Insurance news

Arthur J. Gallagher & Co. (Gallagher) thrived during the first quarter of 2022, despite the challenges resulting from the persistence of the COVID-19 pandemic, the conflict between Ukraine and Russia, and other factors. It reported that its core brokerage and risk management segments combined to post 30% growth in revenue, including over 10% organic revenue growth and US$380 million of acquired rollover revenues.

For the three months to March 31, 2022 (Q1 FY22), Gallagher saw US$613.3 million net earnings (as adjusted) for the brokerage segment (compared to US$453.8 million in Q1 FY21), US$25.6 million net earnings (as adjusted) for risk management (compared to US$21.4 million in Q1 FY21), and US$39.5 million net earnings (as adjusted) for corporate (compared to US$11.3 million in Q1 FY21).

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It’s that time of the year again when the Financial Conduct Authority (FCA) publishes its complaints data for financial services in the UK, and there’s good news for the insurance sector.

According to the FCA, the insurance and pure protection product group saw the biggest decline in complaints received by firms in the second half of 2021. There were 770,000 complaints in the period, compared to 890,000 in the first half of last year.

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AXA shareholders approved all resolutions submitted to them by the board of directors at the company’s annual shareholders’ meeting Thursday. This means, CEO Thomas Buberl was reappointed by AXA shareholders as a member of the board of directors, while Antoine Gosset-Grainville was appointed as chairman of the board of directors, succeeding Denis Duverne.

“It is with great emotion that I leave the chairmanship of AXA today,” Duverne said. “I had the privilege of succeeding Henri de Castries in this role and of accompanying Thomas Buberl in his successful transformation of the group, with the support of the board of directors. I would like to express my gratitude to the women and men of AXA. their commitment, their cohesion, and their ability to surpass themselves have always been a source of motivation and pride for me. I am very confident in AXA’s future. The group is solid and strong, with a strategic vision and a purpose adapted to the challenges of our time. It will continue to be able to rely on very high-quality governance and benefit from the talents of Antoine Gosset-Grainville and Thomas Buberl.”

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Read more: Interim CEO Jonathan Clarke on the past, present and future of the CII

Commenting on the appointment, CII chair Dr Helen Phillips said Vallance’s experience as CEO of a Royal Charter membership body makes him “the ideal choice” to lead the organisation. She noted that he is well recognised as an expert in leading and transforming professional bodies into becoming 21st-century digital organisations with greater focus on meeting members’ needs.

In a Press release, the CII highlighted that during his seven-year stint at RIBA, Vallance implemented a comprehensive growth and transformation strategy for the team and that this included a governance and constitution overhaul, staff restructure, property review, and extensive investment in technology and international support.

Vallance, who trained as a Chartered accountant in London with Ernst & Whinney (later Ernst & Young (EY)), has a background in finance, consulting, strategic planning and general management across a broad range of roles in Europe and Australasia. While at EY, he spent most of his time on insurance audit work with Lloyd’s of London syndicates, brokers and insurance companies.

Discussing his new role, Vallance said he is delighted to join the CII and looks forward to working with its colleagues, volunteers, board and partners to deliver the skills, knowledge and networking required by insurance and personal finance professionals to develop their careers and serve the public.

“The CII is a force for good in raising public trust in the profession,” he said. “It will be an honour to represent both the institute and shine a light on the power of insurance and financial planning to improve the nation’s financial resilience in the UK and internationally.”

Vallance will succeed interim CEO Jonathan Clark on 30 August.

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“Almost 20 years ago, I started my career as an analyst in the retirement business, taking actuarial exams, doing valuations and benefits calcs – and I loved it, but I was middling at best,” she said. “I was working hard and getting by that my peers were brilliant. And they outshone me, and they outpaced me in promotion and progression. So, I tried to fill the gap through extra effort, 120% billable hour targets and client feedback. But I just knew I didn’t fit into the box and I desperately wanted to.”

At every performance management meeting she had with her supervisor, Scott would go in braced for the feedback she would receive. She always glossed over the positive feedback to get to the negative, she said, so she could continue to sharpen her focus and just concentrate on trying to get better. One day her supervisor gave her some advice that changed everything – to stop focusing on the negative and try to also look at the positive feedback that is being shrouded by that negativity.

“So, we took a deep breath and we started over and read through the positive feedback again,” she said. “[And it] really highlighted the fact that I should think about a consulting role based on client feedback and the broader strategic thinking that I like to do. And as a budding actuary hopeful, it was devastating feedback at first. But then I realised she was helping me pivot, and she was highlighting my strengths and helping me understand that what makes me odd could make me great.”

From that point on, Scott started embracing the client relationships and client focus that is her strength and attained an MBA to strengthen her capacity for strategic thinking. She embraced her passions, she said, and while she still focused on building a strong baseline of technical competence, she also worked on the things she was naturally strong at.

“And every time, I feel like I no longer fit in a box, I do think back on her advice,” Scott said. “And I give that advice often because people do find themselves are a round peg in a square hole, and feeling like maybe they don’t fit in. But absolutely what makes you odd will make you great.”

Listen now: WTW’s Amanda Scott on finding your voice in insurance

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“I don’t think that that perception is entirely fair: there are recent examples of UK regulators moving swiftly to enable the investment of substantial capital in the traditional insurance market, without compromising prudential standards,” he continued.

“But, fairly or unfairly, the UK’s financial regulators have acquired something of a reputation for being relatively slow and inflexible, and of engaging in excessive scrutiny of detail without due proportionality – and I am often told when I speak to market participants that that perception is deterring some businesses from even attempting to locate new ventures in London.”      

The issues surrounding watchdogs’ supposed lack of flexibility, as well as their so-called excessive scrutiny, were highlighted during the course of a recent House of Lords inquiry into commercial insurance and reinsurance market regulation in the UK.

Read more: “Parliament ought to be involved”

In his speech, though, Sheppard cited PRA’s supervision of third-country branches – pointing to “a number of practical steps” already taken to relieve branches of what he called unnecessary requirements and burdens. These changes, including waiving branch capital requirements for pure reinsurance third-country branches, are aimed at making Britain an “exceptionally welcoming environment” for cross-border insurance activity.

“To those [deterred wholesale] businesses I would first say – just try us,” the insurance policy head went on to state. “Come and talk to us, and you might be surprised at the difference between reality and perception, even under the current processes.

“And for our part, we are planning changes in our approaches to authorisation of traditional wholesale insurance ventures, and insurance special purpose vehicles (ISPV). We believe these changes have the potential to bring much greater flexibility and speed to the business of locating in London.”

The planned reforms include giving ISPV applicants more certainty over the outcome earlier in the process, as well as a faster decision on applications. As for authorising traditional entities, PRA’s new approach will be designed to address the areas of process speed, the level of business plan review, and the level of required documentation.

Sheppard declared: “From our approach to maintain a thriving ecosystem of insurance branches, to innovative approaches to achieving in the wholesale space the high standards for which the UK is rightly known, the PRA is determined to play its part in fostering a competitive UK insurance industry, which has never been more important to the success of London as a financial centre, to the wider economy, and to the great challenge of our time: investing in and underwriting the transition to net zero.

“The opportunities for the industry are great: we look forward to helping you seize them.”

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The Lloyd’s Market Association (LMA) has today announced its appointment of Janine Powell as claims director. She will be joining the LMA later in 2022.

Powell will join the association from Lloyd’s where she is currently head of customer oversight and delegated authorities – a role that sees her set Lloyd’s Customer Standards and oversee associated performance and compliance by syndicates and third parties. She has held several senior roles within Lloyd’s since she joined in 2010 and has over 25 years of insurance industry experience.

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Geopolitical risk has become a much more pressing concern for businesses since the last survey, with war risk ranking top for 22% of UK and US leaders by summer, Beazley found. Economic uncertainty, which was a top concern even before the Ukraine invasion, has spiked six percentage points over the same time last year, with 27% of business leaders ranking it their top risk in January, rising to 28% in six months’ time.

55% of respondents globally said they were very or moderately concerned about their ability to mitigate inflation during 2022. In the US, that proportion rises to 65% – the highest of any country surveyed.

Other fast-rising risks in January included employer risk, intellectual property risk and energy transaction risk, all of which broadly doubled on 2021 levels, Beazley said.

Resiliency woes

Even as risk perceptions have spiked, perceived resilience has fallen dramatically, Beazley said. Only 27% of survey respondents said they felt highly resilient about managing risk in January, compared to 35% during the same period last year.

Read next: Beazley names head of cyber services – international

Like last year, US business leaders were more confident about resilience than their UK peers.

Emerging threats from the changing nature of work post-pandemic are helping to drive the fall in perceived employer resilience and spurring concerns over disruption due to factors such as changing customer behaviour or market shifts, Beazley said.

“Business leaders continue to face perhaps the stiffest test in a generation as the world reels from the economic whirlwind unleashed by COVID-19 to the unfolding horror and ensuing geopolitical dislocation caused by the Russian invasion of Ukraine,” said Adrian Cox, CEO of Beazley. “Business resilience is under threat as companies adjust to a new world order in which everything, from trading relationships through commodity prices to supply chains, needs to be reevaluated from the ground up. As insurers, we must step up and help businesses work through this perfect storm of a high-risk, low-resilience world.”

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The survey found that liability insurance premiums have increased 16% in the 12 months since new judicial guidelines were implemented, negatively impacting business growth for more than two-fifths of respondents. Similarly, charities and other voluntary organisations have stopped providing additional services to maintain their operations.

The new guidelines on personal injury awards were meant to lower insurance costs – and, according to the Personal Injuries Assessment Board, they did. The board reported a 47% drop in the average award in personal injuries cases, but the result still failed to stop premiums from increasing.

“Insurers are simply not passing on the benefits of recent reforms to liability insurance policyholders,” said Peter Boland, director of Alliance for Insurance Reform. “Equally, other reforms that would impact on liability premiums are not happening fast enough.”

Because of this, 90% of respondents still felt the government was not doing enough to fix the issue. Eoin McCambridge, managing director of McCambridge’s of Galway, has spent an estimated €800,000 on insurance cover within the last decade. He called on the government to reform the current duty-of-care legislation. 

“The duty-of-care is effectively absolute. If someone walks into my shop and anything happens to them, it doesn’t matter what I’ve done, I am responsible,” McCambridge said, as reported by The Irish Times. “There is no thought of personal responsibility. We have people suing for falling down stairs, but they were on their mobile phones texting, yet the claim succeeds.”

“[The government] must speed up promised reforms,” McCambridge added. “In particular, they must now deliver very quickly on the delayed rebalancing of the duty of care and the delayed reform of PIAB. Ultimately, they must get liability insurance premiums down to affordable levels with reforms that keep them that way.”

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Risk & Insurance Services

Marsh McLennan’s Risk & Insurance Services business arm saw its revenue rise 10% from last year to $3.5 billion in Q1 2022. Its operating income for the quarter rose 6% to $1.1 billion while its adjusted operating income spiked 12% year-on-year to $1.2 billion.

Marsh’s revenue in the first quarter rose 11% on an underlying basis to $2.5 billion, In the US/Canada, its underlying revenue rose 10%. Meanwhile, international operations produced underlying revenue growth of 11%, including 17% growth in Asia Pacific, 16% growth in Latin America, and 9% growth in EMEA.

Guy Carpenter‘s revenue in the first quarter stood at $999 million, an increase of 11% on an underlying basis.

Consulting

Marsh McLennan’s consulting arm saw its revenue increase 7% (or 10% on an underlying basis) to $2.0 billion in Q1 2022 and its operating income increase 8% to $392 million. Its adjusted operating income increased 9% to $402 million.

Mercer‘s revenue in the first quarter was $1.3 billion, an increase of 6% on an underlying basis. Career revenue rose 16% on an underlying basis to $202 million while health revenue increased 9% on an underlying basis to $524 million. Meanwhile, wealth revenue increased 2% on an underlying basis to $617 million.

Oliver Wyman’s revenue in the first quarter stood at $667 million, an increase of 17% on an underlying basis.

Other items

In additional news, Marsh McLennan highlighted that it repurchased 3.2 million shares of stock for $500 million in the first quarter. It also noted that in March, it announced it would exit all its businesses in Russia and transfer ownership of its Russian business to local management who will operate independently in the Russian market.

Commenting on the “excellent first quarter” with which Marsh McLennan started 2022, president and CEO Dan Glaser emphasised the group’s underlying revenue growth of 10%, its adjusted operating income growth of 12% and its adjusted EPS growth of 16% as evidence it is well-positioned for another strong year.

“The current war in Ukraine has reminded us that risk and uncertainty are constants,” he said, “and I am proud of the work our colleagues are doing to help one another and our clients navigate the widespread challenges created by this horrific situation.”

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