Insurance news

Global insurance services provider McLarens has announced the appointment of Kristen Early to the newly created role of global head of third-party administration (TPA). In her new role, Early (pictured above) will spearhead the strategic expansion of McLarens TPA.

Early has 20 years of experience and is a recognised industry leader in TPA services. She has held senior management roles at Marsh, ESIS and Crawford, and has extensive experience working with brokers, insurers, captives and corporates.

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By providing around £210 billion in insurance cover, the temporary trade credit reinsurance (TCR) scheme has protected over £575 billion of business turnover.

Those were some of the numbers highlighted when the government and the Association of British Insurers (ABI) announced that, as planned, the scheme will close on June 30. It was noted that TCR has directly benefitted more than half a million businesses across Britain.

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Dye joined Allianz in 2003, becoming its CEO in 2013, and during his tenure he has overseen several acquisitions including that of the general insurance businesses of Liverpool Victoria (LV=) and Legal and General (L&G), aiding Allianz in becoming one of the leading personal and commercial lines insurers in the UK.

In a Press release, Allianz noted that Dye’s legacy includes the successful integration of Allianz UK and LV= and his role in helping Allianz achieve a step-change in its market position.

Chris Townsend, board member Allianz SE, said: “I would like to thank Jon for his leadership of Allianz Holdings since July 2013, in particular for working through our recent UK acquisitions and successfully navigating through the challenges of the pandemic. We look forward to Colm joining us to take our business forward and capitalizing on our strong market position.”

Meanwhile, commenting on the news, Dye noted that he had thoroughly enjoyed his 18 years at Allianz and that it had been his privilege to lead the business as part of a successful team. He said he would be working closely with his colleague during the handover period of the next six months to ensure that the business is in the best possible shape for Holmes to take on.

Holmes, who has held senior leadership positions at JP Morgan Chase, Zurich Financial Services, and most recently, Aviva, where he served as CFO and GI CEO, was noted by Allianz for his deep understanding of the UK P&C market. The release noted that he will work towards strengthening Allianz’s position in the UK.

The change is subject to regulatory approval.

Aviva has also revealed who will be stepping up to take over Holmes’ role, with Adam Winslow being appointed CEO of Aviva UK & Ireland General Insurance. Winslow, who was most recently CEO of Aviva’s international businesses, will continue to report to Aviva Group CEO Amanda Blanc in his new role. He will also remain a member of Aviva’s group executive committee.

Winslow brings over 20 years’ experience in the general and life insurance industry, including roles at AIG and Allianz as well as senior management experience in personal and commercial lines, across operations and broker relationships.

Commenting on Winslow’s appointment, Amanda Blanc, group CEO of Aviva, noted that the insurer has significant ambitions for growth in general insurance in the UK & Ireland as it continues to transform the performance of its core businesses following the reshaping of the group.

“Adam’s talent and capability have been amply demonstrated in his leadership of our successful programme of eight divestments over the past eight months,” she said. “Having now concluded the strategic refocusing of our portfolio, I am delighted to appoint him to this pivotal role, and his next challenge in Aviva.”

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“You can’t stop a hurricane heading towards your plant,” he said, “but you can certainly put structures in place to protect the building, to envelop the roof, walls, windows and doors to ensure that they aren’t damaged as the storm passes over. The thing that causes the most damage in a hurricane is the elements inside the building getting water damage so [by preventing this] you can be up and running very quickly. And our clients have done amazing things in previous hurricane events and that’s all testament to what people have done before the event is there.”

Read more: FM Global report assesses 130 countries on their resilience amid COVID-19

It’s all too easy to fall into the zone of thinking ‘there’s nothing I can do’ about risk, Bryson noted, when the reality is that there is an awful lot that business leaders can and should do to protect themselves. Preventing a loss in the first place rather than looking to insurance as the solution of first resort needs to become standard because, at the end of day, insurance is never going to be able to offer complete restitution.

Between uninsured losses, reputational harm, and the loss of customers during downtime – there is so much more at stake than just a claim and c-suite executives need to understand this.

“Insurance alone is not enough,” he said. “And when you are running a major global business, making informed decisions is absolutely critical. And having the right information and analysis at your fingertips is key to informing those decisions… It’s all about making sure you make very clear, informed decisions about what direction your supply chain takes so that you can build resilience at the start of any supply chain mapping process that you go through.

“And, for me, risk managers and the C-suite need to understand the limitations of insurance and make sure that they plan for risk in a more holistic way so that insurance [can do] its job, but you’ve also limited your own loss to within your appetite…. There’s a danger, perhaps, of over-reliance on pure insurance to be a risk management tool in and of itself, rather than as a suite of products put in place to make sure that particular risks are effectively managed.” 

Read more: World Economic Forum reports on business leaders’ top risks

The good news is that the debate around this has started to shift, Bryson said, and people are coming to accept the mantra that FM Global has long sought to instil in the wider insurance marketplace – resilience is a choice. You can either choose to invest in resilience or instead become a hostage to fortune.

The pandemic and other recent events have shown insurance as the first port of call simply isn’t the solution. The time is right, he said, for businesses to start reflecting more keenly on where their key supply chain pinch points are and making sure they have a plan B in place. If C-suite leaders are horizon scanning, then they will have an educated viewpoint on the environmental, financial and societal shifts that are headed their way and will be better placed to plan for these.

“Resilience really is a choice,” he said. “It’s not cheap, it usually requires a different perspective and it may require, depending on where your manufacturing base in your supply chain is located, significant financial investment. And it’s sometimes hard to build a business case when a business has short term demands on that same capital to perhaps improve productivity or reduce the costs within the supply chain by investing in better equipment. But, at the same time, you’ve got to have that longer-term view of how you’re going to invest to make sure that you are not going to be interrupted materially when that storm comes or the river enters your factory.”

Knowledge is key when it comes to managing your supply chain risk, Bryson said, and both the pandemic and the Suez Canal incident have shown that extended supply chains can be very tenuous and quite easily interrupted. Information is essential to ensure that your manufacturing risk stays within your appetite for risk. So, his key advice for businesses is this: “be aware of what your exposures are, and have plans in place accordingly.”

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The RISX Index uses ICMR’s transparent weighting algorithm based on reported premiums written, which offers a more appropriate mix of underlying risk than a traditional market capitalisation weighting, and also ensures sufficient liquidity in the underlying index components. As a result, the aggregated weighted underwriting return profile of the index has mimicked that of Lloyd’s.

Quentin Moore, co-founder of ICMR, said the team was excited to launch the RISX Index, given the difficulty investors have traditionally encountered in benchmarking specialty insurance risk investment.

“We are delighted to be working with Moorgate Benchmarks as our regulated benchmark administrator and index partner,” he said. “Their experience and regulated status allow all stakeholders to have full confidence in both the calculation quality and the governance of the index, as well as to develop investment products.”

Meanwhile, Markus Gesmann, co-founder of ICMR, noted that the index is a first in the industry, and opens up the potential for new research concerning more liquid Lloyd’s-related investments, as well as providing alternative metrics to measure and benchmark performance.

Gesmann added: “I would like to thank the team at Moorgate Benchmarks, who have been instrumental in bringing our idea to market.”

Commenting on the news, Gareth Parker, chairman and chief indexing officer of Moorgate Benchmarks, said: “We are delighted to be the administrator of ICMR’s innovative index. ICMR’s insurance markets expertise and our index design input has resulted in a hugely interesting, important and tradable proxy for returns made from specialty (re)insurance business.”

Neither ICMR nor Moorgate Benchmarks nor RISX nor RISXNTR are associated or affiliated in any way with Lloyd’s of London or the Society of Lloyd’s or the Corporation of Lloyd’s.

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Net premiums earned improved year-over-year from US$68.5 million to US$82.3 million in the quarter, and investment income jumped from US$2.6 million to US$4 million. The firm reported a combined ratio of 84.6% in the three months ended March 31, 2021.

The long-tail segment, which includes all professional and financial lines written by the company, had a net underwriting result of US$12.7 million in Q1, compared to US$12.6 million in the first quarter of 2020.

Meanwhile, its short-tail segment, which includes energy, property, general aviation, marine, construction and engineering, and political violence, saw an increase in net underwriting of US$5 million to US$13.4 million. The reinsurance segment’s net underwriting result dipped from US$2.2 million in Q1 2020 to US$1.5 million in Q1 2021.

“We have had a very solid start to 2021 on the back of our strong performance in 2020,” said Wasef Jabsheh, chairman and CEO of IGI. “Our results for the first quarter of 2021 clearly illustrate the strength of our underwriting capabilities and our agility in managing the portfolio to maximize returns.

“We recently announced our entry into the contingency market, which, you’ll know from the headlines, has experienced significant disruption globally as a result of the COVID-19 pandemic. Consistent with our underwriting philosophy, we will grow this book carefully and thoughtfully. We are also close to completing the process of establishing a European platform in Malta and we expect to be able to start writing business inside the European Union in the near future.”

The company has completed its first full year as a US-listed company, through the US$400 million merger with Tiberius Acquisition Corp., a special purpose acquisition company (SPAC)

According to Jabsheh, IGI has grown its book value per share by 15.1% since end-March 2020.

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Read more: RSA CEO, Scott Egan, on the importance of great broker relationships

“It was with [this proposition] in mind that we decided to embark on our half-year reviews,” he said. “It is early for these reviews but the one thing we absolutely need to do is to make sure we keep as proactive as we can and keep a tab on what are pretty dynamic market conditions. It’s interesting because, back in January, there were lots of jokes that [2021] didn’t really feel like a different year but, actually, I think there is quite a significant change in market conditions at the moment. That’s the critical thing we’re hearing from brokers, and to an extent, our customers too.”

When COVID hit, the focus of commercial clients was understandably centred on the security of their customers, their staff and their livelihoods, and the high retention levels seen by insurance businesses across the board revealed that insurance rarely made it to the top of any to-do list. This is now changing, he said, particularly for those clients who have made operational changes to their businesses and are likely considering further changes as lockdown nears the final stretch.

“So, the pressure and demand on brokers is starting to shift and we should expect to see more brokers challenging whether they’ve got the right programmes, products and coverage in place,” he said. “We’ve seen lots of different reactions from brokers, with most of them asking for different levels of support – but the exciting thing is that there is renewed space for advice. And that’s the primary role of the broker – to emphasise that more so than ever before, [customers] must balance price and cover.”

People who have had difficult experiences during the pandemic through not having the right cover in place understand this, he said, but those customers facing financial pressures might consider cutting out what is seen as a ‘discretionary spend’. The role of the broker is to provide risk management advice and educate their customer in cases where a cover may seem unnecessary but is actually essential.  

What brokers are looking for from RSA is a commitment that the insurer will play its part in supporting its broker partners in offering valuable and trusted advice and will make sure there are ‘no surprises’ when it comes to coverage.

Read more: RSA on a new approach to SME clients for brokers

“And that proposition means not going for opportunistic rates, which we have seen in the market,” he said, “it means proper and early engagement when things need to change, which sometimes they do, and it means giving brokers enough of a lead time with their customers. And that simple statement of ‘no surprises’ is going down well with brokers because it gets into the DNA of how we trade and how we support brokers.”

As difficult as the last 15 months have been, Hardy said, he really believes that the true measure of any relationship is when it’s been tested and challenged, not when the going is good. You don’t know how good your broker and customer relationships are until you’re facing a challenging set of circumstances, he noted, and with the proof of these relationships cemented, RSA is not taking that for granted and will continue to keep making sure its teams and its processes support that.

In addition to the array of initiatives RSA is crafting to support its broker partners, including its broker leadership programme, the key focuses for the year ahead are around being consistent, being contactable and listening to what brokers need. Hardy anticipates that the insurer’s accelerated half-year reviews will provide significant insight and noted that early indicators emphasise the additional support brokers require to thrive in current market conditions.

“Part of what I and the team are trying to bring to the forefront of our discussions is how brokers can get the best out of RSA and vice versa,” he said. “The way in which we work can give brokers natural competitive advantage. For cases we trade offline (£10k+ typically), we only ever issue one quote to market as we believe this supports the broker that has often put the groundwork in with the customer.”

RSA helps brokers convert over 50% of what it quotes, he said, and supports its brokers and customers with risk management as a matter of course. Going forward, Hardy and his team will also be looking to broaden RSA’s distribution footprint.

“Essentially,” he said, “we want to support brokers as broadly as we can – that means ‘no surprises’ for existing customers, keeping proactive and adapting in this new phase of market conditions, and staying close to our brokers and supporting them [through] a proposition that is compelling and that they can rely on.”

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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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