Insurance news

Read more: How will increased consumer vulnerability impact insurance behaviours?

Dominguez, who joined Quadient in 2018, noted that her role within the software services firm enables her to be on the front line of assessing the root of the communications issues faced by insurance companies and how these challenges can be overcome. It was positive to see the downward trajectory among these nuisance communications, she said, and she hopes businesses will take the actions required to see this trajectory continue.

“It might be a bit of a pipe dream to wish that nuisance calls will be completely consigned to history but, in the meantime, it would be great to see these levels stay steady or continue to decrease. That would be wonderful to see, especially for the insurance industry,” she said. “[…] Because there’s so much value in what these businesses provide and frankly these scammers and spammers just get in the way and cause a lot of noise, distracting from a lot of the good work that insurers and banks are trying to do to serve their customers better.”

The challenge facing insurance companies, she noted, is that despite exponential technological advancements and changed consumer behaviour patterns, it has become very difficult for businesses to keep up this pace of innovation or even just with changing customer expectations. Insurance businesses are having to continually evaluate the balance of communications required for customer satisfaction, whether that’s regarding the channels they prefer or the devices that they’re using.

“It’s a fascinating space to be in,” she said, “because it’s really just as much an art as it is a science. Good science is the data piece of understanding those customer behaviours, of understanding what it is that they’re telling companies in terms of their channel, or communication preferences. But this is also about understanding behaviours, so there’s an aspect of behavioural economics here too.”

Read more: Quadient on creating long-term customer relationships

The impact that COVID-19 has had on consumer behaviour and expectations over the last year or so is significant, Dominguez said, and she highlighted that when people are in a happy or stable equilibrium, their provider interactions are significantly different to when they are under stress. When consumers have a claim or need an emergency loan or have a medical concern, the high levels of stress change their interactions and with the additional stressor of COVID on top of this, it has been made increasingly hard for insurers to understand what channels they need to make available.

Insurers have needed to explore the best ways to communicate, balancing availability with not being seen as intrusive or as a nuisance. It was interesting to read the findings of the ICO report, she said, and to see that the number of nuisance calls dropped last year while the number of nuisance texts increased. For Dominguez, this indicated that organisations are getting pretty savvy about using other channels but the bad news is that insurance companies still have to be smarter about that.

Read more: Claims management firm slapped with fine – warning for insurance industry

Insurance companies, therefore, need to find the right balance between calls, which are a much more personal touch; texts, which can be timely, but could also be a nuisance; and emails or mobile push notifications or making information easily available or searchable on a customer portal.

“So, it’s good that those numbers have come down. Even though they’re still very high and there’s some work to be done, it’s a good indication that businesses are starting to understand the need to go digital. And that increase in SMS complaints is probably indicative of that,” she said. “But businesses are still trying to find that balance – to find how to create a one-on-one feeling for each individual customer.

“And that’s hard, particularly for a larger insurer, for example, to service their potentially millions of customers in a way that feels one-to-one, when really what they’ve done has just been really smart about how they set up their processes and their communication so that it just feels that way. So, it’s really about replicating that experience in a scalable way so that it feels much more personal.”

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“To put this into perspective, GMIs reported a much larger overall decline of nearly US$20 billion in net income,” the report said. “In addition, this does not include all of the financial consequences of the pandemic, which would include unrealised capital gains, reserve adequacy, and new business volume and value. A number of players, notably in the life business, did not single out the pandemic in their financial reporting as a key driver.”

However, no insurer among those rated in the report fell into a position where its capital position was insufficient to meet regulators’ expectations.

“Beyond 2020, we believe additional COVID-19-related losses could be manageable, given that GMIs reported a large share of incurred but not reported losses in 2020 earnings, and also due to the exclusion of pandemic claims that insurers have added to the terms and conditions of policies reviewed in 2021,” the report said.

Non-life takes the biggest hit

Overall, the pandemic hit non-life activities the hardest, according to the report.

“That’s because there is a large negative correlation between people insured against death and the segments of the population who have died from COVID-19 or other conditions that led to excess mortality,” the report said. “These groups notably include old people, who are less likely to have term life insurance, and lower-income people, who are typically less likely to be partly or fully insured.”

In contrast, non-life commercial lines were barely hit, according to the report. The pandemic’s negative effects on underwriting were mostly concentrated on a few products: business interruption, event cancellation, and – to a lesser extent – credit insurance.

“On the other hand, underwriting results increased for some non-life personal lines as the frequency of incidents, notably in motor insurance, dropped as lockdowns took large numbers of cars off the streets,” the report said.

Big losses for reinsurers

“The profitability of large reinsurers slid even more, on average, than for the GMIs,” the report said. “This is because reinsurance policies, especially in commercial lines, covered a large share of primary insurers’ exposure.”

For the top 20 insurers S&P rates across the world, the company estimated COVID-19-related losses at about US$20 billion – which corresponds to nearly four times their year-end 2020 aggregate net profit.

European GMIs face steeper losses

European GMIs were harder hit than those domiciled in other regions, although a large part of their losses came from non-European markets. The higher losses for several European players, including AXA, Allianz and Zurich, came primarily from their large commercial property-casualty lines.

“Overall, aggregate losses posted by the three most exposed players (AXA, Allianz, and Chubb) accounted for more than half of the US$8 billion loss for the 16 GMIs,” the report said.

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The European Insurance and Occupational Pensions Authority (EIOPA) will be chaired by Petra Hielkema come September.

In a release, the Council of the European Union stated: “In agreement with EIOPA and her current employer, De Nederlandsche Bank (the Dutch national central bank), Ms Hielkema will take over this role from September 01, 2021 for a period of five years. This term may be extended once.”

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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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