Insurance news

“Phil is a tremendous appointment for the Clear Group as we continue to deliver on the next phase of our development,” said Mike Edgeley, chief executive officer of the Clear Group. “He brings a broad range of experience across distribution, pricing, operations, underwriting and product development, which will undoubtedly add real value to our exciting growth plans.”

Prior to joining the Clear Group, Williams (pictured above) undertook several roles at Simply Business, one of which was as the managing director for the global MGA. He was instrumental in setting up and supporting growth in the UK and North America. It was during this period when the company grew from 170 to 1,200 employees and earned the Sunday Times “Best company to work for” recognition in 2015 and 2016.

Outside his main line of work, Williams is also a non-executive director of the Society of Underwriting Professionals.

“I am delighted to be joining the Clear Group at such an important stage of its journey,” Williams said. “Mike and the team have put in place an exciting strategy for the coming years, and I look forward to playing my part in delivering significant growth and continuous improvement for our business.”

The appointment is still subject to regulatory approval.

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All 13 electric cars analysed were cheaper than their petrol or diesel equivalent models if bought upfront, saving drivers £3,862 over the average ownership period of seven years. Seven of the 13 were cheaper across a four-year lease term, while four were cheaper on a three-year PCP agreement.

The savings on electric cars were driven by lower average annual running costs – £1,054 cheaper on average annually than a petrol or diesel car – although their average purchase price was still higher than equivalent petrol or diesel cars. Of the electric vehicles analysed – ranging from entry-level ones such as the Volkswagen e-UP (£22,585) to high-end cars such as the Tesla Model 3 (£42,990) – the average cost of an EV was almost £7,000 more than the average petrol or diesel car.

Thanks to the lower running costs, drivers who bought any of the 13 EVs analysed would recoup some of their initial outlay over seven years, with 10 of the 13 cars saving over £2,000.

The biggest annual saving came from charging the vehicle instead of paying for petrol or diesel. EV drivers paid just £467.40 to charge their car each year, based on driving 8,000 miles. Petrol and diesel drivers paid £1,199.40 for the same mileage – a difference of £732. 

The other significant saving for EV drivers came from not having to pay tax on the vehicle, which for petrol and drivers came up to £193.68 annually.

For drivers unable to buy the car outright, leasing was found to be better than taking out a PCP contract. Except for the VW ID3, every electric car looked at was significantly cheaper to lease over a four-year period than via PCP on a three-year contract.

While only a handful of the EVs had cheaper annual lease costs than their petrol or diesel equivalents, the cheaper running costs allowed seven of the 13 to provide savings over a four-year lease. Only four of the 13 cars recouped money over a three-year PCP, with the MG5 Long Range Excite recouping the most at £2,270.

In addition to substantially cheaper running costs, average annual maintenance for an EV, including a service and replacement tyres and brakes, saved drivers £200. LV= found this was mainly because EVs have very few moving components, making them less likely to break down as they age and cheaper to maintain.

“Despite the upfront sticker price of an electric car being higher than the equivalent petrol or diesel car, it pays to look at all the costs involved,” said Gill Nowell, head of EV at LV= General Insurance. “Even with escalating fuel and energy costs, if people can afford to make the switch to an electric car, either new or second-hand, then charging up with energy at home rather than filling up at a petrol station is far cheaper – and better for the environment and our local air quality.”

LV= has also debunked the assumption that EVs are more expensive to insure. The Electric Car Cost Index showed that premiums were on average cheaper for the EVs analysed, with some cars (Vauxhall Corsa-e) cheaper to insure by up to 33% than their petrol or diesel equivalents.

In April 2019, LV= General Insurance launched the UK’s first car insurance product developed solely for electric cars. The product meets the specific needs of electric car owners, including cover for home charging cables and access to a network of specialist electric car repairers across the country.

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Commenting on the expansion, Bruce Stevenson CEO Edward Bruce said: “Our new office allows us to increase our presence in a dynamic part of the country, with a representation from a number of industry sectors, which align well with our overall offering.”

Bruce Stevenson’s further expansion in Scotland follows its solid financial performance in 2021, with a 7% increase in revenue and gross written premium (GWP), particularly with trading income up £600,000 to £8.7 million and GWP at £44 million. It aims to reach double-digit revenue growth in 2022.

Aside from launching a new office, the firm has made a few senior appointments, naming Graeme Christie as its new commercial director and Ian H Smith as its new education sector director.

Graeme Christie has over 25 years of experience in the commercial broking market, holding various roles with independent and global insurance brokers. He joined the firm from Marsh Commercial, where he was a regional development director for Scotland North.

Commenting on his appointment, Christie said: “Bruce Stevenson has some of the most highly qualified and sector-specific experience in the market, which gives us a really strong base from which to further expand the business and the team. Having spent most of my career in the Perth and Dundee area while operating across Scotland and the UK, I’m excited about the new office opening in Perth.” 

Smith brings over 35 years of experience in the insurance market and is a leading adviser to independent schools in Scotland, having built strong working relationships at bursarial level across the sector. He joined the firm from Marsh, where he served as vice president, responsible for managing the insurance and risk management requirements of education establishments at Marsh’s education practice.

He commented: “With Bruce Stevenson providing a local service to schools across Scotland, and backed by the strength and capabilities of Aston Lark, I am greatly looking forward to contributing to ongoing growth in this sector.”

Bruce added: “Bringing Graeme and Ian on board improves our offering to clients. They are both at the head of their fields, and we look forward to their contributions to the business.” 

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Arch Insurance International has appointed Richard Smith its new senior warranty & specialty affinity underwriter, effective immediately.

Smith boasts a wealth of insurance experience spanning the Lloyd’s and company markets. Most recently, he was a director at Newpoint Insurance Brokers, having joined the company in 2007. He also served as a senior risk and pricing analyst at Advent Solutions Management and began his insurance career at Domestic and General.

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The deal will see ReSure’s directors – Aidan Brady, Ross Barron, and Garry Fitzroy – and employees continue in their roles and remain fully engaged in the business’s growth, working with NFP.

“I cannot let this moment pass without acknowledging the overwhelming support we have enjoyed from our loyal clients and our excitement in continuing our strong partnership for years to come,” Brady said, adding that he sees great value in integrating ReSure’s insurance solutions and services with NFP’s corporate benefits and wealth management clients.

“Our ambition at ReSure is to continue our incredible growth journey to scale the business and support our clients as they expand into new markets and sectors,” he continued. “In NFP, we have found a likeminded partner with shared values that will help us accelerate and achieve this plan and help create further opportunities for our talented team to continue to thrive and prosper.” 

The ReSure swoop is NFP’s third acquisition in Ireland within the past two years, having acquired brokers HMP Insurance and Pension Advisors and Aiken Insurance Limited.

Matt Pawley, managing director in Europe at NFP, said he is confident that the Irish-owned broker will enable NFP to elevate its business further in Ireland and across Europe as it grows organically and through additional strategic acquisitions.

“We are delighted to welcome the ReSure team to the NFP family. They are a great fit in terms of people, expertise, and attention to customer service and relationships,” Pawley continued.

John Paul Allcock, UK and Ireland managing director at NFP, added: “NFP always looks for quality over quantity, and the market feedback about ReSure’s business, culture, and management team was exemplary. We have acquired a terrific business with great clients and extremely talented brokers and client managers. Most importantly, we are confident they will fit into the culture of NFP, which encourages independence, entrepreneurial spirit, ethics, and a focus on doing the right thing for employees and clients.”

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The Worldwide Broker Network (WBN) has announced the appointment of Benjamin Verlingue to its board of directors. Verlingue was appointed during WBN’s annual conference in San Francisco.

Verlingue holds a master’s degree in insurance and risk management from the Université de Paris-Dauphine. He began his career in consulting at Deloitte before shifting to brokerage in the United States. He is currently head of international subsidiaries at family group Verlingue and deputy CEO of sales and business development for Adelaide Group.

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“With the exception of proposal IV, which will only apply to life insurers, these proposals will apply to all insurers with a Part 4A permission to effect or carry out contracts of insurance as principal. However, the association of underwriters known as Lloyd’s of London would not be in scope. This is because separate legislation provides for the specific restructuring and winding-up procedures available to Lloyd’s of London.”

The proposals are expanding and clarifying the court’s existing power under the Financial Services and Markets Act 2000 to order a reduction of the value of an insurer’s contracts; the creation of a new position of a ‘write-down manager’; the introduction of a moratorium on certain contractual termination rights in both service contracts and financial contracts held with insurers; for life insurance policies, the introduction of a stay or suspension on policyholder surrender rights; and a change to the operation of the Financial Services Compensation Scheme (FSCS) in the event of a write-down to ensure protected policyholders are not financially worse off.

In its consultation, the government asked 24 questions. Responses were submitted by the Association of British Insurers, University of Aberdeen’s Centre for Commercial Law, City of London Law Society Insolvency Law Committee, Freshfields Bruckhaus Deringer LLP, International Underwriting Association of London, Interpath Advisory, Mazars LLP, PricewaterhouseCoopers LLP, and Teneo Restructuring.

Part of HM Treasury’s response reads: “The government agrees with respondents that the role and qualifications of a write-down manager will need to be set out in suitable detail, and anticipates that this will be set through a combination of legislation and PRA (Prudential Regulation Authority) policy.

“The government agrees with respondents that having a write-down manager in place to monitor a write-down, and provide oversight to the court, is important. As such, the government will ensure that a write-down is not able to proceed without a write-down manager in post. The government expects that the private sector will normally be able to provide a suitable write-down manager candidate without delay.”

“However,” continued HM Treasury, “to remove the risk that a lack of suitable candidates prevents the use of a write-down, the government is also proposing that the PRA be able to propose a member of its staff as a write-down manager of last resort. A PRA staff member would still need to be appointed by the court in the same way as a private sector appointee, with the same appropriateness tests applied, and the PRA’s existing statutory immunity would be extended to expressly apply to such a person.”

Meanwhile the government does not expect FSCS funding costs to increase as a result of the proposals.

“While new FSCS ‘top-up payments’ will be introduced in a write-down scenario, it is important to note that FSCS compensation would also be triggered in the event of insurer insolvency, the likely counterfactual absent a write-down,” it was highlighted in the 35-page document published on Thursday.

“The government does not expect the cost to the FSCS of providing ‘top-up payments’ to generally be higher than the cost of paying compensation in insolvency, particularly given that the FSCS will be able to make recoveries if the insurer’s financial position later recovers sufficiently to allow for a (full or partial) reversal of the write-down.”

HM Treasury added: “Moreover, by reducing value destruction and the extent of losses for policyholders, a write-down may in fact reduce the level of funds which the FSCS is required to provide. Importantly, the same individual compensation limits will apply following a write-down as would apply in insolvency, meaning that policyholders will not receive more from the FSCS than they would currently if their insurer were to fail.”

The government, which will continue to consult with the relevant bodies, intends to legislate for the proposals when Parliamentary time allows.

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Fairweather highlighted how the FCA is “rightly” looking to reduce consumer harm while setting higher standards and promoting competition, as well as – in a first for the watchdog – putting published metrics against its targets.

“We are now focussing on results rather than being driven by processes,” reads part of FCA chief executive Nikhil Rathi’s message within the strategy document. “Our strategy sets out, for the first time, the outcomes we expect all firms to deliver across our markets.

“We will also be tougher on our own performance, collectively and individually. For the first time, we are publishing measures that cover a multi-year period and against which we can be held accountable to support delivery of these outcomes.”

Rathi also said: “Prioritisation is inevitable, not least due to our broad and growing remit, but our decisions will be data-based. And an outcomes-based approach guards against inconsistent regulation.”

To help realise its strategy, the regulator is recruiting 80 people.

Commenting, Fairweather stated: “We welcome the fact that the FCA sees informed and empowered consumers as an important defence against bad conduct. Over time, consideration needs to be given as to how this aim is measured. Data from firms, collated under the consumer duty, could really drive this ambition.

“We would also want to see a wider ambition that consumers improve their financial resilience.  Preventing harm, such as from investment in inappropriate high-risk products, is the first step here.”

“But over the coming three years,” she added, “using the consumer duty as a driver, we believe that firms can and should do more to improve the outcomes for consumers, ensuring that they are building their resilience over time.”

According to Rathi, the new strategy will provide a foundation for the FCA to continuously improve while enabling itself to respond swiftly not only to changes in the financial services sector but also to economic and geopolitical developments.

Offering his take on the matter, Sicsic Advisory managing director Michael Sicsic asserted: “Nikhil Rathi was brought in to fix the performance of the FCA. The strategy, business plan, and outcome metrics published [on April 07] support the drive towards the performance culture he wants to build and a way of measuring its success.”

Indeed, the new FCA strategy builds on activities that were introduced in July 2021 when the CEO committed the watchdog to become more innovative, assertive, and adaptive.

Sicsic, who runs a specialist financial services risk and regulation consultancy, went on to note: “There are a number of key headlines for all financial services firms. Firstly, the FCA will raise the bar for authorisation of new firms and individuals. It is ultimately easier to thoroughly check for bad apples before they enter the cart than to sift through thousands. It will also move faster to remove authorisation from any bad actors it identifies.

“For established and reputable firms, the new consumer duty principle is confirmed as its flagship policy. This raises the standards it expects firms to adhere to above ‘treating customers fairly’ and with a rigorous amount of reporting and internal measurement to support its implementation. Third, the use of data runs deep.”

Sicsic stressed that organisations will have to build up their capabilities to measure consumer outcomes and adequately deal with complaints before they reach the regulator.

Meanwhile he commented further: “The business plan and strategy are also noteworthy for what they don’t say. There is scant mention of ‘supervision’ for example, with language shifting towards detecting harm and fixing it. This could trail the disbandment of its dedicated supervision team in its yet to be published new target operating model.”

Rathi did say that the FCA is changing its operating model to focus more on “the problem in front of us” instead of simply addressing types of firms or sectors.

“This is an exciting time for the FCA,” declared the chief executive, who took the helm in 2020. “Two hundred (200) new colleagues have joined us since the start of the year, with dozens more joining every month, as we change the way we operate, on behalf of the consumers we serve. We are committed to holding ourselves to the highest standards in doing so.”

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Among the key concerns voiced by industry witnesses are:

• That the regulator takes a “one-size-fits-all” approach to commercial insurance and reinsurance, requiring London Market firms with “sophisticated clients” to comply with unnecessary consumer protection requirements.
   
• That there is a lack of proportionality which can hinder the development of new forms of insurance in the UK.
   
• That there is a “very demanding regulatory regime” that involves a significant body of requirements and large numbers of information requests and meetings with the regulator.
   
• That the regulators “take a risk-averse approach and operate very bureaucratic systems, contrasting this with other jurisdictions that manage to operate high regulatory standards in a more pragmatic, business-friendly way”.

The inquiry saw industry members highlight the different approaches taken by regulators in other jurisdictions, notably Singapore and Bermuda, which seek to support new businesses through collaborative, open dialogue.

“This was contrasted with the approach of the UK regulators,” the letter stated, “who were said to be more likely simply to point new businesses to a website and ask them to make their own judgement on the requirements.”

This difference in approach was also highlighted in relation to stakeholder and practitioner panels that the regulators operate, with witnesses suggesting that these panels – particularly in the case of the FCA – are selected by the regulators and meet in relative secrecy, with meetings often consisting of the regulator outlining its approach rather than taking on feedback from stakeholders.

The UK industry would likely benefit if UK regulators would adopt a similar and more collaborative approach, the letter stated. However, despite these concerns, the committee recognised it is important to distinguish between dissatisfaction with the outcome and dissatisfaction with the process. In those cases in which the industry did not secure its preferred outcome, it said, this is not always necessarily a sign that the process was poorly run.

“The PRA and FCA stated that they aim to act in a proportionate manner and take into account their impact on the industry,” the letter stated. “However, it is understandable that they focus on their current statutory objectives, which prioritise safety and soundness and make no reference to competitiveness.”

Proposed solution

The industry’s proposed solution to the above issues is a “competitiveness objective” for the regulators that encourages them to be less cautious and to give thought to their impact on the industry. However, many contributors said the proposal of a “secondary competitiveness objective” may be insufficient and argued it may need to be a primary objective instead.

The PRA and FCA argued in favour of a secondary objective, the committee stated, and witnesses from the regulators suggested that they would try to take competitiveness into account when assessing the impact of new rules.

Many witnesses called for clear metrics to be established around this objective, as well as some form of annual reporting to drive cultural change within the regulators and to allow others to hold them to account.

“We heard suggestions that this could include comparing numbers of new applicants, entrants, flows of capital and services to the UK market with other regulated territories each year, reviewing UK regulators’ performance relative to other major regulators,” the committee said, “and monitoring the UK’s performance against international metrics.

“We share the PRA and FCA’s view that the primary objective should continue to be the safety and soundness of firms. Indeed, we agree with those who emphasised that a robust and rigorous regulatory framework contributes to both the competitiveness and the reputation of the London Market and would be concerned at any initiative which could unintentionally dilute this.”

Committee recommendations

The committee agreed that there were strong arguments in favour of adopting a secondary competitiveness objective but noted that this alone may be insufficient. Concerns around the inflexible and sometimes unnecessarily complex processes identified by witnesses require a broader reassessment of regulatory culture, it said, and there is a need for current rules to be applied more proportionately and effectively.

“The FCA and PRA should regularly review their rulebooks to ensure that they are maintaining high standards in the most efficient way possible to enable the competitiveness of the UK financial industry; such reviews should focus on the scope for more efficient and proportionate as well as less cumbersome and mechanistic engagement between regulators and industry,” it stated. “The PRA and FCA should consider formalising such reviews on a regular basis.”

The letter also advised the following:

• The importance of open and transparent communication with industry.
   
• The need for regulatory stakeholder panels to offer two-way dialogue.
   
• Discussions in stakeholder panels to be more transparent and public.
   
• The need for the PRA and FCA to regularly look at other successful financial centres to develop and sustain best practice.
   
• That, alongside, introducing a competitiveness objective for the PRA and FCA, it will be essential to establish clear criteria and appropriate performance measures.

Regarding the last point, the committee stated: “The evidence we heard suggested that industry practitioners have some ideas for what such measures might be and would be a useful source. Publicly disclosed performance criteria would provide an opportunity for both the Government and Parliament, through this committee and others, to monitor performance and hold the regulators to account.”

The committee welcomed Glen’s agreement on the importance of strengthening the role of parliamentary committees in holding regulators to account as they are granted greater rule-making powers. It added it will consider issues of remits, responsibilities, performance measurement and accountability more generally in forthcoming inquiries and looks forward to Glen’s response to outline the Government’s thinking in this area.

Industry reaction

Responding to the recommendations, the London Market Group (LMG) welcomed the letter and noted that, having listened to market leaders and stakeholders – including those from the LMG – the Committee agrees that it is possible to have a properly functioning competitiveness duty without compromising safety and soundness.

LMG highlighted the letter’s call for a more proportionate and efficient implementation of the current rules and the acknowledgement of industry concerns around the ‘one-size-fits-all’ approach by regulators, and the need for more openness and transparency, so that they are open to constructive challenge.

Caroline Wagstaff, CEO of the London Market Group, commented on the letter and said: “This inquiry was an opportunity for the industry to show Parliament its value to the UK economy, but also the challenges it faces. We are delighted that the committee agrees with us on the impacts that regulation can and does have on the future success of the market.”

She highlighted LMG’s five-point plan to identify the regulatory and legislative changes it believes are necessary to enhance the market’s competitive position and that the recommendations of the committee align with many of the key points this plan raised.

“Growing global competition means that the London Market’s place as a jewel in the UK financial services sector is under threat, and it is vital to take action by producing a regulatory framework that makes us fit for the future,” Wagstaff added. “These recommendations are a step towards a regulatory system which boosts our competitiveness, brings in new investment and allows our market to fully contribute to the UK’s recovery and future prosperity.”

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In the report, WTW saw that the scales were finely balanced in all markets, with most portfolios returning to profitability. However, it found that the absence of any fresh underwriting leadership and a reluctance of insurers to “break ranks” are preventing brokers from forcing through any fundamental changes in market dynamics.

Graham Knight, head of global natural resources at WTW, advised the energy sector to come to terms with the consequences of the energy transition that may be accelerated by the recent events in eastern Europe.

“Now, we have a new factor to add to the mix – a significant future loss of energy market premium income from Russian business. It really is too early at this stage to predict with any accuracy what effect this withdrawal of premium income will have on market conditions,” Knight said. “On the one hand, insurers may use this factor to insist on recouping lost premium by re-imposing stiff rating increases; on the other, they may be inclined to compete more aggressively for the remainder of the premium income pool.”

WTW’s report expects a short-term fossil fuel “binge” due to the crisis in eastern Europe that will alter the balance of the broader energy trilemma of affordability, availability, and reliability.

“It is probable that some assets may need to ramp up production, and/or other mothballed assets may be brought back online. The big question, of course, is whether maintenance and capital expenditure have been maintained for these facilities; if not, perhaps we can expect a future escalation of the current loss levels affecting the energy insurance markets, which may fuel a return to hard market conditions,” Knight said.

“How the markets react to premium income depletion as a result of sanctions and a short-term increase in fossil fuel activity remains to be seen. In the meantime, the energy transition will wait for no one; every risk manager involved in the industry will need to address the uncertainties arising out of both the new geopolitical landscape and the mounting momentum towards achieving net-zero emissions targets.”

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