Insurance news

Five major Greek shipping firms on the database were spotlighted by the Ukrainian government which claimed in its letter that in spring alone, the firms had transported 19 million tons of Russian oil worth $16 billion – a third of all the country’s oil exports over that period and “equal to the cost of launching 2,350 Kalibr cruise missiles”.

The Guardian noted that the latest figures “suggest the total value of oil transported by the Greek shippers now stands at $32 billion.”

The IGP&I responded nine days later to the agency. In a letter, seen by The Guardian, Paul Jennings, chair of the IGP&I, offered “sympathy” over Ukraine’s plight but said Greek shippers were acting lawfully.

“To the best of our knowledge, the ship-owning companies you have mentioned in your letter are engaged in trade that has, to-date, remained lawful under European Union, UK and US law,” Jennings wrote.

“Specifically, under the sixth EU sanctions package there are exemptions to the prohibitions so as to permit some Russian oil cargoes to be transported into the EU and there is also no general prohibition on the transport of Russian oil cargoes to third countries.”

Officials in Kyiv have contrasted this response to a similar request from the Ukrainian agency to the London Stock Exchange Group (LSEG), which did lead to action.

In a letter on August 31 to the agency, Phil Cotter, the head of the data and analytics division at the LSEG, offered “support for the Ukrainian people through this difficult time” and confirmed that “the World-Check database does cover the Ukraine national agency on corruption prevention [by flagging] ‘international sponsors of war’ entity names”.

This response saw each of the Greek shipping companies transporting Russian oil being tagged by the LSEG with a notice on their database that they are on the Ukrainian “international sponsors of war” register and are allegedly “financing terrorism”.

Meanwhile, The Guardian reported that a letter dated September 1 to the IGP&I shows the Ukrainian government agency made a further appeal to the insurers’ body to take responsibility for avoiding the financing of the Kremlin’s invasion.

Oleksandr Novikov, the head of the agency, wrote: “We do not dispute the legality of their actions and their compliance with the current international sanctions regime. Otherwise, the carriers in question would have been placed on the sanctions list right away (so far they are in the International Sponsors of War category, which is not the same).

“Yet, we believe that IGP&I Clubs do have a say in the matter.”

Novikov asked the IGP&I Clubs to send “a message discouraging the members from doing business with Russians or shipping Russian oil”, or otherwise to at least follow a precedent set in 2020 when it had issued a circular advising about the increasing sanctions pressure faced by companies cooperating with the Russian Nord Stream 2 gas pipe.

Jennings reportedly replied that it was likely such a circular would be issued in the future but that discussions over watering down an EU prohibition on the export of Russian oil would probably keep the trade legal.

The Guardian noted that “a subsequent circular issued by the IGP&I Clubs on October 11, five months after the relevant EU sanctions came into force, advised members there was an “extended wind-down period for insurance and reinsurance relating to the transport of Russian products … until February 5, 2023”.”

Officials in the Ukrainian government said that while the LSEG had “found a way to help”, it appeared that the IGP&I Clubs had been “looking for a reason to stay apart” and that its advice would merely enable further transports of oil.

The Guardian highlighted that Novikov said: “Greek shipowners are the first to blame for undermining economic sanctions by moving Russian oil and profiting from the shipment, but they cannot be the only ones worthy of blame.

“The companies – some of them non-profits that classify, register, and insure ships – as well as other actors who appear reluctant to take action, deserve blame too.

“It is very disappointing when the debate on transportation is reframed as one of legality. It is not just about hard-law regulations and sanctions any more; there is a need for a great global unity and there is a lot that can be done by private actors, not just governments.”

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Truss has been facing increasing pressure from within her party to reconsider her economic plans, which included around £43 billion worth of unfunded tax cuts. Her mini budget, delivered by Kwarteng himself, started a chain of events that triggered mortgage market chaos the following week. The pound hit an all-time low, and a number of lenders pulled their mortgage products from the market. The Bank of England then decided to buy government bonds to “restore orderly market conditions” and prevent a “material risk to UK financial stability.”

“Amid the wait for the wheels to screech on another U-turn, the door to no. 11 Downing Street is already groaning on its hinges, with Kwasi Kwarteng exiting the Treasury,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, commented. “The finger of government blame was pointing straight at the Chancellor as soon as he was ordered to dash back to from the US a day early, going straight from arrivals to a humiliating departure.

“His promise of a medium-term fiscal plan to be delivered on Halloween did not provide enough reassurance that the government was in control of economic policy and investors showed signs of taking fright again. But Liz Truss is still facing a rocky horror show of her own making, given that the UK is still hurtling back into a 1970s time warp.

“Even if this embarrassing reshuffle is accompanied with a fresh reversal of policy, as far as the credibility of the government is concerned, significant damage has been done. There will be a long way to go and significant bridge building ahead before the UK risk premium disappears.”

Meanwhile, over at our sister website Mortgage Introducer, property industry experts are saying that the Truss tenure as prime minister is now clearly in trouble.

“This is officially now a government without a mandate, without a plan and without a clue,” Andrew Montlake, managing director of mortgage broker Coreco, remarked. “The Conservatives know that Truss will never be able to turn people around after this and that whenever an election is called, they will be annihilated.

“Their only chance is to install a Sunak and Mordaunt double-act to restore some sense of calm maturity to proceedings to see the country through hard times. This may not be enough, though, as the sense of outrage among the British people will linger for a long time.”

For Lewis Shaw, founder of Mansfield-based Shaw Financial Services, Truss is “a pound shop Thatcher with no mandate from the country.”

“We need a general election now,” he said. “We’re scraping the barrel so hard we’re through the bottom. Just think of the poor joiners whose job it is to get the spur marks out of the wood-panelling in Downing Street.

“The current administration has no ideas or leadership and has torpedoed our economy. If that’s not a good enough reason to turf them out, I don’t know what is.”

Joe Garner, managing director at London-based property developer NewPlace, said the Truss administration has been in “absolute shambles.”

“Truss has no mandate, no control and absolutely no idea how to govern,” he added. “A general election should be called immediately because even the most blinkered Tory voter can see this is doomed to fail.

“In the meantime, it might be an idea to pull Hammond or Osborne out of retirement as a caretaker to at least add some credibility and stability. Truss isn’t fit to govern, has no mandate to govern and unless this government calls a general election, its credibility and that of the UK will continue to be shot to bits.”

UPDATE

According to a BBC report, Jeremy Hunt is set to be installed as the new chancellor imminently.

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With the latest iteration of the fabulous Dive In Festival in full swing – and also advanced plans for running our second week-long course for STEM students – thoughts have been very much on culture at LIIBA these last couple of weeks. And those thoughts have been emphasised by our enthusiastic contribution to the London Market Group’s relaunch of its London Insurance Life campaign. So, it feels a good time to reflect on the work we have done and the work that still needs to be done to build the inclusive market to which we all aspire.

Our STEM course this year, remarkably but very encouragingly seems to have been pretty much fully subscribed before we properly advertised it. Once again, we will bring around 40 school students from under-privileged backgrounds in for five mornings in their half-term week. They will be taken through our industry’s efforts to help clients meet their Environmental, Social and Governance (ESG) challenges – providing specialist risk management consultancy services to help corporations identify and mitigate threats to the businesses which may or may not include the purchase of insurance.  Experts from across the market will talk them through how their job will deliver the right outcome for clients. And at the end, the delegates will get to advise a client. It is an opportunity to showcase the wide range of roles people can find in our industry – a secret we keep depressingly well hidden.

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Alex Lay, CEO of Munich Re Specialty Insurance (UK) Limited, joins IBTV to delve into the high-net-worth market. He looks at how it has developed in recent times, the key trends and what is likely to change over the next 12 months.

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As the proverb goes, the best time to plant a tree is 20 years ago and the second best time is now. So those insurance businesses which planted the foundations of a strong cyber insurance proposition some decades ago are now seeing those roots take hold and flower as cyber risk takes its place at the top of the agenda for C-suite executives across every region and industry.

Find out more: Discover the full range of CFC’s cyber insurance services today

Discussing the current lay of the cyber insurance land and the changing tide of public opinion on cyber insurance solutions, Andrew Marvin (pictured above), chair of Gallagher’s cyber strategy group and Jim Dixon (pictured below), senior cyber underwriter, UK, at CFC highlighted what they are seeing in the market. From discussions with insureds, Marvin said, the biggest risk they are seeing is the ransom piece, largely because it represents such a broad threat to their businesses.  

“That could be business impact caused by encryption, or the exfiltration of data and that data being used for blackmail, or poor PR,” he said. “Or it could be from a manufacturing point of view, with even some smaller manufacturers are starting to see this – that they can’t manufacture because their kit might be controlled by computers, or they can manufacture but they don’t know the logistics of where that’s going, who needs it etc.”

An essential element of Marvin’s role is to work actively with insurers and insureds alike to promote education and knowledge around cyber risk. He highlighted the changing attitude of businesses towards cyber risk. Going back just a few years, he said, most businesses of any size didn’t really understand this risk or their own exposures to the peril but certainly, in the last two years, C-suite executives, in particular, have gained significant insight into the operational impacts of cyber risk.

This is in large part due to the attention paid to cyber incidents by the mainstream press, with every week seemingly bringing new news of a major cyber attack. And it’s conflating down to smaller businesses, he said, which is reflected in the questions now being asked of brokers regarding cyber risk.

“That real increase in awareness of the exposure they’re facing, particularly on the larger end of things, translates nicely across to us as the insurance providers,” Dixon said. “Because it gives us a lot of headroom and the opportunity to field the concerns these businesses have by giving them the protection they need.”

Read more: CFC Response on resetting the dial on truly proactive cyber solutions

As to how CFC is seeing the concerns voiced by businesses translate into notifications and claims, he highlighted that the team is seeing that threat actors are still focused on making money as quickly and easily as possible – with fund transfer fraud and ransomware key areas of focus. But while the end goal is always the same, he said, what is constantly changing is the tactics and procedures that threat actors are using to initiate those attacks.

“That is being reflected in the claims and notifications that we see, which is why we try to focus on staying ahead of them to actually try and reduce the claims and notifications coming through,” he said. “We can look at our claims data and how it changes. And by spotting these trends and specific tactics and procedures, we can use that intel to predict their behaviour on other businesses, and then get ahead of them to actually work with our insureds to reduce those notifications coming through in the first place.”

Looking across the UK market, Marvin noted the increasing penetration rates in existing cyber books, which, within Gallagher, he credits to the broker’s recognition of and investment in knowledge-sharing and education around cyber risk. Creating a holistic overview of a client’s risk profile is vital, he said, and with this in mind, Gallagher has fully brought into this concept of proactive cyber solutions aimed at reducing losses.

“When we talk to our clients, yes it’s about them reducing their risk but it’s also about us helping them reduce their risk,” he said. “We have a 16-strong risk management team who do nothing but help their clients reduce their cyber exposure – whether that be understanding the risk with something like a full penetration test, or bespoke staff training… And staff training and education will become in the future, and to be fair it’s the case now too, de rigueur.”

While getting stronger, Marvin said, there is no doubt that the insurance industry needs to do a better job of educating and informing clients – particularly when it comes to acronym-heavy risk controls and intel. In an effort to combat this, both CFC and Gallagher have produced glossaries of terms to support insureds and prospects in navigating the market.

Looking at the uptake of cyber insurance across the UK, Dixon noted that, particularly among SMEs, there does remain a real gap in the understanding of the exposure that they face, and he reinforced Marvin’s call for increased education around cyber. For while news of high-profile breach incidents may propel larger corporates into action, he said, it can lead to a false sense of security among smaller businesses which do not view themselves as a viable target.

“At the smaller end of the market, SME clients throughout the UK don’t really appreciate their exposure,” he said. “Then you couple that with the fact that most businesses don’t really realise what a cyber policy actually offers and what’s actually available. And there’s such a variety out there, from a very basic cyber insurance policy to what we provide which is an all-singing, all-dancing proactive service that offers real value throughout the whole life of a policy.

“But it’s not just about educating the end client, for us as the insurance provider we know we need to work closer with our brokers to help educate them. Obviously, Gallagher has hit this hard and they’ve deep-rooted expertise and ability, and specialist teams. But if you look at the regional UK market, our job as insurance providers is to help educate those brokers so they can have easier conversations with their clients. So, it is about education – but educating both end insureds and the brokers. And that’s where we’re stepping up.”

Read more: CFC on what’s happening around cyber insurance pricing

The role of the broker is to move with their clients, Marvin said, and to be risk advisors first and foremost, and cyber is a risk that is not going anywhere. Threat actors are not going to just close up shop, and so it’s up to insurance and risk management teams to look after policyholders and provide them with the best coverage and the best risk mitigation solutions.

What’s critical for brokers to understand, he said, is that their responsibility is not going unrecognised by insureds. He highlighted a recent example, wherein a manufacturing business reached out to discuss a coverage concern after their cyber proposal form resulted in their premium jumping from £3,000 to £10,000 – with an exclusion for ransomware.

“No-one had really read the forms and the broker didn’t really understand the forms,” he said. “And with ransomware cover wiped out in this market, it would be the most expensive piece of paper they’d ever bought. As a result, the business had no cover and didn’t understand what they needed to do to get cover, because they and their broker didn’t understand the market.”

Brokers need to register how the market has changed and that it’s constantly moving, he said. And that means actively partaking in any education and development opportunities that will boost their understanding of where it’s going next.

There’s a real wealth of opportunity for brokers to get ahead of the cyber risk piece and provide a true value-add service for their clients around cyber, Dixon said, and looking across the market he is positive about the future of cyber insurance in the UK.

“When you see the number of inquiries that we’re getting for new business, when we talk to our broker partners and see the number of them that are really waking up to this huge opportunity in the UK market – it all looks very promising,” he said. “There’s also the signs of pricing stabilisation and with that comes new entrants in the market. And the more people we’ve got in the market, talking about cyber as a line of business and the threats companies face, the better. So, I think it’s a very exciting place to be right now.”

Find out more: Discover the full range of CFC’s cyber insurance services today

Jim Dixon serves as senior cyber underwriter, UK, at CFC while Andrew Marvin is chair of Gallagher’s cyber strategy group.

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Elie Hanna, chief distribution officer, UK & Lloyd’s, at AXA XL, joins IBTV to discuss the present trading landscape in the UK, the questions brokers are asking and where the market goes from here.

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Just 11% of Gen Z workers report being pleased with the way their office is currently set up, according to a survey done by Unispace, a company that creates experiential spaces. But that workspace is important to these workers: almost eight in 10 (79%) feel they are more active when working in the office, compared with 66% among older workers.

Sixty per cent (60%) of Gen Z workers also say that work-from-home restrictions made them value the office more, compared with 43% among older employees.

“Employers are seemingly failing to utilize the power of the office to attract these individuals,” said Stuart Finnie, head of design at Unispace.

“With Gen Zers now accounting for around a third of the global population, for employers looking to beat the competition, considerations must be made to improve the quality of the environments they provide. Those employers who consider their workplace and generational needs will be able to not only engage and retain their best talent, but also attract new staff in our current candidate-led jobs market,” said Finnie.

Don’t force me back

Being order to return en masse might see a mass migration of workers leaving, according to another survey done in Australia.

According to the report, People at Work 2022: A Global Workforce View, among the surveyed workers in Australia between 18 to 24 years old and 25 to 34 years old, 54% and 65% respectively said they would think about looking for another job if their employers insisted on them returning to the workplace full-time.

“This is compared to 46% of the 45–54 age bracket and 27% of the 55 and over demographic,” said the report.

The survey showed that younger workers have shifted to a flexible working set-up. Perhaps office leaders should shift their focus from the physical work space to something that might make the younger cohort more satisfied with their jobs.

“This generation want, first and foremost, the flexibility [and] they want to have a great and meaningful work experience, so that means a great career progression, where they will learn a lot and then they will grow professionally a lot,” said Maggie Da Prato, HR leader and business partner at Dialectica, an information services company in Montreal that specializes in providing market knowledge to companies.

“They want to see that fast-track career progression. For them, it’s all about the meaning of that experience. If you just have something transactional, and you say, ‘You will you be doing that, and that’s the schedule, and that will be your paycheque,’ most of them won’t want to join,” she said.

This way of engaging workers must begin early on, said Da Prato. “We need to engage them from the very first contact we have with them. When we were talking 20 years ago, [it was] about ‘Let’s offer XYZ to employees’; now, it’s all about the employee experience, so making sure that we engage them from the get-go with a great package from a total compensation standpoint, but as well, learning opportunities, the experience, wellbeing, the flexibility, and of course, a great and vibrant culture.”

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Inaugurating the new premises, which will act as CFC’s research and development centre, group CEO Dave Walsh (pictured right) noted that the development emphasises CFC’s commitment not just to innovation but also to supporting its tech talent. In a lot of businesses, he said, it can seem the salespeople in the front office are the ones who get the support, while those in the back office feel less important. But for CFC, collaboration is the name of the game and supporting the full gamut of the talent that it takes to succeed and thrive is critical.

Discussing the launch, Jon Fletcher (pictured left), CTO at CFC, said he was “incredibly excited” to be able to throw open the doors of the new hub office and welcome the MGA’s tech engineers to their new headquarters.

“I had a vision for what it would look like not that long ago and it’s amazing how far it’s come in such a short amount of time,” he said. “But my expectations of what it would be like have been exceeded. The feedback from the team has been great, they’re really enthused and really excited. So, it’s up to us now to maintain that buzz as we continue to grow. And hopefully, this serves as a point of attraction for people to come to us.”

The space has been designed to support the collaborative and hybrid working conditions that give the team the flexibility they desire, and it has the capacity to accommodate the anticipated future growth of the team. The time was right for the new office, he said, not least because CFC’s original headquarters were running out of space. Fletcher highlighted that CFC’s tech team has grown significantly since he joined, from about 30 people to around 100 people – a rate of growth that requires constant levelling up.

“I’m always saying to the team, if we want to be the best tech team in insurance, we have to have the best people, the best technology, the best office and everything around that,” he said. “So I think this is representative of that ambition and of where we want to get to. And technology is a massive part of our value proposition and of how we differentiate ourselves from others. It’s central to the business and runs through everything we do.”

Read more: CFC unveils retooled policies for tech, media companies

What’s quite unique to CFC’s approach to technology is that it is embraced for its value-add potential as opposed to just its cost-saving implications. A lot of other insurance companies use technology to drive down costs rather than as an integral element of their proposition, he said, while CFC utilises it as a differentiator and as a way to help insureds.

At the heart of discussions about the workplace is the balancing act that is keeping a team culture alive in a hybrid-working environment, which Fletcher noted is why CFC heavily leaned into the social aspects of designing the new office. Getting the combination of tech and talent right isn’t always easy to do, he said, but as a challenger brand in the market, the business is looking to change the conversation around what tech talent looks like.

“Our focus is [zeroing in] on the softer skills as opposed to just the hardcore, technical skills,” he said. “I really want people coming in who are ambitious, who are team players, who want to be part of growing an amazing business and who can hold each other and themselves to account. We’re bringing in people with all those kinds of soft skills that you maybe wouldn’t traditionally associate with techies.

“Getting that social cohesion part right and having a workforce where people gel well together and are friends is the most important thing. I think if you’ve got the right attitude, you’re going to learn the skills. To do something differently you need people that think a bit differently – who are entrepreneurial, who are innovative, who are confident in putting their head above the parapet and challenging the accepted way of thinking.”

CFC’s current hybrid working model is an effective one, Fletcher said, because he firmly believes in the power of having people together in the office – at least part of the time. What people want from their working conditions does, of course, vary from person to person – with some happier to work at home and others keen to be part of a team and part of something bigger.

“My natural tendency is to veer towards people that want to be together,” he said. “Because it has been proven that we can work fully remotely. As a business, we proved over two years that it works at a transactional level. What hasn’t been proven are the long-term cultural or team impacts of that [working model].

“I’m convinced that being in person is the best way to communicate and the best way to build a culture – in full acknowledgement that you can do those things at home, it’s just better in person. And that’s back to the idea that if you want to be the best, you’ve got to choose all the best things. And the optimal mode of collaborating is to be in person.”

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Effective later this autumn, Lynn O’Leary (pictured) is succeeding Rachel Conran as chief executive of RSA Luxembourg.

“I am pleased to share that Lynn O’Leary will step into the role of CEO overseeing our Europe business,” said T. Michael Miller, chief executive for global specialty lines at Intact Insurance Specialty Solutions. “Lynn is an exemplary leader and, as CEO, RSA Luxembourg, she will ensure that our Europe business continues to grow, we remain focused on our priorities, and deliver on service excellence to our broker partners and customers.”

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Read more: ESG considerations – how are they impacting underwriting?

Touching on her role, Santenac noted that every day brings something different but three key areas of focus govern the services she and her team provide the industry.

“Firstly, I work with the partners who manage our main insurance clients to ensure they have the right resources to service them, and ensure they bring the best EY has to offer to every project or initiative,” she said. “The second is rooted in having a deep understanding of the industry, to enable us to anticipate and meet their needs. We develop solutions to help our clients navigate their strategies – tackling ESG, transformation, the regulatory agenda, and digital.

“Finally, I am passionate about sharing knowledge, developing skills and talent, and creating opportunities. I invest in mentoring and thought leadership that raises awareness of the DE&I agenda and talk about this on panels and at conferences. This is a priority for EY, and we weave this into everything we do.”

EY’s understanding of the broader environment in which insurance operates has enabled Santenac to develop a keen understanding of the factors impacting insurers, and she highlighted that the industry is committed to playing a significant role in the energy transition. This, she said, is reflected in the fact that many insurers are members of the net zero alliances for investors and for insurers. So, the importance of their role and the decisions they make – for example, investment in renewable energies – is heightened.

“[What’s driving this is] the common recognition that we collectively need to react quickly and can no longer ignore what is on our doorstep – failing to act will have a significant impact on society, and the industry,” she said. “Insurers are in a unique position where they can use their expertise to educate the society and help prevent the risk posed by climate change.”

Read more: Howden introduces first-of-its-kind carbon credit insurance product

Santenac noted that by the very nature of insurance, insurers are well placed to support the energy transition, because the main role of the industry is to protect people and prepare society for a better future. The purpose statement of insurance reflects this, she said, and together insurers can create a better world.

“They can truly deliver on their purpose by taking an active role in mitigating the risk because it impacts everyone, everywhere,” she said. “Insurers are well placed, not only because of their expertise, but because they are embedded in every corner of society, covering individuals and businesses.”

There are several ways in which insurers can get involved with the transition. First on the agenda is impact investing, she said, whereby insurers invest with the transition to net zero in mind. Secondly, they can take a more collaborative approach with their clients to help them understand and accelerate their transition. Thirdly, they can be proactive in finding solutions with other sectors, governments, and key players – harnessing the ecosystem. And finally, they can be involved in proposing new products which encourage good behaviours.  

The ability and willingness of insurers to engage with the transition are affected by several factors, not least the need for greater collaboration. The industry cannot act in siloes, Santenac said, and insurers cannot act alone.

“There has to be a collective effort to engage other players in this journey – there are many risks – and many opportunities to forge a stronger outcome by working together,” she said. “Furthermore, there is a conflict of interest in short- and long-term decisions, which highlights the contradiction between environmental goals and the immediate needs of society.”

A comprehensive examination of where insurers stand with regard to the energy transition requires recognition of the other external factors that are vying for businesses’ attention in an increasingly unstable global environment. Inflation rates are starting to have a significant impact on the profitability of insurers, she said, and this means the transition and focus on climate change could fall lower down the list of priorities.

“[Meanwhile], the war in Ukraine creates a high risk of an energy shortage, which leads to countries using, for the coming months, more coal energy and fossil fuel because renewable energy cannot solve the immediate shortage,” she said. “This again, highlights the current contradiction between long- and short-term goals.”

However, Santenac has a clear message for insurers whose focus is at risk of slipping from the critical question of the energy transition. She highlighted that there is currently a “significant and valuable” opportunity to demonstrate how important insurers are in society and the impact they can have.

“By coming together to find a solution, instead of waiting for someone to make the first move, everyone progresses,” she said. “If we do not address these issues, the protection gap widens, and this will have serious ramifications for the future. Insurers play a valuable role in people’s lives and proactive, positive action will further their ambition to meet their net zero targets and deliver against their purpose.”

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