Insurance news

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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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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