Justin Wong, analyst; and Vivian Ye, analyst.

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Many of LV=’s 1.2 million members have threatened to vote down the controversial deal after they were offered just £100 in payout in exchange for losing their mutual status.

Under the potential Royal London deal, LV= policyholders would be able to keep their mutual status. If a merger was to push through, however, Royal London could also look to sell the historic LV= brand, The Daily Mail reported on Sunday.

German financial firm Allianz currently holds the license to the brand after it bought LV=’s general insurance business for £1 billion last year.

A merge between the two mutuals would require voting by both LV=’s and Royal London’s combined more than three million members – a process that could take at least 18 months.  

Industry insiders told The Daily Mail that if the Bain acquisition was scrapped, LV= was in danger of running out of attractive options.

“If [LV=] stayed as a friendly society, I think they’d have been worried that there was only one game in town, that they could only merge with Royal London,” an insurance expert told The Daily Mail. “So, they were probably thinking that in order to introduce some competitive tension and get the best value for members, we’re going to have to construct something, [a sale process] where other people will be able to bid as well.”

Read more: LV= lifts the lid on Royal London bid and why it was trumped

Royal London made it to the final stage of the acquisition process offering £540 million. Ultimately, LV= decided to go with Bain’s £530 million bid, which the board said was more attractive because the firm was prepared to acquire the entire business while Royal London’s offer had “higher and less certain” administrative costs.

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“But complementing that consolidation is also collaboration,” he said. “So a big part of what we’re seeing on a regulatory basis means consolidation but also collaboration in the sense that it’s really important, now more so than ever, that we work with what would normally be considered our adversaries in the insurance sector. We don’t see them like that at all, we see them as friends, not foes and we want to work closely with them.

“Because, if you look at it from our clients’ perspective, what our clients want – certainly in a low value, high volume space, but really across the PI space – they want a quick and right resolution of their claims as nobody wants to go through a drawn-out process when they’ve had an accident and suffered an injury.”

Read more: Slater and Gordon launches digital solution for minor injury claims

In the interests of accommodating this client expectation, Slater & Gordon is working closely with insurers and other stakeholders to find ways in which the entire insurance ecosystem can work together and take a more collaborative approach to the resolution of claims. If these can be concluded quicker, Jarvis said, it will help reduce the inefficiencies all along the process that comes with resolving personal injury claims, therefore, minimising costs on all sides.

Technology is at the heart of driving such efficiencies, and Jarvis highlighted that, as a law firm, Slater & Gordon has committed itself to seeking out and implementing the innovations needed to meet changing consumer expectations. Artificial intelligence and machine learning are two of the key buzzwords in this space right now, he said, and many other service sectors and industries are committing themselves to using these tools to change the way they work.

The legal sector has been a bit behind the curve on this and is still very much a work in progress but that process has begun and, for Slater & Gordon, it has already made significant headway. The key, Jarvis said, is that the firm knows how important it is for the industry generally not to rest on its laurels but rather to always be looking for the next opportunity for innovation and collaboration.

Read more: Reassessing LEI five months on from the Civil Liability Act

“You’ve certainly got the more progressive thinkers in the market at the moment,” he said, “the ones who can actually see that we’ve got to all change the way that we do things and the way that we work. This an ecosystem that is made up of many parts – whether that’s the provision of the medical evidence to support a claim, or the credit hire repair piece, or the rehabilitation piece, or any of the other component parts of this ecosystem – they’re all very much intertwined with each other and dependent on each other, and the clients are the ones at the centre of that.

“And, therefore, if you’re creating an environment whereby everyone in that ecosystem is committed to achieving the right outcome, and getting to that outcome as quickly as possible, then that has to be in the best interests of everyone within [the sector].”

Historically, Jarvis noted, there have been a lot of games being played and a lot of different business models being utilised across this space – whether that’s on the insurer side or the legal side – but he and his wider team believe the time is right to cut through that. There are a lot of other, external factors, at play right now, both within the courts and on the regulatory side, he said, so the time is right for everybody to pull together in the common interests of all stakeholders.

The firm has been doing this for a number of years at a lower level, in terms of having meetings with insurers to discuss claims and other surrounding issues, Jarvis said. But the conversation now goes beyond that, it’s about taking these discussions to a new level and exploring how the wider sector can work together to embed new processes, to create trust and to find new opportunities to help evolve this market and bring it into the future.

“The resolution of a claim is is what the client wants, it is what we want as lawyers, it is what the insurers want, it’s what everybody wants,” he said. “Because, from a business perspective, as well as from the clients’ perspective, it’s what is best for everyone. That’s where we’re coming from and we are seeing traction in that. And a lot more are coming to us to have these discussions, which is great.”

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Aside from Lloyd’s, Beale’s credentials also include roles at Canopius, Zurich, Converium, GE Insurance Solutions, and Prudential. A retired senior executive, Hammond’s experience spans years spent at Lockton, Jardine Lloyd Thompson, and Marsh.

Swanback, an Accenture alum, is currently product and platform president at Western Union. As for Chima, she’s a seasoned chief information officer presently connected to Boeing Employees’ Credit Union.

“We welcome the appointment of Ms Beale, Ms Chima, Mr Hammond, and Ms Swanback to the board,” said Mark Wills, portfolio manager at Elliott Investment Management L.P., which is one of WTW’s biggest investors. “We believe these four outstanding independent directors have the right combination of skills and experience to support the company’s efforts to drive superior shareholder returns.

“The company’s focus now turns to successful execution, and Elliot looks forward to continuing our constructive engagement with Willis Towers Watson and to supporting the board as well as Carl [Hess] and the management team in the coming months as they implement the company’s strategic plan.”

Read more: Willis Towers Watson picks chief executive’s successor

Meanwhile, board chair Victor Ganzi – who thinks the new arrivals will add “a deep and broad base of knowledge and a wide diversity of experience and skills” to the board – has decided not to stand for re-election. His term runs until the 2022 annual meeting of shareholders.

“We look forward to continuing to engage with Elliott and our other shareholders as we continue the process of refreshing the Willis Towers Watson board and moving forward with our strategic plan to enhance the value of the company for the benefit of shareholders,” stated Ganzi.

WTW had been engaging in what was described as a “thorough” multi-year succession planning process prior to announcing the now-terminated deal with Aon. Further changes to the board next year will see the roster trimmed to nine by the time of the annual meeting.

“We are very excited about our strategic plan and the value that we think that it will deliver to Willis Towers Watson shareholders,” commented outgoing chief John Haley. “We very much appreciate the support of Elliott and all of our investors.

“As I near my retirement, I look forward to working with Carl, the management team, and the refreshed board to continue the transition and best position the company for continued value creation.”

Hess, who became president in August, is taking over from Haley as CEO in the New Year. The new boss will join the board then. In connection with the transition, an operational transformation committee within the board will be set up. Initial members will include Beale, Hammond, Swanback, and existing director Paul Thomas.    

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Risk	2021	2020
Economic concerns	37%	26%
Shortage of skilled workforce	28%	17%
Loss of reputation and brand value	26%	29%
Impacts of Brexit	25%	N/A
Public health events	24%	46%
Business interruption including supply chains	24%	32%
Changes in legislation and regulations	22%	35%
Cybersecurity and cyber incidents	20%	27%
Market developments	17%	16%
Mental health and well-being	16%	19%
New and changing technology	16%	16%

Not included above is climate change, with only 8% of respondents citing it as among the biggest risks they face. Of those who did, however, 67% think it’s an urgent and worrying risk.

“Aviva’s Risk Insights Report captures British businesses as they emerge from the pandemic, eager to grow, but still clearly constrained by a host of pressing and interconnected risks,” said UK & Ireland general insurance chief executive Adam Winslow.

“While some risks are not wholly in our control, there is much we can do to mitigate them. Concerns about the economy, the workforce, and the trading environment cannot be seen in isolation, and the risk they pose can be reduced through foresight, careful planning, and active management. How a business charts its course through these risks will have a direct impact on its reputation with both customers and employees.”

In terms of economic concerns, for instance, those polled are more confident about their organisations’ prospects than the wider economy.

“Now is the time for businesses to double-down on their risk management and business continuity planning to prepare for a wide range of potential stresses and risks,” added Winslow.

“Business continuity plans should be regularly tested. And risk management strategies should – if not already – be at the centre of an organisation’s planning and strategy so that they can best prepare and protect themselves from a range of extreme and high-risk events.”

For the Aviva-commissioned report, YouGov interviewed 1,251 senior business leaders from small, mid-market, and corporate companies across the UK from a variety of industries.

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Among the trends shaping insurance markets are climate change and digitalisation. Rapid decarbonisation is becoming more and more important, and societies’ approach to transitioning to a green economy will determine their economic outlook, Swiss Re Institute said. The insurance industry can support that transition, both by absorbing disaster losses and by promoting sustainable infrastructure investments.

Adopting digital technologies is playing an important role in increasing global productivity growth, and the pandemic has increased customers’ receptiveness to interacting with insurers digitally, the study found.

Another significant trend is the growing divergence of countries’ growth and socioeconomic indicators like inequality – a potential downside risk, Swiss Re Institute said.

“The economic recovery we are experiencing is cyclical and not structural, with macroeconomic resilience weaker today than before the COVID-19 crisis. As such, we should be anything but complacent,” said Jerome Haegeli, Swiss Re group chief economist. “Given its capacity and expertise to absorb risks, the insurance industry is crucial in making societies and economies more resilient. Yet for inclusive and sustainable growth, everyone must be on board. Green growth is sustainable only if it is also inclusive. We have a unique opportunity to build a better market system. For this, all stakeholders will need to accept and internalise the costs of climate change, and policymakers to take into account the distributional effects of their economic policies across their populations. This will help to create the transition we need for a sustainable path to a net-zero economy by 2050.”

The study predicted that global GDP growth would be strong in 2021 at 5.6%, slowing to 4.1% in 2022 and 3% in 2023. Inflation is the main near-term macro risk, spurred by the energy crisis and prolonged supply-side issues, Swiss Re Institute said. The price pressure is expected to be greatest in emerging markets and in the UK and US.

Insurance industry resilience

Swiss Re Institute predicted that global non-life premiums will grow by 3.3% in 2021, 3.7% in 2022 and 3.3% in 2023. Property-catastrophe rates are predicted to improve in 2022 after a year of above-average losses. Casualty rates will likely also be stronger in 2022 due to ongoing social inflation, while personal lines could benefit from early signs of improving motor pricing in the US and Europe, the study found. Global health and medical insurance premiums are expected to rise, driven by the growth in the US economy and stable advanced market demand. Expansion in emerging markets is also expected to be strong, with China predicted to grow by 10% in each of the next two years, Swiss Re Institute said.

Global life premiums are projected to rise by 3.5% in 2021, 2.9% in 2022 and 2.7% in 2023. Protection-type products are expected to see strong demand, driven by higher risk awareness, a recovery in group business and increased digital interaction.

Rising risk awareness is spurring demand for more insurance protection, the study found. The pandemic shock has highlighted the role insurance plays as a risk absorber during times of crisis by providing financial relief to individuals, businesses and governments. However, supply-chain disruptions show that better protection is still needed, Swiss Re Institute said.

“Market conditions suggest that positive pricing momentum will continue across all lines and regions,” Haegeli said. “Inflation-driven higher claims development in all lines of business, continued social inflation in the US and persistently low interest rates will be the main factors for market hardening.”

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