Insurance news

The Australian Reinsurance Pool Corporation (ARPC) has acknowledged the Australian Competition and Consumer Commission’s (ACCC) third insurance monitoring report, which highlights that the Cyclone Reinsurance Pool is contributing to lower premiums in regions at higher risk of cyclones.

The ACCC’s report indicates that the cyclone pool has led to some cost savings for insurers operating in cyclone-prone areas. Insurers have begun adjusting their policies to pass these savings onto consumers.

However, the report also noted that several economic and environmental factors, beyond the cyclone pool, are impacting overall premiums. These factors include the broader hardening of global reinsurance markets, extreme weather events, and rising costs of building materials and labor.

The ACCC compared premiums before and after insurers joined the cyclone pool and evaluated how insurers incorporated the pool’s benefits, including the recognition of cyclone mitigation measures.

Among home and contents policies in medium to high cyclone risk areas that renewed after joining the pool, 27% saw a decrease in premiums. In contrast, only 12% of policies in similar risk areas experienced a premium reduction prior to insurers entering the pool.

Similarly, for strata policies in medium to high cyclone risk areas, 16% experienced premium decreases after joining the pool, compared to 10% before entry.

ARPC chief executive Dr Christopher Wallace (pictured above) responded to the findings, stating that ARPC welcomes the report’s insights into the cyclone pool’s effect on premiums.

“The ACCC provides invaluable monitoring of premium rates and we support any efforts to improve access to affordable insurance for cyclone events,” Wallace said.

Wallace added that ARPC recognizes the economic challenges and the impact of severe weather events on Australians and reiterated the corporation’s commitment to working with insurers.

ARPC aims to offer discounts on cyclone reinsurance premiums for properties undertaking mitigation activities, which is expected to help reduce premiums and enhance resilience in cyclone-affected regions.

The ACCC’s report draws from various data sources, including an analysis of individual policies renewed both before and after insurers joined the cyclone pool, as of Sept. 30, 2023.

What are your thoughts on this story? Please feel free to share your comments below.

Lloyds has today confirmed that Sir Charles Roxburgh KCB (pictured) is to become its next Chair, following a robust and extensive search, and approval from the Council of Lloyd’s.

Sir Roxburgh is due to take up the position on May 1, 2025, subject to regulatory approval and consent from the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), He will succeed Bruce Carnegie-Brown after an eight-year term. 

In a Press release, Lloyd’s highlighted Sir Roxburgh’s ‘wealth of experience’ in both the UK government and the private sector, and his support of several high-profile initiatives at Lloyd’s. He recently served in a senior role within His Majesty’s Treasury, having been the Second Permanent Secretary at the Treasury from July 2016 to June 2022.

Previously he was the Director-General of Financial Services from February 2013 to July 2016. In his time at the Treasury, he had regular contact with the insurance industry and engagement with Lloyd’s. In his 26 years at McKinsey, he held a variety of leadership positions including as co-head of the Global Strategy Practice. In his time there, he was also the lead consultant working with the Lloyd’s Taskforce in 1992, later working with then-chair Sir David Rowland on the 1993 Business Plan and the design and implementation of Reconstruction and Renewal.

Commenting on his upcoming departure, Carnegie-Brown said: “It has been a huge privilege to serve the market as its chairman since 2017 and to play a part in driving forward many aspects of Lloyd’s progress including, most importantly, its financial performance. During that time, Lloyd’s has also made good progress in building a more modern, sustainable, innovative, and inclusive marketplace.”

He highlighted the important role Lloyd’s plays in the global financial services sector, and said he is delighted to welcome Sir Roxburgh, whose experience and expertise will help the market go from strength to strength.

 Sir Roxburgh also commented on his appointment, noting the critical role Lloyd’s plays at the heart of the global insurance industry and UK financial services. “Under Bruce’s leadership, it has prospered and is in a strong competitive position, with robust financial security,” he said. “The market is delivering valuable protection to its customers and healthy financial returns to members and investors.

“I am delighted and honoured to have been selected as the next chair of Lloyd’s.  I look forward to working with the Council, with John and the strong executive team, and with the wider Lloyd’s market to guide Lloyd’s to even greater success in the future.” 

Sir Charles was appointed Knight Commander of the Order of the Bath (KCB) in the 2022 Birthday Honours for services to Government.            

The role and work of an insurance broker today is very different from a few decades or even a few years ago. Not only has the competitive landscape changed, but the way that younger buyers look, choose, and purchase products – insurance included – has evolved as well.   

Your insurance broker marketing strategy should be in step with these drastic changes. These days, it’s of great importance to know how to market your insurance business to a younger, more tech-savvy generation of insurance buyers.  

In this article on how to market your insurance business, Insurance Business will provide insight into insurance marketing strategies for today’s business environment. You’ll see some insurance broker marketing examples. These might help you with insurance marketing ideas and strategies you can make part of your insurance broker marketing plan.  

Generally, the purpose of marketing is to help grow your business and unlock its potential for a high return on investment (ROI). The most common way to achieve this is to promote your brands, products, and services.  

Marketing makes sense for any business, even insurance. And how else but through marketing would customers find out about your insurance business and its products?  

Insurance broker marketing can: 

Even if you offered the best insurance products, terrific service and had the best agents, these would go to waste if no one knew you existed or if you didn’t stand out from your competitors. And even if potential clients knew your company and it stands out, it would be for nothing if they weren’t convinced about your products.  

This is where your insurance marketing plays a crucial role. With insurance marketing, you can plan and execute promotional efforts that can raise awareness about you or your company. Efforts that increase awareness can then translate to increasing sales, which goes back to increasing your brand awareness and market differentiation. Implementing these strategies can go a long way, considering all the time, money, and effort that go into putting up your own insurance company.  

As for your insurance business’ marketing promotions efforts, these can be traditional, digital or a mix of both. Some traditional and digital marketing efforts can include:  

• mailed newsletters 

• billboards  

• social media posts 

• digital ads 

• online blogs 

While traditional marketing promotional efforts still have a place in insurance broker marketing, it is more cost-efficient to leverage the predominantly tech-reliant insurance environment we have today.  

The following are marketing strategies that an insurance company or brokerage can use to expand its client base, by using the tech tools that are readily available.  

1. Use search engine optimization (SEO) 

These days, it’s not enough to have your insurance company listed in a directory, it’s even more important to have a high-quality website. While it’s now standard practice to have a well-crafted website that includes your contact information, products, services, and staff, it won’t do you much good if no one can see it.  

This is where search engine optimization (SEO) can be a big help. In a nutshell, SEO efforts are things you do to make sure that your insurance company’s website is featured on the first page (ideally on top) of a search engine’s results. When a prospective client uses online search engines like Google or Bing to look for insurance, your SEO efforts should place you as one of the top search results.  

SEO mostly entails putting yourself in the shoes of your prospective client and figuring out which keywords they would use to find information about insurance companies and their products. SEO specialists reverse-engineer these keywords, which you can sometimes use free SEO tools to find. 

2. Optimize your website 

It’s essential to have your marketing efforts centered around your insurance company’s website, since it serves as the central hub for information about your company and its products and services. It’s also the tool by which you can convince potential customers to buy insurance from you.  

Your website reflects your company’s credibility. Whether you like it or not, the first impression potential customers get from it will influence whether they will do business with you or not.  

So, make sure your website is user-friendly, organized, and updated so they will trust you with their business. Here are some important website characteristics to look after to increase your website’s conversion rates:  

Loading speed 

In a study, the average loading speed that customers expect nowadays is 2.5 seconds per page or less. It was also found that websites that load in 1 second experience a 40% chance of converting customers. That’s why it’s essential that your website loads quickly, or potential customers will look elsewhere.  

Cybersecurity 

Potential buyers of your products need to know that your site is secure. How do they know your website is safe and secure? For one, they need to see that your website address is HTTPS to have the reassurance that your website is not vulnerable to cyberattacks. As these are now a daily nuisance, potential customers must be sure that their data will be safe with you if they become your client. 

Mobile functionality 

More people use their smartphones and tablets to do a lot of their internet surfing. That’s why it’s important for your website to be as quick to load and work on these devices as they would on a laptop or desktop computer. The design and appearance of your website should remain just as user-friendly and functional regardless of the screen size and orientation (portrait or landscape) of the device viewing it.   

Clear language 

Your potential customers aren’t limited to Baby Boomers and Gen Xers, so your website should account for millennials and Gen Z business owners. There are distinct differences in the way customers of different generations communicate. Make sure that the language of your website is kept simple, clear, informal, and free of any industry or insurance jargon.  

Interactivity 

Try to make your company website as easy as possible to navigate, and easier still for potential policy buyers to get in touch. Always have your contact information placed in a convenient, easily clickable spot on your website. Better yet, have your website developer install a live chat feature that lets you answer queries in real time.  

3. Use targeted direct mail campaigns 

Yes, some traditional marketing tactics like this one still work in the internet age. A carefully planned and executed direct mail campaign can target specific demographics, industries, or geographical areas, and give you good leads.  

A more direct and personalized marketing approach like this can help you stand out from competitors and spark interest among potential clients, especially in your local community.  

4. Build and reinforce client-broker relations 

You may be pleasantly surprised when you reinforce relationships with your existing clients. This can encourage repeat business and referrals. Exerting some effort to become a trusted advisor and maintaining regular contact will keep you top-of-mind when it comes to their insurance needs.  

You can foster and strengthen these relationships via personalized messaging, staying informed about their life events, and following up on renewals and policy updates. Consistently nurturing your relationships lays the foundation for a loyal client base and gives the prospect of a strong referral program later. 

It would be very beneficial if your website could collect reviews in real time, reply to feedback from clients, and engage in conversations with them. Efforts like these can result in better customer relationships, customer retention, and more customer conversions. 

5. Use the power of reviews 

Client reviews and testimonials can be powerful marketing tools for insurance agencies and agents. You can leverage positive reviews by showcasing them on your website, which can help build trust and credibility in the minds of potential clients.  

Online reviews are more important nowadays, since Gen Z and millennials take them very seriously. In fact, they’re the generation that are most likely to write and read reviews.  

Another similar tool to use is industry awards. You can display awards badges on your website or social media pages, just like some of the winners on our Best in Insurance page have done! 

We’re proud to be named a 2024 Top Insurance Employer. https://t.co/EiujW6dWBk pic.twitter.com/p9876Q7tsz

— Risk Placement Services (@rpsins) August 27, 2024

6. Use data analytics 

Data analytics tools can be indispensable to collecting, analyzing, and acting on valuable client insights and market insights. Using data analytics tools lets you make better-informed decisions when it comes to your marketing efforts, like the content for your audience, and product offerings.  

With data analytics, you can uncover trends, track ROI, and better understand what does and doesn’t work in your marketing mix. 

7. Give seminars and workshops 

You can present yourself as an industry expert and resource person by giving in-person or digital seminars. Doing so can give potential clients a taste of your expertise.  

These seminars will allow you to share your knowledge, answer questions, and directly engage with an audience who may be interested in your services. Providing free educational seminars is an excellent way to demonstrate your skills and expertise. It’s a great way to connect with potential clients, too. 

8. Harness pay-per-click advertising 

Pay-Per-Click advertising or PPC is a more cost-effective and targeted form of advertising that is done online. When you use PPC, you only pay for ads each time an internet user clicks on your online ad.  

When these types of ads are on platforms like Google AdWords or Facebook Ads, they can help capture searchers who are serious in their search for insurance products.  

Speaking of PPC advertising, here’s a short video discussing which platforms would be best for your PPC ads. The presenter also gives advice on which platforms to use for which purpose or to achieve which goal.  

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When planned and executed correctly, PPC ads can substantially boost your online presence and visibility. This in turn drives more people to your website and increases the likelihood of converting potential clients into actual ones.  

9. Partner up with local businesses 

You can also tap your local community to generate leads or even increase sales. Try setting up joint marketing campaigns, co-branded promotions, or trade referrals with complementary businesses like: 

• mortgage brokers 

• financial planners 

Partnerships with these and other relevant businesses in your community can provide new potential referrals and clients, along with expanding your client base and those of partner businesses.  

For instance, if you tie up with a realtor, you can have your home insurance piggyback on their catalog of homes that are up for sale. On the flipside, if you offer health insurance and auto insurance, you can assist local car dealerships by matching them with some clients looking for a brand-new or used vehicle.  

10. Build a strong company culture 

Did you know that you can bolster your marketing efforts by investing in your own company culture? Positively impacting on your employees leads to increased productivity and better customer service, which lead to better client relationships and retention.  

To reap these benefits, your team members will need the resources and support to give exceptional customer service, communicate effectively, and contribute more actively to growing your business.  

Don’t discount how a supportive and inclusive environment can boost your business by elevating your brand’s reputation in the industry. 

It’s been some years since insurance businesses used digital marketing strategies and tactics as part of their insurance broker marketing. Use these different strategies in combinations that work best for your company.  

Make sure that you have your digital assets like your website and social media accounts up and running properly. If all this seems overwhelming for you to do on your own, enlist the services of digital agencies or consultants to help with efforts like your email marketing or content marketing.  

Which of these insurance broker marketing strategies do you intend to use? Let us know in the comments 

Earlier this year, AM Best revised its market segment outlook for the global reinsurance industry to positive, for the first time ever, citing robust profit margins along with higher attachment points and tighter terms and conditions as the reasons for its revision.

In a market briefing at Rendez-vous de Septembre in Monte Carlo, leaders from across the rating agency giant gathered to discuss the unique conditions of this hard market – and why they think this cycle is different to previous ones. Offering a comparison with previous hard cycles, Carlos Wong-Fupuy (pictured), senior director of global reinsurance ratings at AM Best, noted that they tend to be triggered by a significant large event which erodes capital and puts pressure on the solvency of a number of companies.

“That would trigger a sharp increase in rates within a relatively short period of time,” he said. “That’s what we saw in 1992, 2001 and 2006. Something that has changed that dynamic in the last few years has been interest rates. 2011 was a year when we had significant cat activity, but very low interest rates. We had a market awash with capital, the movement in rates on lines was very localized in the particular regions affected by these events.”

How the re/insurance cycle has evolved

The last heavy cat year seen by the market was in 2017 – which brought storms Harvey, Irma and Maria – and the market, since then, has seen a slight recovery in prices. Wong-Fupuy noted that this was a ‘price discovery phase’ and a very gradual process., with every year seeing the market asking when the market might stabilize. “It wasn’t until the renewals in 2023, when we had that step change and it was very clear… that we could see that hardening in the market.

“But one of the things that we have to realize is that it was only last year when we saw prices actually getting back to the levels last seen in 2006. So it has taken 17 years to get to that point.”

Also impacting conditions is the impact of the increase in interest rates. He identified the long period of low interest rates that started in 2008 and began to correct in 2017/2018. The stimulus measures of the COVID crisis then negated those previous movements in rate, he said, so it has been a prolonged period of correction. However now, after the excellent results delivered last year, conditions are such that the situation is likely to stabilize at a higher point, and remain the case for at least a couple of years.

Greg Carter, MD of Analytics highlighted that historically, within the re/insurance industry, there has often been a correlation between the impact of higher interest rates and cash flow underwriting, which actually led to softer market cycles. But this cycle is different, he said, and it’s important to flag that the expectations of investors – because of the poor returns delivered for so many years – is another factor driving the hard market.

What’s behind AM Best’s latest revision?

Examining AM Best’s revision of the market’s outlook to positive, Wong-Fupuy highlighted that it’s a decision informed not just about pricing, but largely about the de-risking of the segment. “The changes in terms and conditions, the increase in attachment points and the tightening of wordings are as important, if not more important than the prices themselves. That’s why we believe that these underwriting margins are sustainable in the short-to-medium term.

The role of reinsurers has come back to their historical position as protection for balance sheets rather than earnings stabilizers, he said. He believes that during the time of cheap capital and low interest rates, the allocation of capital was excessive and allowed reinsurers to actually offer capacity that saw them get involved in the high-frequency layers that they are now retrenching from. Their role as capital protectors has now been restored.

“We don’t see the capital depletion that we have seen in previous years,” he said. “Yes, there has been a bit of volatility in capacity, but we’ve made a significant difference between available capacity and dedicated capacity. What we see is that the largest companies have been able to retain profits at significant levels and the market remains very well-capitalized.

“The way that capital is being utilized has become more efficient. Obviously, companies are being more careful, more cautious, on how they deploy that capital, but at the same time, we don’t see the need, we don’t see pressure for new capital entering the market. We don’t think that that’s impossible, but it’s unlikely to see disruptors in the market, as we had seen in previous cycles.”

The evolution of cat activity

What’s also clear is that cat activity in recent years has been more focused on medium-sized to small-sized perils, which the reinsurance segment has been largely isolated from due to changes to its terms and conditions. There is still a distinction between the primary sector and the reinsurance one, he said, and at the moment, that’s a situation which is here to stay – albeit with some room for realignment. “I think it’s very clear that investor appetite is putting lots of pressure on management teams to maintain that discipline, and that is, to a large extent, what explains the lack of emergence of new entrants as well.”

Recent years have seen an increase in demand for more complex risks, he said, and the reinsurance sector definitely has a role to play in the broader economy. AM Best sees the segment as being well-positioned to take advantage of those opportunities. As to what might dramatically change the current situation, he highlighted the impact of significant changes in economic trends, including interest rates. “At the moment, we see some decline in interest rates and some control on inflationary pressures, but they’re still at a higher level than what we have seen just two or three years ago.

“And companies, despite the fact that they are benefiting from those higher investment returns, we don’t think that they are factoring that as something within their underwriting strategies. On the contrary, the focus is on underwriting quality and taking any investment return simply as a benefit which is not a key part of their business plan.”

The CEO of Munich Re, Joachim Wenning, has pushed back against calls to lower the price of natural catastrophe coverage, characterizing the demands as “noise” and “nonsense.”

Speaking to the Financial Times, he argued that rising reinsurance costs reflect increased claims and expenses rather than any attempt to exploit the market.

The steep rise in reinsurance prices has contributed to growing concerns about the affordability of insurance for consumers looking to protect their homes and businesses from natural disasters like wildfires and severe storms.

In the interview, Wenning responded to suggestions that reinsurers should help ease the burden on businesses and consumers. He pointed out that while the industry has experienced significant profits from higher prices, such profits follow years of substantial losses.

Wenning said that primary insurers, who rely on reinsurers for coverage, could reduce costs by purchasing less reinsurance.

Wenning noted that Munich Re’s record profits in the first half of the year were partly driven by the rising cost of property coverage, with the company now holding a market capitalization of €65 billion.

“I never hear the opposite of these statements, when the market cycle is a little bit softer, that they say: give the reinsurers a little more, they deserve it, because they don’t make enough money. This is very asymmetric, this is noise, this is nonsense,” Wenning said.

Despite the strong financial position of reinsurers, Wenning acknowledged that affordability could become a growing issue for consumers in high-risk areas, particularly as climate change leads to more frequent and severe natural disasters.

He warned that the cost of insurance would rise accordingly, making it harder for both businesses and households to afford coverage in disaster-prone regions.

Wenning also commented on proposals for more public-private partnerships to manage the financial fallout from natural disasters, as some policymakers have suggested expanding existing schemes that cover flooding and extreme weather.

He said any such programs should be designed to avoid distorting prices, emphasizing that higher-risk properties should still carry higher premiums.

“If you have property in a highly risk-exposed area, you should pay more,” he said. “If that doesn’t happen, we socialize the risk.”

Wenning warned that reducing financial incentives for property owners to mitigate their risk could lead to increased losses in future disasters. He also stressed that reinsurers maintain high solvency ratios to safeguard against significant losses.

Munich Re’s solvency ratio, for example, rose to 287% in the first half of the year, well above its target range of 175% to 220%, suggesting the company has excess capital.

Regarding potential mergers and acquisitions, Wenning noted that Munich Re may consider expanding its US specialty insurance portfolio or growing its primary insurance division, Ergo, in markets where it already operates. He said deals in the €1 billion to €5 billion range are realistic.

Wenning also addressed the threat posed by large-scale cyberattacks. He indicated that a public-private scheme might be necessary to share the losses in the event of a major incident, such as an attack that disrupts a country’s energy supply.

Wenning pointed out that the market currently lacks the capacity to provide sufficient coverage to large companies for such events, leaving them to manage and mitigate the risks themselves.

What are your thoughts on this story? Please feel free to share your comments below.

The reinsurance industry continues to demonstrate its resilience in the face of market volatility, with investors consistently valuing the sector for its stability, according to insights from the Boston Consulting Group’s (BCG) 2024 Insurance Value Creators Report.

Despite the high-stakes nature of the business, where claims often total in the billions, the reinsurers with the most consistent year-over-year performance have proven to be the most reliable value creators over the past decade.

Reinsurers delivered an annual total shareholder return (TSR) of 11.5% over the past decade and 13% over the past five years, outpacing the broader insurance industry. BCG notes that this performance would place reinsurers close to the first quartile among all sectors in global value creators rankings.

The industry benefited from a relatively quiet period after major natural catastrophes in 2018 and 2019, followed by the disruptions caused by the COVID-19 pandemic in 2020 and 2021.

A significant portion of reinsurers’ TSR over the last decade has come from dividends and share buybacks, accounting for more than half of total TSR in the past 10 years and 40% over the past five years, according to BCG.

Growth in tangible book value (TBV) for reinsurers has also improved, trailing only the pure-play property and casualty (P&C) insurance segment. This improvement has been driven in part by a higher return on equity for reinsurers in recent years.

Top reinsurers, including Hannover Re, Munich Re, and the Everest Group, have consistently generated long-term value through effective risk selection, assessment, pricing, and the use of advanced data and technology.

BCG reports that these companies not only excel in TSR but also rank highly in terms of risk-return performance. However, not all reinsurers have met these benchmarks, with some delivering TSRs below the cost of equity.

P&C leading the way

Within the reinsurance sector, property and casualty (P&C) reinsurers outperformed life and health (L&H) reinsurers. According to BCG, P&C reinsurers achieved higher returns, while L&H reinsurers faced negative underwriting margins.

The five-year return on tangible equity (RoTE) for reinsurers has improved over the past year but still lags behind the primary insurance sector’s RoTE, especially in P&C and L&H segments.

Looking ahead, reinsurers will need to address shareholder expectations for continued TBV growth, BCG advises. Top performers will focus on balancing profitable growth, cash flow contributions, and multiple expansion.

Although dividends and share buybacks have played a significant role in supporting TSR, BCG notes that over-reliance on these strategies could weaken companies, especially if market conditions soften.

The robust market of recent years should have allowed companies to build reserves, but softening in some commercial lines in primary insurance markets could impact reinsurance pricing in the near future.

Prepping for climate risks

BCG highlights that as climate change leads to more frequent natural catastrophes, reinsurers may need to adopt a longer-term view, potentially accepting lower cash flow contributions to TSR as they shore up capital for increased capacity requirements.

The growing need for additional capacity, particularly driven by investments in the green transition, could place further strain on the sector. According to BCG, $19 trillion in green transition investments committed through 2030 will require an estimated $10 trillion in additional insurance coverage.

Premiums for physical risks and natural catastrophe protection are expected to rise by 50% by 2030, reaching between $200 billion and $250 billion globally, BCG reports. This increase will be driven by climate-related events and other factors, including the need for more protection against large-scale disruptions.

In addition to climate risks, cyber threats also pose significant challenges to the industry. BCG and Howden, an insurance intermediary, have noted that a recent global cyberattack, triggered by a flaw in a software patch, could result in billions of dollars in insured losses, underlining the growing risk in a highly connected world.

Amid these developments, reinsurers are likely to remain a source of relatively stable returns for investors, despite the mounting challenges posed by climate change, cyber threats, and shifting market dynamics.

What are your thoughts on this story? Please feel free to share your comments below.

Independent specialist re/insurance broker Miller has announced the appointment of Andrew Gordon to its marine team, further strengthening its capabilities in the sector.

Gordon brings over 40 years of experience in marine insurance, having most recently served as Managing Director at Seascope Insurance Services.

He began his career in 1973 at Lloyd’s broker Morice, Tozer & Beck, building extensive expertise in the market over his five decades of service.

This appointment is part of Miller’s broader strategy to expand its Marine operations, following the addition of several senior professionals last year, including Andreas Bisbas, Nick Lockyer, Lee Bright, and Craig Dennis.

Nick Summers, head of direct marine at Miller, said Gordon’s extensive experience and strong relationships with underwriters will play a crucial role in the development of Miller’s Marine offering.

“Andrew’s distinguished reputation will further enhance our high standards of client service and the expertise that sets Miller apart,” Summers said.

Gordon also expressed his enthusiasm about joining Miller, stating that he looks forward to contributing to the company’s marine market offering.

“I’m excited to work with Nick and our colleagues to further enhance Miller’s standout offering in the Marine market, and I look forward to supporting our prestigious clients as we continue to meet their evolving needs,” Gordon said.

Miller also expanding in non-marine lines

In July, Miller also appointed Kazuhiko Shinkai as head of its non-marine Japan strategy. Shinkai is responsible for the operational management of Miller’s Japanese business and will lead the expansion of its non-marine operations through Lead Insurance Services Limited.

This move continues Miller’s strategic growth in the Japanese market, where it aims to strengthen its local presence and diversify its services.

Shinkai’s appointment is part of Miller’s ongoing efforts to broaden its global footprint, particularly in regions like Japan where the company sees significant growth potential.

With Shinkai at the helm of its non-marine operations in Japan, Miller highlighted that it is focused on expanding its offerings and building long-term relationships with clients in the region.

What are your thoughts on this story? Please feel free to share your comments below.

Bermuda’s premier, David Burt, has defended the strength of the island’s life reinsurance sector following the financial difficulties at 777 Re, a Hamilton-based reinsurer linked to private equity firm 777 Partners.

In a report from The Financial Times, Burt acknowledged that while not all problems can be prevented, the focus should be on how issues are addressed.

Bermuda has notably become an important center for life insurers seeking to transfer longevity and investment risks. However, the recent troubles at 777 Re have sparked concerns over private equity involvement in the sector.

The reinsurer reportedly became entangled in investments tied to Josh Wander’s Miami-based firm, which includes assets ranging from football clubs to budget airlines.

Burt, who also serves as Bermuda’s finance minister, highlighted the role of the Bermuda Monetary Authority (BMA) in responding to the crisis at 777 Re. The BMA, which regulates the island’s financial sector, has taken steps to crack down on connected-party investments in response to the issues at the company.

Burt said Bermuda has “a very strong and robust regulatory system” and emphasized that international regulators should be reassured by the steps being taken to address concerns.

“It is accepted that we have a very strong and robust regulatory system, where we have made sure to tighten the rules… to make sure that our international regulators, who may have expressed these particular concerns, know that we are taking these matters seriously,” Burt said.

Bermuda’s financial system holds equivalent status to European and US solvency rules, meaning it is viewed as on par with those regulatory environments.

According to Burt, the BMA has been at the forefront of addressing concerns related to private equity ownership of insurers, engaging with international regulators on the matter. He pointed to a 2023 BMA paper outlining specific risks associated with private equity ownership and detailing the authority’s tightened rules around investments.

Burt also addressed broader concerns about the insurability of natural disasters. He said Bermuda’s insurance market would continue to play a key role in assessing and managing these risks, expressing optimism that market cycles will eventually ease pressure on consumers.

In July, 777 Partner’s continuing troubles reached a new development as its London basketball team reportedly faces potential closure due to a legal action supported by multiple creditors.

What are your thoughts on this story? Please feel free to share your comments below.

The rapid rise of artificial intelligence (AI) is reshaping the landscape of the telecommunication, media, and technology industries. The launch of ChatGPT and other large language models has accelerated the use of AI applications.

However, the popularity of AI has led to greater energy requirements, especially for AI-focused data centres, which require significantly more power than traditional ones. At the same time, telecom companies are facing challenges in expanding networks to support AI, requiring significant investment in fibre optics and infrastructure.

“The increased energy utilisation that an AI-focused data centre requires is massive – as much as a small city,” said George Haitsch (pictured right), technology, media and telecommunications industry division leader at WTW.

“It’s significantly greater than typical data centres have been in the past. Major AI providers like Microsoft, Apple and Google need to quickly pivot to have greater capacity to support the utilisation of the tools that they’ve been rolling out.”

Energy and telecom infrastructure demand climbing

The issue has spurred renewed interest in nuclear energy as a viable power source, said Haitsch, with discussions now focusing on small mobile nuclear reactors to meet the immense energy needs of these facilities.

Experts have noted concerns that telecom companies may struggle to keep up amid growing demand for AI and machine learning technologies.

Firms are leveraging solutions like network slicing and edge computing to close this gap, but companies’ investment levels vary, according to Jose Mercado (pictured left), telecommunications subsector leader for North America and Latin America at WTW.

“Telecom companies are working diligently to address these issues, focusing on expanding their networks to support advanced technologies,” Mercado told Insurance Business. “This includes upgrading transport networks, enhancing fibre optic infrastructure, and integrating high-tech systems to meet growing demands.”

“There are existing solutions, but their effectiveness largely depends on each carrier’s business model,” Mercardo noted.

For example, he said, network slicing protocols allow carriers to segment their networks for different services and markets. Additionally, edge computing and cloud-based services help address capacity gaps.

Many carriers are also forming partnerships with major cloud providers to enhance their capabilities. Edge computing is particularly valuable for supporting the Internet of Things (IoT) as it provides reliable computing resources.

Risks and exposures as telecom firms expand to meet AI usage demands

This rapid expansion to meet the growing demand posed by AI involves substantial costs and raises various liabilities for telecom firms. Mercado stressed the importance of proper network management and investment to bridge gaps, which insurance can also play a role in.

“Liabilities are rapidly increasing for telecom companies, with cyber risk being a significant concern,” said Mercado. “As they expand into remote or hazardous areas, insurance can help manage these risks. Business interruption is also a concern, as it can greatly impact profits and earnings, making it especially important for capital-intensive telecom operations.”

Despite the challenges, there is a strong sense of enthusiasm and proactive investment in this sector.

“The industry is clearly excited about the opportunities AI presents,” said Haitsch. “It has been expanding its capacity aggressively, moving from 3G and 4G to 5G and now looking ahead to 6G.”

In the US, the Broadband Equity and Deployment (BEAD) program has introduced $42 billion in investment to expand high-speed internet in underserved areas. The initiative, which WTW is actively supporting with insurance and surety solutions, underscores the telecom industry and the government’s joint commitment to advancing communication infrastructure and bridging digital divides.

Haitsch highlighted the “growth opportunities” ahead, and the role of insurance in facilitating telecom investments.

“Insurance is a hedge, a risk financing tool, that can help smooth out the edges and ensure (telecom firms) can proceed with confidence in terms of the investment and the construction that’s going to be required,” said Haitsch. “We’re excited to be a partner to the telecommunications industry, and we’re seeing a lot of interaction and excitement around managing the challenges.”

What are your thoughts on the increase in telecom infrastructure and energy demands due to AI? Please sound off in the comments.

Gallagher Specialty has released its latest market update, focusing on global macroeconomic challenges and their effects on risks faced by those trading with or investing in emerging markets.

The report also provides an overview of the structured credit and political risk (SCPR) insurance market, noting changes in capacity and key market developments.

The report highlights geopolitical tensions, including ongoing conflicts in Ukraine and the Middle East, which continue to impact global markets. Gallagher Specialty points to the upcoming US election in November as a potential turning point, with the outcome expected to have significant implications for Ukraine, trade with China, and Western diplomacy in Africa.

The SCPR insurance market remains crucial in supporting trade and investment amid this volatile environment.

SCPR across emerging markets

In the Democratic Republic of the Congo (DRC), the escalating conflict in the east of the country is increasing risks for investors, particularly in the mining sector. Gallagher Specialty reports that the involvement of regional forces is disrupting mining operations and supply routes, which could impact investor confidence and government revenue.

Despite the instability, global demand for critical minerals is expected to sustain investor interest in the DRC.

Kenya is also facing economic pressures, exacerbated by extreme weather and supply chain disruptions. According to Gallagher Specialty, the country’s government has limited fiscal space to offer reconstruction funding, which has led to increased reliance on external support.

While Kenya’s recent Eurobond buyback has alleviated immediate concerns about sovereign default, debt sustainability remains a longer-term challenge.

In Gabon, political stability has improved since the August 2023 coup, with the military authorities committed to a democratic transition by 2025. Gallagher Specialty notes that while this transition has led to the resumption of external budgetary support, any delays could negatively impact investor confidence and lead to social unrest.

The government’s efforts to reduce external debt have also been noted as a positive step towards improving the country’s economic outlook.

Algeria is expected to hold presidential elections in September 2024, with President Abdelmajid Tebboune likely to remain in power. Gallagher Specialty highlights the country’s ongoing economic challenges, including inflation and unemployment, which may continue to affect foreign investment.

Algeria’s reliance on hydrocarbons remains a key vulnerability, particularly amid restricted oil production.

In Ghana, the approach of the December 2024 general election is raising the risk of civil unrest and political violence. Gallagher Specialty reports that confrontations between rival party supporters are likely as the election nears, and public distrust in electoral institutions is growing.

However, recent debt restructuring agreements and renewed IMF support have improved Ghana’s fiscal stability and debt sustainability outlook.

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