Insurance news

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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Nearly £1.2 billion – £1,183,788,990, to be exact – has now been paid by insurers following the business interruption (BI) test case in the UK, according to the latest numbers published by the Financial Conduct Authority (FCA).

FCA’s November update shows £312,215,762 in initial or interim payments, while the total value of compensation for BI claims where final settlements have been agreed and paid stands at £871,573,228.

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“It has been my privilege to work with Charles Brindamour since I joined the organisation in 2019,” said The Geneva Association managing director Jad Ariss. “I am very pleased that Christian Mumenthaler has accepted to become the chairman of The Geneva Association and am grateful to the board for running the succession smoothly.”

Ariss continued: “I look forward to working with Christian as new chairman and Lee Yuan Siong as new vice chairman. I also warmly welcome Amanda Blanc as new board member.

“Together with the rest of the board we will ensure The Geneva Association – through its programme of research, discussions, and outreach – continues to provide meaningful support to the insurance sector in its mission to make the world a more sustainable, equitable, and resilient place.”

Aside from the Swiss Re and AIA CEOs, also part of the board’s executive committee are Munich Re’s Joachim Wenning, who serves as treasurer; Allianz chief Oliver Bäte; and Tsuyoshi Nagano, chair of Tokio Marine.

Commenting on his new position, Mumenthaler stated: “I feel privileged to take on this role at such a crucial time for both our industry and society more broadly, as re/insurers mobilise to confront immense challenges, namely climate change and the after-effects of COVID-19.

“I thank Charles Brindamour for his outstanding leadership over the past three years. Under his chairmanship, The Geneva Association has deeply transformed. Through its rich portfolio of research and dialogue activities, the organisation makes an essential contribution to the debate on strengthening the world’s resilience to global risks.”

Mumenthaler added that he looks forward to further increasing the impact The Geneva Association has for all its stakeholders.

Also honoured to be appointed, the organisation’s new vice chair commented: “The enormous positive difference that insurance can bring to the lives of our communities has never been more relevant than it is today.

“I look forward to collaborating closely with Christian and members of the board as we work together to address the global strategic and risk management issues facing our industry, while playing our part in the transition to a better, more sustainable future.”

The other board members, alongside Blanc and Brindamour, are Thomas Buberl (AXA), Philippe Donnet (Generali), Antonio Huertas Mejías (MAPFRE), Denis Kessler (SCOR), Michael Khalaf (MetLife), Charles F. Lowrey (Prudential Financial), Anna Manning (Reinsurance Group of America), John Neal (Lloyd’s), and Alejandro Simón (Grupo Sancor Seguros).     

“I look forward to working with Christian, contributing to The Geneva Association agenda and supporting the critical role which the global insurance industry plays in the resilience of our economy and society,” said Blanc.

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UK-headquartered financial services group Prudential Plc, which describes itself as “Asia-led,” could be heading East in search for its next chief executive.

A report by The Sunday Times said the company has begun the process to look for the successor to group boss Mike Wells, who is credited with transforming the organisation.

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Aston Lark has once again demonstrated its acquisitive prowess by welcoming Innovation Broking as the latest addition to the group. Innovation, which was founded in 2015 by Paul Dickson and Howard Pearson, is an independent corporate insurance broker and employee benefits adviser which boasts a team of 30 staff.

The corporate broker specialises in larger risks, global programs, and private equity-backed businesses, with particular expertise in the technology, health, film and TV, and charities and care sectors. Commenting on the deal, Peter Blanc, Aston Lark group CEO, noted that he has known Dickson for many years and that his reputation in the market as a broker and a leader is “outstanding”.

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The business quickly found its footing, she noted, moving to establish a variety of procedures to make the home working experience as pleasant as possible for everybody involved. If anything, McDonald said, the last 18 months have really brought the separate teams that make up the UK & Ireland business together, and virtual meetings have actually strengthened the relationship between the London office and its regional counterparts.

“COVID has caused so much destruction and damage to people’s families but in terms of our working environment, it has made us all closer, rather than pulling us apart,” she said. “And that’s at every level [of HDI Global]. We didn’t used to do global town halls and now we do, and everybody joins those from all over the world. So, I think we need to keep the good things going forward. For my local town halls, people have voted they don’t want to have them in-person anymore, they will continue to be virtual because it’s actually a lot easier to ask a presenter questions that way, there’s an approachability around it.”

While other businesses have understandably tapped the brake during the tumult of the COVID crisis, McDonald and her team have moved the business forward. It recently launched its inherent defects insurance proposition, as well as establishing a marine cargo business line, and has maintained its focus on forming and leveraging strong industry relationships.

Read more: HDI UK establishes marine cargo business line

For the rest of the year, the focus will be on pushing through with marine, and also with the ongoing reshaping of HDI’s Irish presence. Traditionally, she said, HDI has been a property-casualty player in Ireland, so now it’s about bringing other lines of business such as engineering, motor and marine into the Irish market in a more meaningful way – an ambition that has already made good headway.

It has been a busy year for the UK & Ireland team who, in addition to the changes outlined above, were delighted to receive approval from the PRA at the end of September, which has seen the business exit the temporary permissions regime. For McDonald, however, there’s no reason to slow down the trajectory HDI is on, buoyed by its great security and world-class treaty reinsurance facilities.

Looking forward, she noted that she sees no reason why the business can’t grow further, aided by its stable, long-term client base and its reputation among brokers for dealing with very technical propositions.

“We’re known by the brokers for tending to do more on the heavy end than the vanilla end,” she said. “But there’s no reason why we can’t do some vanilla as well along the way and that we can’t be a little bit more ambitious about what we’re doing. Because sometimes what you need is just a little bit more of that self-belief.”

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Generali Group has posted an operating result of €4.4 billion (around £3.766 billion) in the nine months to September 30, 2021 – a 10% increase from the same period in 2020.

The firm credits the “strong increase” in the operating result to the performance of its life, asset management and holding, and other businesses, as well as the “resilient contribution” of its property and casualty (P&C) segment, despite the higher impact of natural catastrophe claims.

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MNK Re Limited has launched a new business that is focused on the UK wholesale and retail space.

The new MNK Re UK Specialty business creates a wider category of risk solutions, and will initially focus on developing “unique wholesale and high net worth lines,” a company release said. To lead this new team, MNK Re has tapped Grahame Lamb, Richard Daws and Jonathan Britton.

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“This has been a core part of the last four BIBA Manifestos, so we are delighted to see such a positive direction of travel. We also support Government’s proposal that the FCA (Financial Conduct Authority) report on their performance against their growth and competitiveness objective on an annual basis.”

The new 75-page consultation paper – which makes a series of proposals aimed at delivering the intended outcomes of the FRF Review – sets out the response of the government to the feedback gathered from October 2020 to February 2021. The second consultation will close next year, on February 09.

London & International Insurance Brokers’ Association (LIIBA) chief executive Christopher Croft, meanwhile, had this to say: “These proposals provide many of the right ingredients for a vibrant commercial insurance sector to flourish in global markets, but the proof will be in the pudding that Government and regulators bake from these.

“As most of our members’ business is international, we particularly welcome the proposal for a specific ‘growth and competitiveness’ mandate for the regulators. And it is especially welcome that this is to be an objective with teeth in that FCA will be asked to report on its adherence to it annually.”

As of this writing, the Financial Conduct Authority has not issued a statement in response to the newly released policy document.

“Exports by Lloyd’s brokers in London’s specialty insurance market generate a contribution of around £37 billion to UK GDP (gross domestic product), one quarter of the contribution made by the City of London as a whole,” added the LIIBA CEO.

“We face significant and growing competition from the other centres and from emerging markets. The current regulatory framework has evolved into a disproportionate regime that has added unnecessary burden and cost to the commercial insurance sector, particularly for those serving large, complex, and international clients.”

Croft went on to commend the Treasury for seeking to design a regime that he believes will maintain the UK’s global competitiveness and export revenues. In LIIBA’s view, said Croft, this approach is a step in the right direction.  

London Market Group (LMG) chief executive Caroline Wagstaff also had positive remarks in relation to the review, which was set up to examine how the financial services regulatory framework should adapt to be fit for the future, particularly in the context of the UK being no longer part of the European Union.

Wagstaff stated: “The speciality commercial insurance industry, along with many other sectors of the financial markets, has highlighted the need for a competitiveness remit for the PRA (Prudential Regulation Authority) and FCA for some time. It will maintain robust regulatory protections while enhancing our global offer.

“We are pleased that the government has listened to the London Market Group and our members’ long-running campaign that this is best achieved through a statutory objective for the regulator – this will send a positive message to the world that the UK is open for business and welcomes new investment and trading opportunities.”

To help develop the proposals further, Wagstaff said the LMG will continue to work with the government and across the commercial insurance sector in the next phase of the consultation.

Comments from the Association of British Insurers (ABI), however, indicate that the trade body isn’t entirely pleased with the proposed changes, which it views as inadequate. 

“The second consultation on the Financial Services Future Regulatory Framework Review has the right intentions towards creating a regime that is fit for purpose, but it could have gone further,” declared ABI director general Huw Evans. “If the government wants the UK to compete on the global financial stage, then we need a regulatory framework that matches the same vision.

“It’s disappointing to see the consultation published today (November 09) recommends a new growth and international competitiveness objective that will only be a secondary objective for the PRA and FCA. This does not go far enough, as regulators will always put primary objectives above secondary ones.”

Evans continued: “We have a unique opportunity to boost competitiveness, attract overseas capital, and promote the UK as a world-leading financial services hub, but unless regulators have economic growth as a primary objective, we are not convinced anything major will change.”

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