Insurance news

A series of “targeted” amendments to the existing insolvency arrangements for insurers is being proposed by the UK government in hopes of enabling authorities to better manage insurer distress.

“These amendments include clarifications and enhancements to the court’s existing power, under section 377 of the Financial Services and Markets Act 2000 (FSMA), to order a reduction of the value of an insurer’s contracts (write-down),” said HM Treasury in a release when its 66-page consultation document was published.

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International General Insurance Holdings (IGI) has announced the appointment of Emily Clapham as senior underwriter for its recently launched contingency line of business.

Clapham has extensive experience in contingency underwriting. Prior to joining IGI, she served as a contingency underwriter in Fidelis’s London office. She has also served as a contingency underwriter for Beazley.

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One such question touched on how the COVID-19 crisis has changed the expectations of insurance customers and whether the value of insurance brokers has been demonstrated during the pandemic. In response, Ian Donaldson (pictured bottom, right), CEO of Atlanta Group, noted that there are increased expectations around brokers being more flexible and more available. This means being there for customer according to their timeframe and not just within the standard nine to five office hours, he said, because that nine to five day has shifted across many industries. Donaldson’s main focus, therefore, is on making sure that his team is there to offer the right advice and to be clear and transparent at all times, via any accessible channel, be that telephony or digital.

“I think our investment in digital and data has made us very accessible at a time of real need,” said A-Plan CEO, Carl Shuker (pictured bottom left). “Our average call answering time never dropped below 20 seconds which meant we were accessible in ways that consumers didn’t expect. I’m just delighted with the way our teams have responded. And as Ian said, we’re building proper relationships with our clients and treating them like humans, rather than just policies. And that is good for us, and for our colleagues, and for the business.”

Adding to the discussion, Phil Barton (pictured top, right), CEO of Partners&, stated that the pandemic had emphasised the role of the broker as the conduit between the insurance contract and the client. It had highlighted the need for brokers to work harder to enable clients to understand what they’re actually buying, he said, and this advice piece is the key part of any discussion about the future of insurance broking.

Read more: CII appoints Aon UK CEO as president

The broking model is inherently unique, added Julie Page (pictured top, centre), CEO of Aon UK, as the level of engagement that brokers have with clients is much longer and greater than other elements of the insurance ecosystem. Brokers occupy the space where advice and understanding must flow through both ways, she said, and if there’s one thing COVID has shown it is that words really matter.

“The words in policy wordings have been the conversation of the last 12 months,” she said, “and I think many, particularly smaller ones, who buy without that engagement, are getting confused at just the name of the product, let alone the words that sit behind it. So, we have a very meaningful role in making sure that our clients know what they’re getting and why they’re getting it.”

Read more: Atlanta Group reveals acquisition of Marmalade

Mistry also raised a question on the minds of individuals across the entire spectrum of insurance services – is the hard market warranted now that insurers have repaired their balance sheets? Donaldson addressed this first, highlighting that it’s not a case of ‘all or nothing’ but, rather than this, change is warranted in some markets but not in others. Different insurers have different approaches, he said, with some enjoying good ratios in this period in the motor segment while taking a hard hit in other areas like property.

“Those with these varying books of business are challenged,” he said, “while with an overall motor book, not so much. But I think a hardening market is not a bad thing overall, anyway, given where we’ve been pre-pandemic.”

Corrections that have occurred in the market have been deep, Page said, and it has been difficult for clients to deal with, but there’s no denying the need for some degree of correction. She noted that the degree of the correction needed is variable, however, and emphasised that it depends largely on the product and the market in question.

“But we have a very, very competitive marketplace,” she said. “So you can be sure that at the point at which the market feels it can start to bring it back down again, it will do so. I just think there has been a ‘peak issue’ that been difficult to manage with clients.”

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Read more: “We will have work to do to prove why insurance is still relevant and important”

“Brokers now have to deal with the fact that, across most lines, even simple renewals are more challenging because capacity is being reduced and rates are hardening,” she said. “So brokers haven’t got much time for a nice chat, which we need to be sensitive to and to make sure we’re available when they are. [This means] working with them on each case, telegraphing when we’ve got issues and trying to get in contact early to give them as much information and forewarning as possible.”

Allianz’s updated broker proposition has all the traditional engagement features of its original proposition, she said, from dedicated points of contact to exceptional claims services and a strong risk management offering. However, the revamp now includes a variety of new features that are centred around having a wider impact on the market. The ‘strong partners for what’s ahead’ message is an innate part of that, Mallaby noted, as it’s about riding out any upcoming storms with the aim not just of improving the experience of brokers and customers, but also the industry as a whole and society in general.

The proposition was born on the back of conversations with brokers and through marketing research into the supports that will be most useful to them, she said. This research also highlighted a few key concerns facing brokers – they are increasingly talking to the team about environmental factors and sustainability, as well as how to heighten the resilience of their business infrastructure, particularly with regards to cyber risk.

“Another main concern that brokers, and all small businesses really, deal with is around people – talent recruitment, talent development,” she said. “From the struggle around remote working or flexible working in a small operation to HR policies and procedures, there are so many elements where insurers need to be more alive to giving consultancy and thought leadership, and providing access to experts, as and when required and requested by brokers.”

Read more: Allianz UK on how to address the mental wellbeing challenges of COVID-19

With its broker partners in mind, Allianz is launching a series of new initiatives, including a broker apprenticeship scheme to help them gain their CII qualifications, as well as on the job training. It’s early days yet, she said, but the feedback has been great so far and the team is keen to expand this going forward as the initial scheme was heavily oversubscribed. Mental health has also become a point of focus recently and so the insurer has entered into a partnership with Mind, focusing on offering mental health training.

“I actually spoke to quite a large brokerage recently, and they were saying they’ve actually been trying to do mental health training and wellbeing for years but just never found a way of doing it,” she said. “So this has been a godsend for them, and it’s such an important issue, especially with everything that’s happened over the last year.”

Another core emphasis for brokers and Allianz alike has been making sure that local communities are well-served. This is behind the insurer’s sponsorship of local sporting initiatives, and its pledge of support to previously overlooked sporting endeavours, including through its sponsorship of women’s games as well as men’s games as part of its RFU backing.

“I’m told our funding has helped put the Premier 15s, the women’s league, on the television which is massive for them and helps drive more support and engagement,” he said. “And it’s also driven their ‘Inner Warrior’ campaign which is helping them get the message out there about what a great game rugby is and how women and girls can get involved.”

Brokers are closely involved with Allianz’s sports fund, Mallaby noted, and it helps them gain reach into their local communities while driving a wider message about the role in insurance in supporting wider society and an ESG agenda. Whether it’s through the Mind partnership, or the sports fund, or any other initiatives the company supports, however, the underlying focus is always the same – supporting brokers now and into the future by growing together and working together.

“My message to our broker partners is clear,” she said. “We’re not going anywhere, we are completely committed to the broker market. You might not always like what we have to say or what we do, but we are here to support you and to make the best of whatever comes our way… We do everything we do in a considered way, and always with the best for our brokers in mind.”

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The FT has today revealed that a person familiar with the matter said the Euler Hermes policy covers Greensill Bank.

The news is the latest in an ongoing series of developments since Germany’s financial regulator, BaFin filed a criminal complaint against Greensill Bank’s management for suspected balance sheet manipulation in March. BaFin said that the bank failed “to provide evidence of the existence of receivables in its balance sheet that it had purchased from the GFG Alliance Group”, after a forensic audit by KPMG.

Bremen criminal prosecutors told the FT that five former executives of Greensill Bank are under criminal investigation and that their houses have recently been searched.

On Friday, the UK’s Serious Fraud Office started an investigation into suspected fraud at GFG, including its financing arrangements with Greensill Capital. GFG denied wrongdoing and said it would “co-operate fully” with the probe.

The claim, paid by Euler Hermes last year concerning the default of NNC, was referred to by both Greensill and the company’s adviser, former UK prime minister David Cameron, in their appearances before MPs last week, as an example of insurance working properly to protect investors from losses.

However, the FT noted that insurance experts have told the publication that the string of client defaults suffered by Greensill last year, and the loss of Euler Hermes, were key moments in the lender losing the support of the trade credit insurance market.

“In April last year, Euler had the third-largest exposure to Credit Suisse’s biggest supply chain finance fund, which packaged Greensill’s loans into investments, behind Insurance Australia and Japan’s Tokio Marine, according to a document seen by the FT,” the publication stated. “At that point, Euler underwrote 12% of the credit risk in the $5 billion fund.”

Euler Hermes is one of the “big three” credit underwriters and the FT stated that people familiar with the matter have said that the other two, Coface and Atradius, never insured Greensill.

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It added that 36 insurance and financial advice companies, including Zurich, Aston Lark, Foresight Financial Planning, Willis Owen, will provide job offers to 58 youngsters in the coming weeks.

After these initial job placements have been filled, CII said it will contact its insurance and personal finance members to see whether they can accommodate additional job placements.

The government’s Kickstart Scheme provides companies with funding to create new job placements, which must be additional roles rather than already existing vacancies. The funding covers the entirety of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of six months.

It also includes associated employer National Insurance contributions and employer minimum automatic enrolment pension contributions.

Employers can spread the start date of the job placements up until the end of the year.

The minimum application for the Kickstart Scheme is for 30 job placements. The CII working as a gateway organisation for the scheme allows companies that cannot meet the minimum number of 30 placements to participate.

“We want to assist those who may struggle to find work due to COVID-19 access a rewarding career in the insurance and personal finance profession where everyone can help consumers with their money matters,” said Manuel Thompson-Oloko, early careers manager at CII.

“We hope these job placements will result in throwing open the doors to long-term careers for individuals who may not have previously considered the insurance and personal finance profession. This is a profession keen to attract fresh and diverse talent.”

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It has been quite the week for insurance role models between the recognition of Alex Margolin of Sioma Insurance Consultants as BIBA’s ‘Young Broker of the Year 2021’ and the posthumous honouring of Forces Insurance’s Keith Frampton with the 2021 Francis Perkins Award.

Read more: BIBA celebrates insurance stalwart with posthumous award

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It’s now the turn of specialist legal expenses insurer DAS UK Group to share how it performed last year.

The group, which is the name behind legal expenses insurance company DAS LEI and law firm DAS Law, saw a statutory loss worth £0.6 million in the year ending December 31, 2020. Gross written premium (GWP), meanwhile, stood at £109 million.

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Neil Manser, chief strategy officer, former MD of DLG’s commercial business, NIG, and former director of investor relations, has been acting CFO since January 2021. The board has resolved to appoint him as an executive director and CFO, and as a member of the investment committee, with effect from the conclusion of the AGM today.

Withdrawal of AGM resolution

As DLG’s AGM Notice has already been issued, DLG confirms that the resolution to re-elect Tim Harris as an executive director of the Company (resolution number 6) is now withdrawn. This withdrawal does not otherwise impact the validity of the Notice of Meeting, the proxy form or any proxy votes already submitted on other proposed resolutions. The numbering of all other proposed resolutions at the AGM will remain unchanged.

Board Committee chairmanship

The following changes will also take effect from the conclusion of the AGM today.

Mark Gregory, independent non-executive director, will become chair of the board risk committee, succeeding Jane Hanson, who will be stepping down from the board, as announced on 21 December 2020. Gregory will give up his chairmanship of both the remuneration committee and the investment committee but will remain a member of both committees.

Meanwhile, Richard Ward, senior independent director, will become chair of the remuneration committee while Fiona McBain, independent non-executive director, will become chair of the investment committee.

Commenting on the changes, Danuta Gray, chair, said: “On behalf of the DLG board and all our colleagues, I would like to thank Tim Harris for the exceptional contribution he has made as CFO since 2019 and to wish him and his family the very best. The board warmly welcomes Neil Manser as our new CFO. Not only has Neil proven himself to be extremely capable while acting as CFO during Tim’s leave of absence but he has also held a number of senior roles across the business, giving him a deep understanding of capital markets, strategy and the culture of the group.”

Neil Manser, CFO-designate, noted that having held a number of leadership positions within DLG, he has seen first-hand the quality of DLG’s business model and the dedication of its talented people.

He said: “I am proud and excited to be taking over from Tim as CFO at a time when we are grasping the opportunities made possible by our significant investment in capability.”

This announcement is made in compliance with the Company’s obligations under Listing Rule 9.6.11.

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The acquired operations include certain Willis Re treaty and facultative reinsurance brokerage operations, as well as some UK specialty, European and North American brokerage operations. Combined, these operations generated US$1.3 billion of estimated pro forma revenue and US$357 million of estimated pro forma EBITDAC, in each case for the year ended December 31, 2020. 

“This acquisition will accelerate our long-term strategy by significantly expanding our global value proposition in reinsurance, broadening our retail brokerage footprint and strengthening key niches and specialty brokerage offerings,” said J. Patrick Gallagher, Jr., Chairman, President and CEO.

“The powerful combination of expertise, geographic reach and scale that this acquisition presents will greatly enhance our offerings to clients and prospects, while also providing significant value for our colleagues, carrier partners and shareholders.  Most importantly, I look forward to welcoming more than 6,000 new colleagues to our growing Gallagher family of professionals.”

Gallagher has listed several expected benefits of the acquisition, including:

• Expanded global value proposition within reinsurance brokerage
• Broadened global footprint in retail property, casualty and health & benefits brokerage
• Increased depth in key niches and specialty operations such as energy, construction, cyber, space, and aerospace products
• A comprehensive suite of analytics capabilities including catastrophe modelling, dynamic financial analysis, rating agency analysis and capital modelling
• Stronger relationships with major insurance carriers and new relationships with middle market and large account retail clients
• Added platforms for future tuck-in acquisitions

The brokerage giant said it expects to finance the US$3.57 billion transaction using a combination of long-term debt, short-term borrowings, free cash and common equity. Integration of the new operations is expected to take around three years with total non-recurring integration costs estimated to be approximately US$350 million. 

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