Insurance news

The Hollywood writers’ strike could cost the entertainment industry up to $8 billion (£6.2 billion), according to an insurance expert, and it won’t be insurers that foot the bill.

“Losses from the 2007 to 2008 strike were around $2 billion,” said Ross Garner (pictured below), managing director-property & casualty at NFP. “With the amount of new streaming services that have popped up since then, which has led to an increase in productions, losses this time around could be around $8 billion, which would put it up there with major natural disasters, hurricanes and things like that.”

Writers’ strike – “There is no insurance product for events like this”

One of the downsides of major strikes is that there is very little to nothing that can be done for clients to mitigate the impact from an insurance perspective.

“There is no insurance product for events like this,” Garner said.

One of the reasons for this is that strikes are seen as an inevitable occurrence that should be considered when working in the entertainment industry.

There is also ambiguity around how long this blackout period will persist for, which would make writing coverage much more difficult and cost prohibitive.

“I couldn’t even imagine how an insurance product would be helpful in this situation, since the premiums would be astronomical,” Garner said.

Coverage like this would be hyper specific, which means that only few key businesses would be able to write a policy for situations like this.

Furthermore, while strikes do not happen on a consistent basis, the sheer amount of loss that is attributed to them can be vast.

However, there is insurance coverage for third party strikes that lead to a business disruption, such as having to rebook flights due to an aviation shut down that prevented a film crew from travelling to a foreign country for a union production.

“In this circumstance, the business disruption is widespread and much harder to rectify from a claims perspective,” Garner said.

Writers’ strike action – pandemic impact and building reserves

While Hollywood has experienced production halts in the past, notably during the 2007 to 2008 writers’ strike, the ongoing action that started in April is even more complicated due to it coming after a pandemic that shook the industry to its core.

“Businesses, especially independent contractors providing equipment and other services to film and television productions, blew through their financial reserves while the world came to a standstill during the pandemic,” said Ross Garner, managing director-property & casualty at NFP.

“Now, they are once again in a position where they can’t work and may be close to running out of funds once again, if they were able to recoup their losses during lockdowns.”
The first piece of advice US brokers can give to a client working as a contractor in the entertainment industry is to always have a cash reserve.

“Especially after COVID, unforeseen circumstances are a big threat,” Garner said. “In between strikes and a pandemic, I would definitely bring up a rainy day fund as an integral investment.”

On Week 10 of the writers strike, co-chair of the WGA negotiating committee, David Goodman, says there is no movement towards resolution. “The companies have to make the move.” https://t.co/Lfmz7YUCey pic.twitter.com/D722HpGqPh

— Variety (@Variety) July 7, 2023

Making sure a client has the right coverage in place

Beyond establishing robust savings, talking to a client and explaining the particularities of their broader coverage is extremely important in a situation like this.

This is particularly key for companies that have a costly inventory of equipment that may not usually be stashed in one place when things are business-as-usual.

“When these businesses are in production, a vast majority of their equipment is out for use on sets,” Garner said. “When a strike occurs and contracts freeze up, all of that expensive technology and machinery is just sitting in one place, which makes a more catastrophic loss imminently possible.”

Whether falling victim to a warehouse fire or theft, the amount of inventory that can be affected by a loss increases substantially.

It is of utmost importance for a broker to speak with a policyholder about how the chances of incurring a larger than usual claim is now a more pronounced threat.

“Now is a perfect time to look over the terms of a policy to make sure that it includes the updated risk profile that is associated with business disruption,” Garner said.

“This is especially true for more niche forms of coverage related to the entertainment industry, and having that specialized broker be able to assess all the variables of a potential loss scenario and safeguard a client from more economic hardship.”

Looking back to when he first joined the cyber insurance market in 2010, AXIS’ Andrew Maher (pictured) said that it has been incredible to see how the online threat landscape has changed as back then, it was privacy that the cyber insurance and security industries were selling. And the rapid evolution of cyber risk is unlikely to slow down any time soon, he said, not while the value of most organisations’ intangible assets continues to so dramatically outstrip that of their tangible assets.

Maher, who was promoted to head of cyber and technology, London at AXIS in September 2022, noted that he stepped into his new role at a fascinating juncture, with corrective market conditions starting to gently ease. It’s a fantastic time to be part of the London team, he said, because of how it fits into the strength of AXIS’ global cyber offering and because of the opportunity present in the market to “get out there and grow”.

Key cyber insurance milestones

Addressing some of the milestones he has seen mark the progression of cyber insurance in recent years, he noted the increased identification, implementation and maintenance of key minimum standards to which insureds are now expected to adhere. There is an increased understanding across the market that just putting a hard protective shell around businesses is not sufficient.

“So, it’s not just about having those different controls and securities in place, it’s having the understanding of them and how they’re working together within the network to the benefit not the detriment of the company,” he said. “The market all came together and pushed on certain minimum standards, on some harder than others, but those baseline controls such as multi-factor authentication for remote access, backup controls and security have been key.

“They’ve really become your cyber sprinkler system or seatbelt. They should be seen as bog standard and must be implemented which is why you’re now seeing insureds buying cyber insurance for the right reason – for true risk transfer as opposed to using insurance as their whole cybersecurity and incident response plan. Because insurance is not there to be the first line of defence, it’s there to be the safety net in the event of an incident.”

The changing nature of cyber ownership within businesses

Another trend which has been interesting to see develop in recent years is the changing nature of cyber ownership within businesses. While 90% of the time, he and his team will of course deal mainly with chief information security officers (CISOs), chief privacy officers and risk managers, cyber conversations have evolved to include a much greater variety of stakeholders.

Much of the focus within those meetings is around governance, he said, and it’s a very rare occasion now that he doesn’t hear that cyber risk findings are being presented to the board every quarter because it has become such a board-level issue. As a result, it’s a red flag to hear that any board isn’t discussing a company’s exposure to cyber risk because the risk has evolved so significantly.

“And it’s a D&O risk as well now,” he said. “We all know about cyber now so if the board isn’t requesting that training be provided or that cybersecurity controls be implemented then that could lead to some rather large D&O risks. It goes further than just your cyber insurance policy so it’s definitely a red flag if there’s no board-level involvement.

“It also comes down to where and who the CISO reports into because there have been studies to show that the verity of a cyber insurance claim is dependent on where the CISO reports into. It tends to be that if they’re reporting into the board, the less severe the claim is going to be compared to if they’re reporting to say the CFO. So, as an underwriter, if you hear they’re not reporting into the board regularly, it does set off alarm bells.”

Increasing understanding of the cyber risk among businesses

There is a generally increased level of awareness around cyber risk among businesses and Maher noted that this is being driven by a combination of increased education from the insurance market and the high-profile nature of the risk. Most days bring new headlines on a ransomware demand or a data breach, he said, so it invites substantial attention – while reports also consistently rank cyber as one of the top risks facing businesses today.

“In the wild, we still hear that ‘my third party handles my security’,” he said, “but if their balance sheet can’t support your loss, that’s what insurance is there for. There’s so much that comes into play and even for those who might not have so much of a network, we cover privacy.

“And privacy is making a big comeback. The litigation landscape for privacy at the moment is a bit of the Wild West with old legislation being looked at to try and shoehorn modern-day risks. There’s a lot more attention [on privacy] now, especially with biometric information being collected, and how cookies and website data are been collected too.”

Cyber insurance – demonstrably worth the paper it’s written on

Addressing whether the corrective market conditions of recent years might have put off businesses from purchasing cyber insurance, Maher highlighted that cyber insurance has proven conclusively that it’s worth the paper it’s written on. That’s not just from a claims payout perspective, he said, but also given the increased emphasis on cyber insurance as a service as well as a product.

From SMEs to multinationals, insurance companies have shown themselves to be willing and able to help insureds navigate their way through an incident. The work that cyber teams do to support insureds in the event of a claim should never be underestimated, he said, as the expertise and experience they bring to the table make all the difference for insureds during their time of crisis.

“We did see some clients walk away from the market over the last couple of years with the pricing correction that was going on, and some of those have looked to come back now,” he said. “There is always going to be a tipping point for certain sized companies, as to whether they take it on their balance sheet or do some risk transfer.”

This decision-making should be underscored by a deep-impact risk assessment so businesses can have a better understanding of what their true exposure is and the limits that they should be buying. This is where the broker really steps in, Maher said, as their communication is the key to ensuring that insurers can put together the right products that match the requirements of the business in question.

“We’re never going to sit still from that perspective,” he said. “We have our AXIS Cyber Insurance  product – ACI – which is aimed at over £2 billion and our AXIS Cyber Technology and Media – ACTM – which is sub-£2 billion. There are nuances and differences between them because of where we’re aiming them and the partners that we’re working with. We’re always trying to ensure that our products are forward-facing and address the issues that are actually affecting our clients. There’s never going to be a one-size-fits-all product because you just can’t treat every risk as the same risk.”

The role of the broker in cyber insurance solutions

The role of the broker in helping to create a sustainable and secure cyber insurance market where the coverage matches the insureds’ risks is critical. AXIS works closely with its strategic partners to bolster their understanding of and confidence around cyber, he said, including through holding full-day accredited cybersecurity courses that offer extensive training to partners’ new joiners and graduate employees.

“We want to ensure that everyone is educated and knows which threats our clients are facing, and what we’re seeing from our claims experiences,” he said. “That knowledge is being transferred to the brokers because this is something we’ve all got to address together. Brokers, underwriters and vendors all need to address the issues we’re seeing today – whether those are on the regulatory side, the litigation side or the threat actor side. Everyone working together is how we ensure that we can stay relevant and continue to deliver products that are actually meaningful to our clients.”

This article was produced in partnership with Travelers Europe.

Mia Wallace, of Insurance Business, sat down with Donna Hurst, director of professional indemnity at Travelers Europe, to discuss what’s happening in the solicitors’ PI market.

When it comes to pricing, coverage and market exits in the professional indemnity (PI) insurance market, it’s fair to say that recent years have been quite a rollercoaster journey. But one positive to emerge from the turbulence is that it’s cemented the importance of creating a sustainable PI marketplace – backed by long-term, financially-secure providers with an eye to the future.

Zeroing in on the solicitors’ PI market, Donna Hurst (pictured), director of professional indemnity at Travelers Europe, noted that Travelers has been one of the leading insurers of solicitors in England and Wales since 2000. As a result, she said, the business has a wealth of claims data that helps to inform its underwriting and risk selection. 

“We employ risk managers who work closely with both our claim and underwriting teams to track claim trends and ensure that underwriters are informed,” she said, “as well as providing advice to clients by way of seminars, webinars, factsheets and bespoke training sessions. In addition, our claims team is made up of qualified solicitors who understand our clients’ businesses and use their expertise to work for the best outcomes for our clients.”

What makes a winning solicitors’ PI team?

During her time in the market, Hurst has seen first-hand the difference that it makes to clients and brokers alike to have ready access to expert and experienced solicitors’ PI professionals. Travelers Europe has 15 underwriters in the solicitors’ team, she said, some of whom have been writing solicitors’ PI since 2000. 

“We regularly meet with our key brokers to understand their needs as well as the constantly changing marketplace,” she said. “Our underwriters are available to attend meetings with existing and prospective clients which helps us to build a good knowledge of the kinds of challenges that law firms face. 

“Our risk managers are qualified solicitors who have worked in private practice and are on hand to provide advice to our clients around risk. Our claim professionals have been called out for the invaluable help and support they provide to clients when facing the uncertainty that an allegation of negligence can bring to the practice. We want our clients to view us as partners who can provide advice and support to help them manage their business safely.”

What does Travelers’ solicitors’ PI proposition cover?

Travelers Europe has a generous appetite for PI coverage, Hurst said, and the insurer is able to consider insurance for all SRA-regulated firms – from a sole practitioner to a multi-office global law firm. Its PI cover meets the requirements of the SRA’s Minimum Terms and Conditions, plus cover is included for liability arising from accidental damage to documents and court attendance compensation. 

“While we continue to monitor our exposure to conveyancing across the book,” she said, “we have now raised our cap (previously 25%) and can consider sole practitioner firms with up to 40% conveyancing, and all firms with an income up to £4 million which can demonstrate excellent risk management procedures and claims experience, and which have been held by the same broker for at least three years.”

How to navigate the evolutions of the legal landscape

The key to being a sustainable, dependable presence in the solicitor’s PI marketplace is not resting on your laurels, but rather embracing the evolution required to keep pace with the ever-evolving legal environment. The legal landscape is forever changing, Hurst said, with emerging case law, regulatory changes and fluctuations in the economy among the factors affecting the risks and opportunities that law firms face.

“By monitoring changes on the horizon together with trends we are seeing on the claims side,” she said, “we are able to remain relevant to the legal industry and ensure that we are providing a product and service that meets the specific needs of every firm we insure.”

Exploring some of the key changes Travelers Europe has made to its solicitors’ PI proposition in order to keep up with the demands of its brokers and clients, Hurst highlighted that poor mental wellbeing has been a hot topic for the legal industry in recent years and has been shown to lead to an increase in errors. To that end, the insurer has launched a highly acclaimed ‘post-claim wellbeing’ service which offers professional support from a third-party provider to any individual involved in a claim. 

“Last year, we launched a product specifically for freelance solicitors,” she said. “Since 2019, the SRA have allowed individual solicitors to offer reserved legal activities without setting up a regulated practice. This provides more flexibility around working practices and our new product is designed to reflect the diversity in this sector with premiums starting from £950 and no appetite restrictions to activities undertaken.”

What’s at the top of the agenda for Travelers solicitors’ PI team?

Looking to what’s next for her and her team in 2023, Hurst emphasised the importance of continuing to monitor claims trends. This also involves undertaking analysis on claims arising from work undertaken during the pandemic, she said, in order to better understand how remote working and the pressures of the SDLT window impacted firms’ ability to undertake work safely.

“Following extensive research, we are working on a risk management portal for our insured firms,” she added. “This contains a number of articles to help our clients manage the risks their firms face on a daily basis. And we are continuing to work on making the buying of insurance less of a chore for our clients.

“As a result, we are now able to offer 18-month policies, subject to meeting certain criteria, enabling firms to concentrate on running their businesses without facing the headache of an insurance renewal every 12 months. In addition, we’re also working on ways to improve the renewals process for our smaller insured firms to reduce the time spent completing forms. All in all, it’s a busy, and very rewarding, time to be part of the Travelers’ PI team.”

The information provided in this document is for general information purposes only. It does not constitute legal or professional advice nor a recommendation to any individual or business of any product or service.”

So who’s your social media “go-to” influencer? KSI? Logan Paul? Huda Kattan?

If your answer to the above was: “who, who and who?”, then you might just be missing a trick – because it seems the surge in internet celebrities is having an impact on the insurance sphere.

A newly released study by Forbes Advisor shows that nearly one in 10 people who have picked up private life insurance have done so because they heard about it on social media. Unsurprisingly, it is the 18-24 year-old age group most likely to be “influenced” – around 16% of that age group have taken out a policy because they heard about it from a social media influencer.

How big an impact are social media influencers having on insurance?

Before any insurers reading take out that advertising deal with their TikTok, Instagram or Threads favourites, it should be noted that the social media influence on insurance hasn’t exactly usurped more traditional means. The study by Forbes Advisor, still noted the most common way people hear about an insurance policy is through a financial professional – around 36% – so yes, brokers should still be top of your list. Friends and family took second spot, while comparison websites came in third.

Still Kevin Pratt, life insurance expert at the firm, was keen to highlight that new avenues should be considered.

“Contemplating the aftermath of your death on those you leave behind is hardly a cheery subject to consider,” he said. “This makes it all the more interesting that some insurers are able to leverage social media to reach a younger audience, even if those numbers are relatively low at the moment.

“Reaching new audiences and customers is important, but insurance providers should make sure they are presenting them with all the necessary information up front. Social media is fast-moving and can be superficial in its treatment of complex topics, so it is beholden on insurers not to gloss over the intricacies and implications of their products when they expose them to the market, whatever the channel.”

Why do people take out life insurance?

The study also delved into the reasons why people take out life insurance in the first place.

Top of the list – for around 38% – was that while they do not expect anything to happen to them, they are being cautious. Meanwhile, 30% take out cover when they become parents, and 21% picked it up as a requirement with their mortgage.

What do you think of using social media influencers to advertise insurance products? Leave a comment below with your thoughts.

It’s one of those crimes that doesn’t really hurt anyone, except that big bad corporate insurer, right? So there’s just no harm in insurance fraud really, is there?

Anyone connected with the insurance industry will be quick to point out the impact that fraud has on innocent policyholders, but that message doesn’t seem to be getting across to a host of desperate young adults hit by the cost-of-living crisis.

How many adults are turning to insurance fraud?

According to newly released findings from YouGov, published by the Insurance Fraud Bureau (IFB), a growing number of young adults are turning to insurance fraud amid the economic crisis.

It found that as many as one in four would now “likely” consider an act of fraud if they were struggling – a significant jump from the survey’s findings last year.

“It is worrying to see that there is a rise in younger people turning to or considering committing insurance fraud,” said detective chief inspector Tom Hill, from the Insurance Fraud Department at the City of London Police. “We know that the cost-of-living is increasing and is causing finances to be stretched for so many, but turning to fraud is not the answer.”

One in four in this age group would consider lying on an insurance application to save money, while one in five would consider lying to make money. Across all age groups, one in 10 would consider a fraudulent application if struggling.

What is the impact of insurance fraud?

The IFB recently launched a campaign called Fraud Cons in an effort to highlight the devastating consequences that fraud can have.

“Opportunistic fraud has serious consequences for those who are dishonest, which includes being placed on the Insurance Fraud Register and facing a potential criminal conviction,” highlighted Ursula Jallow, director at the IFB. “Furthermore, fraud can put innocent people at risk and adds costs to everyone else’s insurance premiums, which is why we’re so determined to tackle the issue in collaboration with insurers and the police. Our campaign is shining a spotlight on the reality that opportunistic fraudsters face, so that more people will think twice before making a falsified insurance application or claim.”

Her words were backed by Mark Allen, assistant director and head of fraud and financial crime at the Association of British Insurers.

“Insurers appreciate that many customers are facing financial pressures due to rising cost-of-living bills, and they are doing all they can to help, while continuing to pay genuine claims as quickly as possible,” he said. “But whatever the financial pressure, making a fraudulent insurance claim is not the answer, as the only thing you are likely to gain is a criminal record, making future insurance and other financial products harder and more expensive to obtain.”

Indeed there are host of potential consequences including that the perpetrator will be unable to:

• insure a vehicle for third-party cover, which is a legal requirement for motorists.
• get buildings insurance, which is often compulsory for securing a mortgage.
• take out liability insurance, which is required for many business premises.
• have life and death insurance, which can leave loved ones in financial hardship.

In addition, they can potentially face imprisonment and large fines.

Global merger and acquisition activity experienced a significant decline in the first half of 2023 due to rising interest rates and economic uncertainty, according to research conducted by WTW’s Quarterly Deal Performance Monitor (QDPM) in collaboration with the M&A Research Centre at The Bayes Business School.

The report revealed that the number of completed M&A deals valued over $100 million fell worldwide during the first half of 2023, with a total of 280 deals compared to 441 deals during the same period in 2022. This represents a 37% drop in volume, marking the lowest figure for the first half of a year since 2009.

The challenging macroeconomic conditions are particularly evident in the North American market, which experienced a continuous decline in deal volumes for six consecutive quarters, WTW reported. From a near all-time high of 173 deals in the third quarter of 2021, the number of deals dropped to just 61 between April and June 2023.

In addition to the decrease in the number of M&A deals, the performance of acquirers who completed transactions in 2023 also underperformed the market by -2.1 percentage points (pp). This decline follows a positive performance of +4.4 pp in the second half of 2022. However, despite the ongoing volatility, global M&A still achieved an overall positive performance of +1.4 pp over the last 12 months.

“A perfect storm”

“A perfect storm of higher inflation, interest rates, capital costs and greater regulatory scrutiny, combined with major geopolitical headwinds and a banking crisis, have triggered a steeper drop-off in M&A activity than anticipated by the market,” said Jana Mercereau (pictured above), head of corporate M&A consulting for Great Britain at WTW. “Buyers have had to shift gears to adapt to a more cautious M&A environment, although deal conversations have continued throughout this period of uncertainty. With these disruptive trends expected to continue into the second half of 2023, potential buyers will be kicking the tyres a bit harder as they seek deals to address strategic priorities, expand into new markets and fill capability gaps.”

Mercereau also said that buyers have had to adjust to a more cautious M&A environment, but deal discussions have continued amidst the uncertainty. As disruptive trends are expected to persist into the second half of 2023, potential buyers will approach deals with increased scrutiny as they seek strategic priorities, market expansion, and capability enhancement.

APAC outperforms

The performance of M&A deals in the first half of 2023 would have been even worse if not for the Asia-Pacific (APAC) region, where buyers continue to outperform the rest of the world, the report found. APAC acquirers surpassed their regional index by +10.9 pp, although the region still experienced a 25% drop in deal volume compared to the first half of 2022.

On the other hand, North American acquirers underperformed their index by -5.9 pp, while European dealmakers underperformed their regional index by -8.3 pp.

Additional findings from the WTW data include a decline in mega deals, with only three closing in the first half of 2023 compared to 12 deals in the same period of the previous year. The second quarter of 2023 saw North American acquirer performance at -10.3 pp, the second-worst on record, while European acquirer performance during the last three months reached a record low of -10.8 pp.

Intra-regional deals showed an increasing trend for three consecutive quarters compared to cross-regional deals. Similarly, intra-sector deals experienced a significant jump from 57% in the first quarter of 2023 to 67% in the latest quarter, indicating a clear preference for deals closer to home.

“When inflation stabilizes and credit markets reopen, we expect deal appetite to increase considerably fuelled by pent-up demand with digital transformation, portfolio rebalancing and ESG issues continuing to be key drivers,” Mercereau said. “Larger deals will remain tough to pull off due to increasing antitrust and regulatory pushback. Instead, companies are more likely to pursue small to midsize deals, which are easier to complete than megadeals and lower risk in today’s difficult financing environment. But in the race to acquire – whatever the size of deal – due diligence that is faster, deeper and better focused, combined with a plan for successful integration, will prove even more critical in a volatile market.”

Have something to say about this story? Let us know in the comments below.

Howden has announced its acquisition of Media Insurance Brokers International Limited (MIB), a major independent UK and Irish film and television broker.

The deal represents a significant step in Howden’s strategy to become a leading broker in the media and entertainment market, the international broker said in a Press release.

Operating since 1990, MIB offers specialist insurance products to the film, television, music, and events sectors. It boasts strong relationships with many of the leading broadcasters and media buying companies, as well as with many independent production companies.

 The MIB partnership bolsters Howden’s sport and entertainment practice in Europe, following the recent acquisitions of Franz Gossler Insurance Group, a leading film and entertainment insurance broker in Germany and Assimovie, Italy’s leading television and film broking house.

The acquisition of Wallace McLean in July 2022, a broker with specialisms in film and television in New Zealand, further extends Howden’s expertise into the Pacific region.

“The team at MIB has worked hard for many years to establish a first-class brand within our sector which stands for excellent service and product knowledge for all our clients,” said Richard Moore, managing director of MIB. “This acquisition by Howden means we can continue on this path as part of a much larger group and with all the benefits that brings.”

“We have known Richard and the team at MIB for many years and have long admired the business that they have built,” said Duncan Fraser, global practice leader, sport & entertainment, Howden.

“MIB’s established relationships and deep industry knowledge, with many leading clients in the film, television, music, and live events sectors, presents us with a significant opportunity to grow our business. Acquisitions like this will empower Howden to meet the growing demands of our entertainment and media sector clients as they continue to bounce back from the disruptions of COVID.”

Howden is global insurance group that operates in 50 countries across Europe, Africa, Asia, the Middle East, Latin America, the USA, Australia and New Zealand.

Do you have any thoughts on Howden’s latest acquisition? Tell us in the comments.

With 20 years of underwriting directors’ and officers’ (D&O) insurance to her name, Emma Pereira (pictured), product leader, international management liability at Beazley, has worked with companies of every size and scale, and seen first-hand how the landscape has evolved.

The constantly changing nature of the market is what has kept her interest piqued for the last two decades, she said, with new companies and product lines continually emerging – and insurance businesses must keep pace with this evolution to enable enterprise. It’s why she feels so passionate about insurers investing in training programmes and being a voice in the market.

“I like that it’s constantly changing, and, having studied economics, seeing how it all fits in with the world around you,” she said. “There are new types of companies coming all the time, often in really fascinating cutting-edge science areas: whether it’s new developments around AI, or new medical innovations. And we like having the opportunity to try and support those businesses, to allow them to operate and keep doing the important work they’re doing.”

D&O insurance market changes

Assessing the current lay of the D&O land, Pereira noted that there has been a lot of change in the last few years. COVID changed the D&O market quite drastically overnight, she said, as businesses that were seen as low-risk suddenly moved into high-risk categories. Providers had to re-evaluate their portfolios to factor in potential additional claims volatility, and essentially to speculate what might happen in the broader external business environment and economy.

“In the last few years, prices went up quite a lot, while terms and conditions tightened,” she said. “We at Beazley did pride ourselves on writing all the high-risk accounts. We asked a lot of questions, but we stuck with clients and we picked up a lot of new business. We were trying to work and build new partnerships and relationships during that time when other markets either withdrew completely or pulled back on capacity.

“But now, with COVID behind us (touch wood), markets have come back in and there’s capacity again. Things are livening back up and there are more options out there, which is great for clients because it’s not a great situation when they have either zero options or just one. It’s a bit more competitive again, which is the condition needed for us to start coming up with new products and try to do something different to differentiate ourselves.”

During COVID, the emphasis was on emergency measures and business as usual, Pereira said, and she’s relishing seeing such a voracious appetite for innovation in the market. For Beazley, this includes its new private equity (PE) portfolio D&O product which looks to protect insureds through their full lifecycle, from company purchase through to divestment.

“The PE market is huge, with US$1.2 trillion in assets under management,” she said. “So, these are all companies that are owned by PE houses. And people think that these small private companies can just fit under a private company wording but actually, they do need a much more bespoke approach because they are quite a different beast in a lot of ways. I’ve always thought I’d like to develop this wording and this just felt like the right time.”

The coverage looks to insure its clients across the entire time in which they are owned by the PE house, she said, with an automatic renewal clause and some pre-agreed options for when the business exits.

“So, we’re taking a holistic approach to clients’ pricing and coverage requirements rather than providing a solution for one year and then changing the terms and conditions, and pricing the next year,” she said. “Typically, these life cycles are four-to-seven years but depending on the private equity house, they can be far longer or shorter. In D&O, policies don’t tend to cover a whole lifecycle, they are solid on an annual basis.

“And I think, particularly during COVID where certain companies had trouble getting cover and faced very volatile market conditions, there was a cry for a bit more sustainability and for someone to demonstrate consistency.”

Unique product features

Quite unique to the coverage is the introduction of key-person cover, she said, which is not typical in D&O policies but reflects that often small private companies are framed around one individual – whether it’s the founder, or the person behind the tech, etc. In the event of that person becoming incapacitated, the coverage offers protection. Another element is the addition of a legal advice helpline – essential support for small PE companies that don’t necessarily have the means to access expert legal advice.

At the core of the product’s development is a focus on what PE-backed firms are looking for, which is where broker feedback and communication have been so critical. As a result, Pereira said, the wording has already elicited a positive reaction across the marketplace.

“We’re having the conversations with brokers about what this means for their clients,” she said. “So, we’re letting the market know that we’re innovating, we’re coming up with different solutions and we are very much thinking about what our specific clients need. That has been generally very well received which is why after the trial run in London, we’ve started the rollout in our other territories.”

As a passionate advocate for increased education around D&O risk, Pereira emphasised how the narrative around the exposure of private companies to claims has changed. There’s now more awareness that claims do arise in this sector, she said, albeit not with the same frequency as other product lines.

“This cover does need to be taken seriously because it is serious cover,” she said. “When these directors and officers are held personally responsible, they can lose everything. They have to sell their house, their kids come out of private school and every asset they’ve got can be taken unless they’ve got insurance to protect them. And I wouldn’t sit on the board or as a director of any company without a policy there to protect me.”