ACTUARIAL POST FOR THE MODERN ACTUARY SEPTEMBER 2021
INSURANCE INDUSTRY COMBATING CLIMATE CHANGE
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EDITOR’S NOTE As we approach the end of the summer, or lack thereof, and with children returning to school, at long last, the semblance once more of normality is seemingly within our collective grasp for a large percentage of the country. In a packed magazine we touch on an even more topical subject with our front cover story as Rowan Douglas from Willis Towers Watson examines how the insurance industry can play a more critical role in combating climate change. In a completely mixed bag in the rest of the magazine we cover, amongst others, categories ranging from the wider consequences of serious injury from Adrian Denson from Fletchers Serious Injury and how life is being made harder for fraudsters from Dale Critchley at Aviva. As usual all our other regular columnists supply us with a new range of topics to discuss, including Tom Murray getting irritated by a call centre. I trust you have enjoyed your summer whether it was a staycation or if you managed to get abroad. I trust you enjoy the magazine, and this month will see the start of the Actuarial Post Awards 2021, which we look forward to receiving your nominations in the first phase. I look forward to welcoming you back next month
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Serious Injury Lights, Camera, Actuary
NEWS SEPTEMBER PPF confirms extension of 90 day levy payment window The Pension Protection Fund (PPF) has today confirmed it will continue to support levy payers impacted by COVID-19 by offering up to 90 days interest free to pay their 2021/22 levy bill. Schemes and sponsoring employers impacted by COVID-19 can apply for a payment extension for their 2021/22 levy invoices
If approved, the levy must be paid within 90 days so that interest charges can be waived For a second year, schemes and sponsoring employers can apply for the payment extension within 28 days of receiving their levy invoice. To apply for an extension, levy payers must complete an online form on the
The best countries for pensions revealed Blacktower Financial Management reveals the words best state pension systems in 2021 Using metrics such as public expenditure on pensions, average retirement age, average pension contributions per capita and the percentage of the population who have participated in available pension schemes - and the results are in! • A new report by Blacktower Financial Management Group reveals the world’s best state pension systems in 2021 based READ MORE
PPF’s website and explain how they continue to be affected by the pandemic. Applicants will also need to commit to paying their bill within 90 days so that the statutory interest can be waived. David Taylor, Executive Director and General Counsel at the PPF said: READ MORE
Pandemic puts suitability of MPAA in the spotlight Aegon analysis highlights how those on moderate earnings could have their retirement plans damaged by the littleknown Money Purchase Annual Allowance (MPAA). Individuals earning £30,000 per year will trigger the MPAA with monthly pension contribution rates over 13.4%. The MPAA was introduced alongside the Pension Freedoms to prevent people drawing money from a pension and recycling it back into a pension scheme to claim further tax relief on these contributions. It is triggered when individuals flexibly access their defined contribution pension and limits the amount of future annual
contributions to a pension from £40,000 to £4,000 if incurring a tax penalty is to be avoided. Currently, individuals can access their private pension from age 55, although the ‘normal minimum access age’ is increasing to 57 in READ MORE
NEWS Future is hybrid working as employers plan for post pandemic Hybrid looks set to be the working model of the future, with only three-in-ten employers expecting to have their workforce fully back onsite in two years’ time, according to a study by Willis Towers Watson. While the vast majority (85%) of businesses anticipate a return to the workplace for most employees who want to by the end of 2021, employers do not anticipate a return to pre-pandemic working practices. Employers think about a quarter of the workforce (23%) will work remotely on a full-time basis in two years’ time, and almost half (41%) will embrace hybrid working. Lucie McGrath, director, health and benefits GB, Willis Towers Watson, said: “While some READ MORE
FCA warns insurers over product governance rules deadline Insurance firms may not be ready to implement new product governance rules there to ensure insurance provides fair value, according to a review published today by the Financial Conduct Authority (FCA). As part of the FCA’s ongoing work to ensure consumers receive fair value, the review looked at how firms designed, sold and reviewed their products to ensure they met the needs of their customers. The findings show that some firms had made good progress in meeting the FCA’s existing rules and guidance on product governance and value, issued in 2018 and 2019, as well as against temporary guidance on product value, issued in
response to Covid-19 last year. However, too many firms are not fully meeting the FCA’s standards. In addition, many firms are likely to be unprepared to meet new enhanced rules on product governance, which come into force on 1 October 2021. These new rules are part of a wider package of remedies introduced by the FCA to tackle the loyalty penalty and ensure that firms focus on providing fair value to all their customers. The review found weaknesses including: Insufficient focus on customers, outcomes and product value, including when considering value in the READ MORE
European floods claim 240 lives and economic loss of USD25bn Aon have launched the latest edition of its monthly Global Catastrophe Recap report, which evaluates the impact of natural disaster events worldwide during July 2021. The report reveals that extreme precipitation in mid-July resulted in the costliest European flooding event on record, and the deadliest in nearly three decades. Catastrophic damage occurred in Western Germany, predominantly in Nordrhein-Westfalen and Rheinland-Pfalz federal states, with the official death toll listed at 197. The worst affected area was the Ahr River Valley, where the majority of fatalities occurred. Belgium recorded its deadliest and costliest flooding event in its history, with READ MORE
MOVERS & SHAKERS The latest moves and appointments from the actuarial marketplace Mercer hire Global Head of Sustainable Investment Research
Willis Towers Aegis London Watson appoints announce two Matt Dodds appointments in its Claims team
Mercer have announced a global expansion of its sustainable investment (SI) capabilities by an additional 30% to meet growing demand from clients looking to manage investment risk and return linked to climate change and other environmental, social and governance (ESG) drivers. Mercer’s award winning Sustainable Investment team is being expanded to support clients in meeting their sustainability goals and includes new hires to the global sustainable investment team based in Australia, Canada, Hong Kong, Switzerland, US and UK. Mercer also continues to increase its focus on sustainability in manager research, and has appointed Sarika Goel to the newly created role of Global Head of Sustainable Investment Research. Mercer has seen substantial asset growth in its range of sustainableoriented funds over the last 12 READ MORE
Hymans Robertson promotes new Head of DC Investment
Continuing growth and the changing nature of the claims environment have prompted Lloyd’s insurer AEGIS London to make two new promotions in its Claims team.
Willis Towers Watson has appointed a new UK Client Data Services Lead within its Technology and Administration Solutions (TAS) business. Matt Dodds joins WTW, one of the leading providers of pensions administration services in the UK, from ITM where he was a Director. Reporting to UK Head of Business Development, Damian Magee, Matt’s new role is focused on working with clients to improve the quality of their pension scheme data, improving member interaction, understanding and outcomes. He is a leading industry voice on the importance READ MORE
Hymans Robertson, the leading pensions and risk consultancy has promoted Callum Stewart to Head of DC Investment, who will manage and embed the firm’s climate and responsible investment strategy.
In addition to her current responsibility as Head of Technical Claims, London market-based Kerry Williams has been made Deputy Head of Claims. Carrie Trudeau, formerly SVP Claims Canada, has been appointed to the new role of Head of Claims Operations, overseeing all operational aspects of the claims team. She will also continue to support AEGIS London’s broader business activities in Canada. READ MORE
With 13 years’ experience in the pensions industry, Callum joined Hymans Robertson in 2015, and is a Fellow of the Institute and Faculty of Actuaries. Callum is responsible for DC Master Trust and single-employer clients, and
has been actively involved in driving the firm’s approach to tackling climate change and responsible investment. Callum recently co-founded an industry action group to encourage all pension providers to make a climate READ MORE
CITY DEALINGS Keeping up to date on acquisitions, mergers and the dealings of companies in the city
Rothesay agrees to 236m full scheme buy in for Signet Group Rothesay, the UK’s largest pensions insurance specialist, is pleased to announce that it has agreed to a £236m full scheme buy-in of the Signet Group Pension Scheme (the “Scheme”). The Scheme is sponsored by Signet Group Limited (“the Sponsor”), a wholly-owned subsidiary of Signet Jewelers Limited, a Bermuda-based company that is the world’s largest retailer of diamond jewellery and owns H. Samuel and Ernest Jones in the UK. As a full scheme buy-in, the transaction secures the defined benefit liabilities for the entire Scheme, including 825 deferred members and 1,084 pensioners
Alan Baker, Chair of the Trustee representing LawDeb, said: “We are delighted to have worked with our sponsoring employer to secure the pension benefits for all our members with Rothesay. As a purpose-built insurer, Rothesay is an attractive partner for us to ensure our obligations are met and pension benefits provided in full.”
AVIVA EXTEND PROTECTION INSURANCE DEAL WITH CONNELLS GROUP READ MORE
Global insurance M and A dips in first half of 2021
Embedding responsible investment in pensions
Mergers and acquisitions (M&A) in the global insurance industry dropped back slightly in the first half of 2021 with 197 completed deals worldwide, down from 206 in the second half of 2020 and 201 at the same point last year, according to Clyde & Co’s Insurance Growth Report mid-year update
Royal London is further embedding responsible investment across its propositions through the introduction of ‘tilts’ to its £23bn passive equity funds - including in its flagship ‘Governed Range’.
Driven by robust activity in the US, the Americas led the way with 116 deals, up from 102, pushing M&A in the region to its highest level since 2015. After a steep drop in transactions in 2020, Europe held steady in H1 2021 with 51 completed deals, up one on the previous six-
As a result, the carbon intensity of the equity investment in the ‘Governed Range’, which has around 1.25m customers’ pensions invested in it, is expected to reduce by more than 10%. This further strengthens Royal London’s approach to responsible investment and is part of its commitment to protecting standards of living for this and future generations, at no extra charge to
HOW THE INSURANCE INDUSTRY CAN PLAY A MORE CRITICAL ROLE IN COMBATING CLIMATE CHANGE Insurance sector communities have invaluable expertise and resources to address society’s climate challenges, but that experience is not fully understood or harnessed into the mainstream climate, sustainable development and finance agenda. COP26 is a strategic opportunity to finally and comprehensively bridge this gap. With COP26 drawing ever nearer, the insurance industry has a gilt-edged opportunity to re¬capture its historic role as a key commercial shepherd of social transition and gain a seat at the main table in Glasgow. Not since the age of industrialisation has global society faced a challenge on the scale of climate change and the insurance sector is uniquely placed to play a leading role in forg¬ing a workable solution; in fact, it is a challenge we are dutybound to accept. When the Paris accord was adopted by 196 nations in 2015, the annual COP meet¬ings instantly became the focal point of global efforts to tackle climate change. While some of the signatory nations have since made progress in building economic resilience against the physical and financial impacts of climate change, the urgency to do more is escala¬ting; the demand for risk mitigation and adaptation strategies is accelerating in parallel. Like few others, the actuarial sciences have a proven track record of providing support for strategic social transition at scale; its role as an architect of the social insurance systems that have underpinned many national reconstructions is well documented.
More modern insurance tools, such as national catastrophe modelling, also have obvious applications to the climate challenge and reinforce our industry’s unique ability to accur¬ately price risk over the longer term. It shouldn’t be surprising that an industry built upon the mathematical and philosophical foundations of the Scottish and wider 18th Century Enlightenment is now well placed to provide assistance in the quantification of climaterelated risks and the evaluation of the related choices and trade-offs. Since the early 1990s, the insurance industry has revolutionised its mainstream assess¬ment of climate-related risks and integrated this into its core pricing, risk controls, regula¬tory disclosure and capital management. A decade ago, led by Munich Re and in con¬cert with public and academic partners, the industry created a global facility to assess the seismic risks to properties, infrastructure and wider assets. In creating the Global Earthquake Model Foundation, the aim was to support better plan¬ning, building codes, investment, insurance and disaster response to help save the millions of lives, livelihoods and assets that were at risk. We now have the opportunity to emulate that am¬bition and provide a programme for building a global resilience model to sup¬port physical climate risk scenarios, stress testing and analysis for the com¬mun¬ities, markets and assets that are exposed. Because building climate resilience is the product of many factors, insurance is not a ‘silver-bullet’ solution. But it is a necessary component because,
when disaster strikes, the ability to rebuild lost homes, businesses, jobs and lives is central to any economic recovery. Through insurance, communal risks can be shared across public, private and mutual systems, via premiums, taxation and hybrid systems. With sound scientific principles, economic sustainability and transparency as the foundations, costs, payouts and incen¬tives can be designed to support affordability, risk signaling, resilience and wider solidarity. By November, we should have set an objective to make access to basic climate-related insurance protection systems an essential component of a climate-resilient lifestyle. In conjunction with wider financial reforms and processes, we also need to ensure that companies, and local and national governments have enough support to evaluate and formally man¬age their contingent climate risks and liabilities. Society’s history with physical, industrial and social transition has shown that changes need to occur at speed and across all economies. They will require the provi¬sion of public, private and mutual insurance (including hybrid approaches) to enable a financi¬ally, socially and politically viable process. This is not just about commercial insur¬ance products and/or public services; it is about the adoption of ‘insurance thinking’ with regard to risk assessment and the creation of economically sustainable risk pricing and risk sharing mechanisms. It is a mammoth task, but we don’t have to start from ground zero for insurance to play a role in achieving Net Zero. There are organisational vehicles already in place to help speed us along this journey. For example, the Insurance Development Forum (IDF), launched at COP21 in Paris, was created
in recognition of the critical role that risk management plays in the response to climate change. The Forum is a unique international institution that brings together private and public sectors to help countries to build the resilience they need to limit the physical, social and financial impacts of climate change. The global challenge of closing the ‘risk protection’ gap brought by climate change is at the heart of the IDF’s man¬date and the Forum has already found success using its Tripartite Agreement project to support major sovereign and sub-sovereign programmes. This model of shared success, augmented by inclusive insurance and mainstream mar¬ket expansion across many territories, provides the ideas and facilities to support the countries looking to protect their people and assets from the dangers of climate change. If we seize the opportunity, society may look back on COP 26 in Glasgow as the pivotal moment in climate-financial history in the same way we now refer to COP 21 in Paris for its influence on climate politics. November also may be remembered as the month the insurance sector, a sleeping giant, awakened to fulfill its potential to help quell today’s climate emergency. As the providers of risk transfer solutions, we have always been ‘in the room’ for discus¬sions on climate change, but we have yet to fully take a seat at the main table where the historic solutions will be forged. Insurance sector communities have invaluable expertise and resources to address society’s climate challenges, but that experience is not fully understood or harnessed into the mainstream climate, sustainable development and finance agenda. COP26 is a strategic opportunity to finally and comprehensively bridge this gap.
by Rowan Douglas, Head of the Climate Resilience Hub, Willis Towers Watson page 11
MAKING LIFE HARDER FOR FRAUDSTERS
Aviva’s fraud report has once again shone a light into the murky world of criminals intent on robbing individuals of their hard-earned savings. While the report looks at all types of fraud, including insurance fraud which might take the form of unscrupulous claims management companies or bogus ‘ghost’ brokers arranging worthless or non-existent car insurance, it also exposes financial fraud that can have a devastating effect on pension scheme members. Legislation is promised in the autumn that will make it more difficult for scammers to persuade people to transfer their pension pots to dubious pension schemes with high risk, high charge investments. The system of amber and red flags will ensure that members receive guidance, and where there is significant risk of fraud, that the transfer is stopped. But fraud flows like water, constantly seeking to exploit the next crack in our defences.
The Aviva Fraud report reveals that those who have accessed, or have access to, their pension pot are a particular target for scammers. We can see from our own data that a significant number of scheme members access their tax-free cash from age 55 onwards. For a proportion this may be to make a purchase, or provide financial help to family members. For others it might be because they don’t understand pensions and investing, and are seeking the simplicity of a cash deposit or ISA. We could debate the wisdom of these decisions in a world of low interest rates, but people don’t always make fully informed and rational financial decisions. Once outside of a pension scheme, the reality of low interest rates gives fraudsters the opportunity to offer the promise of a better return. This may be reflective of the economic
fall-out from Coronavirus, which has led to a squeeze on personal finances. Our Fraud Report highlights that two out of five people have received emails, texts, phone calls and other communications that mentioned coronavirus and which they suspected to be related to a financial scam. We may be wary of unsolicited texts or calls, but fraudsters are becoming increasingly sophisticated, meaning that anyone can become a victim. One such development is the increasing use of cloned web sites, in which a seemingly legitimate website comes out as the top search result on search engines, providing the comfort of a wellknown brand. The top sites on any web search are of course advertisements, but we might not realise that as we click on the link. We might also be oblivious to the fact that search engine providers aren’t obliged to ensure that those who advertise on their sites are legitimate. Half of the people surveyed in Aviva’s report thought that search engines checked on their advertisers’ credentials, but a scam site, purporting to be from a recognised financial services brand, can advertise on a search engine without any checks being made on the veracity of the claims made. So, can anything be done to make online investing safer?
The first thing we can all do is raise awareness of the kind of scams that are out there and get the message out that online doesn’t always mean above board. The good news is that half of the population are already on their guard - they simply don’t trust online ads. But that still leaves millions of pension savers at risk. The Aviva Fraud Report goes some way to addressing the issue, by highlighting some of the current techniques used to part us from our savings, but pension scheme providers and trustees can make a significant contribution through the inclusion of scam warnings when people access their savings, not just when they transfer to another scheme. The Online Safety Bill also provides government with a clear opportunity to close the online advertising gap in our armour against fraudsters. The recent inclusion of user-generated fraud, such as that promoted on social media sites, within the Bill is welcome, but Aviva would like to see the inclusion of financial scams promoted by paid-for adverts too. It’s something supported by nine out of ten individuals we surveyed as part of our report. The aim of the Online Safety Bill is to make the internet a safe place to be and to interact with others. We also want to make it harder for scammers to part people from their hardearned savings and make the internet a safe place to invest.
by Dale Critchley Policy Manager Aviva page 13
INNER WORKINGS YOUR CALL IS IMPORTANT TO US...
by Tom Murray Head of Product Strategy LifePlus Solutions, Majesco Hanging on the phone recently trying to get in touch with a help-centre, I found myself getting annoyed with the company as it casually wasted my time by clearly keeping its centre understaffed for the level of business it has. The constant apologies from the automated recording, which then tried to reassure me that I was important to them, actually had the opposite effect to the one presumably intended. It came over as wholly insincere and irritating; if I was that important to them, I felt, they could show it by answering the phone. Despite this, I hung in there, and 45 minutes after I started, I finally was put in touch with someone who promptly resolved my issue, but I was left with a bad impression of the company. My experience is far from uncommon and shows how many companies are blithely unaware of how customer-unfriendly their organisations are, despite their oft-repeated mantras about putting the customer first. Saying that the customer is at the heart of your business is easy, and most companies do this constantly, but customercentricity is a concept that is not simple to put into
practice. Looking to the life and pensions industry, this is particularly true, where much of the jargon associated with the industry is opaque and difficult for the uninitiated to understand. The key to having a top-class relationship with your customer is the same as with any other relationship – the ability to put oneself in the customer’s shoes and understand how they feel when they are dealing with your company. The difficulty is that most firms have business processes that evolved to suit those delivering the service rather than being driven by the needs of those using the service. Life and pension companies often deal with the public by assuming the customers know why the sales and servicing processes are the way they are and are therefore not irritated by them. Thus, in many cases, their customer interactions come across as unnecessarily complex and very slow. It may be obvious to those who design these processes why some of them are complex due to regulation or underwriting demands, but little effort is put into explaining this to the customer. As a result, customers often feel that processes are
unnecessarily slow and repetitive or even invasive of their privacy, leaving them with a poor impression of the company and less likely to return to do business or recommend the company to others. These cumbersome processes and their impressing become hugely important when a company decides to digitise its interface with its customers. Digitising the customer/company interface is a key driver of competitiveness in the post-pandemic world, and it requires a major revamp of current business processes. When rethinking how a company does business, it is too easy to prioritise operational efficiencies rather than the customer experience. How many companies really invest time and money to consider how the new solution improves the customer experience, ensuring that the customer understands each stage of the process and how they benefit from it? Yet this type of analysis is key to the successful deployment of new approaches. There is no use in having a very efficient system that delivers in-house savings if it doesn’t increase customer engagement; in-house savings only make sense if there is sufficient business for the efficiency to pay dividends.
Insurers need to work with their solution providers to ensure that new products and services are customer-centric, designed with the customer’s needs at the forefront of the design process. Only then will the new approach genuinely benefit the end-user, delivering a better customer experience and increasing their level of engagement with their firm. We have to accept that protection and long-term investment and savings products are complex. These complexities require companies to follow specific protocols to comply with regulatory requirements. However, customers are liable to be disappointed or frustrated if they don’t properly understand why each stage is required and what it involves. Sales of protection and long-term investment and savings products will increase if customers have a greater understanding of the complexities driving these processes. Insurer’s need to work with solution providers to ensure that their business processes make the customer feel that they are truly important to the company by ensuring their needs are a priority for their life insurer.
RETIREMENT PUZZLE WHY’D YOU HAVE TO GO MAKE SCHEMES CONSOLIDATED Pension schemes in the UK follow a long-tailed distribution- there are a handful of 10-digit giants, and a very long tail of increasingly small schemes. Of around 5,500 schemes, roughly 2,000 have fewer than 100 members There is a regulatory push to consolidate these schemes, and it’s easy to see why.
than their peers (idiosyncratic risk). Trend risk affects everyone equally- all schemes, regardless of size, run the same risk. Idiosyncratic risk is different however.
However, thinking purely about economies of scale misses one of the bigger advantages, which is idiosyncratic longevity risk.
the total value).
As a simple calibration, we looked at the cost of a 65-year-old man getting an inflation-linked annuity of £1 a year, using CMI 2019 tables and Large schemes have huge advantages from all an improvement factor of 1.5%, and discounting the typical economies of scale, including cheaper at gilts + 50bps. We then simulated the realised costs, more negotiating power, access to a wider present value (PV) if he dies at different ages asset pool (including most illiquid assets), and (with the probabilities given by the mortality so on. From the regulator’s perspective too, it table). We then repeat this to get 10,000 must be easier to regulate 1 large scheme than simulations of 10,000 people, and calculate the thousands of small ones. volatility of aggregated PVs of future cashflows for different numbers of members. Moreover, the typical risk of any form of consolidation in general is that risks become We show this both for the simple case where more concentrated; with pension funds the every member has the same pension, and for a opposite may be true, as the smaller schemes more realistic case where the values are skewed are likely to be forced into similar asset (we used a logarithmic based on UK income strategies while the larger scheme can hold a statistics, such that for any group of members, more diversified portfolio. the top 20% of members account for 40% of
To explain this - a pension fund has longevity risk because, if members live longer, the scheme has to pay more. There are basically two way this can have an impact- either everyone lives longer (longevity trend risk), or the individuals in a given scheme happen to live much longer
Finally, we considered what impact this might have on a hedged scheme with 5% volatility from other sources (roughly equivalent to a 25% equity, 75% LDI portfolio including longevity trend risk). To do this, we approximated an annual volatility by scaling down by the square root of the duration, just to get a comparable number.
As you can see, the risks are quite large. As the above example shows, simply consolidating 100 ten-member schemes into a single thousand-member scheme could reduce overall risk to members by over 25%, without doing anything else. Members who would have been paid full pensions in a larger scheme could end up out of pocket in their later years when their opportunity to do anything about it is smallest (while other funds would see a positive return from their previous employees dying faster than expected). When thinking about how to make consolidation work, it’s worth realising that the bar for it to be an improvement over the current system might be quite low. As a final thought, the most extreme case is the single member case, which is what every DC scheme member faces. This is a meaningful risk faced by individuals, and it can be diversified away in any sort of pooled structure. It should not be hard for a CDC scheme to be better for members than DC – something perhaps worth a future post of its own…
by Alex White Head of ALM Research Redington page 17
THE WIDER CONSEQUENCES OF SERIOUS ACCIDENTS AND HOW TO SUPPORT CLIENTS THROUGH THEM
A serious injury has the potential to completely change the life of the injured party. Data shows that almost a quarter of adults in the UK (24.6%) have suffered a serious injury in the past five years, equivalent to over 13 million people. Amongst those injuries, the most commonly occurring are slips, trips and falls (51.6%), followed by road traffic accidents (31.7%) and sports-related injuries (29.7%) – all of which bring their own unique complications and consequences. When it comes to serious injuries, insurance providers can be appointed to represent a variety of different parties from the affected individual themselves, to a business or public entity – such as a local authority – seeking support following an accident on their premises. The priority, regardless of who the client is, is to ensure they achieve a positive outcome. But from the client’s perspective, this often needs to go much further than a successful financial claim – especially if they are the one to have suffered the injury. Serious injuries can lead to a huge array of practical and emotional challenges, which not
only affect the client, but also the lives of the people in their family and wider network. In particular, children are known to be significantly affected when their parent or carer experiences a serious injury. For example, new research from Fletchers Serious Injury has revealed that up to 2.5million children are thought to be suffering mental health complications, including post-traumatic stress disorder, after a parent or carer suffers a serious incident. Insurance teams dealing in serious injuries are often keen to demonstrate they go above and beyond the basic call of duty. To help clients rebuild their lives following an accident, they should make use of the tools and resources available to help families cope with the consequences on their physical and mental health following a serious injury. Doing so will make the claim about more than purely a monetary pay out. The research conducted by Fletchers Serious Injury shows why this is truly important. The Top 100 law firm found that a third (31%) of parents or carers who are living with the effects of a serious injury weren’t provided
with sufficient resources to help their family cope with the challenges they experienced. Meanwhile, a quarter said their recovery would have been better supported if they had been able to access resources to specifically explain to children what had happened and how life might change moving forwards. The study also found 58 per cent of children experience major changes to their life following the serious injury of a parent or carer, including missing time in education, moving to a new house, changing school, being looked after by other people, or even taking on carer responsibilities themselves. As a result, children go on to experience short and long-term mental health issues. Many suffer from shock, anxiety, anger outbursts and insomnia. Some also develop their own coping strategies to process the impact on their lives. In extreme cases, they are diagnosed with posttraumatic stress disorder. The legalities around serious injuries are increasingly complex. As such, insurance providers play an essential role in facilitating access to resources, charities and professionals who can help their clients to recover physically and rebuild emotionally as soon as possible following a serious injury. A vital part of this should be finding ways to help young people who are affected by the injury to understand – in an age appropriate way – how the occurrence of a serious injury may affect them today and into the future as they mature. For example, young children are known to respond positively to storytelling, using fiction and pictures to learn how a character in a similar situation felt during such circumstances, transporting them to a world away from their own. Meanwhile, teenagers have been found to benefit from activities which encourage them to express their emotions in creative ways – such
as drawings or writing – along with informative guides to help process what has happened to their parent or carer. Fletchers Serious Injury recently used the findings of its research to create a wealth of different resources for children of varying ages, which are available to insurance teams to share with families to help them cope with the effect a serious injury can have on adults and children alike.
‘Bracky Builds a New Den’ is the tale of a happy dinosaur whose life is turned upside down when their father suffers a serious injury. Aimed at 5 to 8 year old children, the free book was commissioned following a period of analysis and development, including tailored professional advice from therapists and firsthand accounts from families and children who have experienced similar scenarios. Alongside the book is a series of downloadable activity and fact sheets for older children and teenagers to support them.
Just as the circumstances of any serious injury are steeped in intricate details, individual to the person who’s suffered it, so too should be the response from insurance providers. When it comes to accidents, it’s vital to go beyond a basic obligation and cater to clients’ specific needs by broadening the services and support made available to them, paying particular attention to those who might be affected in more subtle ways. In doing so, insurance providers will demonstrate they understand the true impact of such an event and will enable their clients to rebuild their lives more easily, keeping the wellbeing of their entire family central to their recovery.
by Adrian Denson Chief Legal Officer Fletchers Serious Injury page 19
search & selection
LIGHTS, CAMERA, ACTUARY!
Bolton Associates’ focus is specifically in the non-life actuarial space; the largest dedicated GI actuarial specialist in the market. Working throughout the insurance market, the consultants at Bolton Associates offer an exceptional service, managing the process with the utmost tact and respect for all parties. We are passionate about our market, taking great interest in the insurance world as a whole, keeping up with trends and changes, and maintaining our everexpanding network. We are good at what we do, because we enjoy what we do.
The next focus for Bolton Associates’ Spotlight page, is an interview with one of the actuaries who dedicates their own time to sitting on GI Committees or establishing Working Parties, for the benefit of the wider GI Actuarial Profession. The Actuarial Profession relies heavily on volunteers, who are happy to design and implement annual events and conferences, or who are keen to present and share their expertise and findings, for the benefit of the profession and their peers. From the GI Board, to GILL, GIRTL and the GIRO Conference, Zoe Bolton will be talking to the actuaries who dedicate their time, and contribute to the continuous development of the actuarial community, and getting a brief insight into their career paths and visions for the future. This month Zoe talks to Amit Parmar, MD, GC Analytics at Guy Carpenter & Company Ltd.
What is your current role, and how did you end up in it?
How does your actuarial training and background assist in your day-to-day role now?
I’m an MD within the London Guy Carpenter operation.
I think there are a lot of soft skills that the actuarial exams bring. Time management / communication / problem solving etc are really important as you progress through your career and your career moves from predominantly technical to predominantly commercial.
My current role is a hybrid between reinsurance broker and managing the UK actuarial team. The reinsurance broke on certain lines has gone down the technical route and actuaries are more at the forefront coordinating with clients, underwriters and reinsurers to find a solution that satisfies the different stakeholders. I also colour in charts for brokers. What is the defining moment of your career to date? Catching my tie in a shredder as a work placement intern. Made me think about slowing down and getting things right as sometimes you can’t fix something that’s broken (or shredded). In your opinion, what prepared you best to take on your current role? Watching others and their style and ways of conducting business. We have everything from the caring cuddly exec to the ruthless-sell my-mother to make a buck exec.
Demand. As we are starting to see a hardening of reinsurance rates, demand for actuarial services and divergence in thinking about reinsurance is emerging. Our job is to understand these dynamics and factor them in a consistent way to help our clients mitigate the extreme risks in their portfolio under a lot of competing constraints.
When did you first join the Institute & Faculty of Actuaries, and what advice would you give to those students looking to emulate your career path? Joined in 2002. Be very proactive, help out where you can and have a can-do attitude. Get a good balance between your social life, exams and on the job training. All three are really important and will play a part in the future. Read a lot and try and practice what you learn. Don’t over think things.
I think you have to continually learn and talk to people and build your own style. My role has a lot of different parts from business development, management and operational issues so I am constantly thinking how to improve in these different areas. What is the biggest challenge you face in your role within this market?
And of course helping thinking outside the box and approaching problems in a composed, systematic way. And Tax. And regulation.
If you had your time again, what would you do, career-wise? I think I would build more relationships within as well as outside of the industry at different levels. Maintaining these relationships in a meaningful way is difficult but really important. Please share your favourite piece of trivia with our readers! In the eighties, Pablo Escobar’s Medellin Cartel was spending $2.5k a month on rubber bands just to hold all their cash. There are problems then there are problems – proportionality is key!
DATA VALIDATION IS KEY TO KNOWING THE CUSTOMER IN COMMERCIAL SME
Risk-based decisioning and personalised products have been essential to driving profitability and efficiency for insurance providers serving the commercial market. As traditional underwriting methods have given way to e-trading in commercial SME, some challenges still remain such as referrals, ambiguity around eligibility and fraud.
policyholder with validated datasets to confirm the accuracy of the information provided.
At the heart of the commercial insurance market is huge reliance upon a duty of disclosure. However, the verification methods used in commercial SME can vary from broker to insurer, from account handler to underwriter. This may be due to the fact that commercial insurance providers have been settling for second best when it comes to data - until recently there has been a big difference between the availability of data for personal lines and that for commercial. The challenges of data enrichment in commercial compared to personal lines become obvious when you look at the complexity around business verification, for example, and matching the details provided by the
It may simply be a person’s name for a sole trader, but more often than not, there is a trading name to consider as well as potentially multiple directors to vet as well. Partnerships are very common as are professional partnerships such as a firm of solicitors or accountants, and while limited companies need to be registered bringing in a naming convention, there are several thousand unlimited companies in the UK that need to be understood and considered as well. Then the business name, directors, owners and address need to be matched against multiple datasets to create an understanding of the full risk. The business trading addresses could be a residential address, but it could also be a high street, a workshop, an industrial site, office block or large industrial site. All of these different types of addresses need to be captured for commercial underwriting. If a business is trading from more than one location, more than one risk address needs to be captured. This is especially the case for property owners’
insurance. A portfolio could have a dozen different properties on it, so each address needs to be captured for the risk to be assessed, quoted for and ultimately underwritten. It is absolutely critical for an insurance policy to be set up in the correct name, from both a legal and regulatory perspective, but it’s also essential that the data returned is specific only to that business. Due diligence upfront is a requirement for all Commercial insurance brokers and having the right tools accessible for these checks is key to being able to deliver this. The solution starts with matching routines that hone in on the precise business and its location. Business data can confirm how big a business is, how long it’s been trading, what its financial position is but also importantly gaining a depth of understanding as to who is involved in its management through the use of publicly available person data. An unprecedented rise in new company registrations means it’s never been more important for commercial insurance providers to understand the trading history of a business before taking out an insurance policy . Now, with property data we have specific insight into the residential building - to confirm when a property within a portfolio was built,
the rebuild cost and the construction. This all helps commercial insurance brokers meet their Know Your Customer obligations using accurate validated information and allowing presentation of the correct risk to the market. Commercial PreQuote, for example, offers a single integration into broker software platforms so that data can be injected into the policy lifecycle prior to quote, meaning by validating and verifying information, the quality and accuracy of the quote can be improved. Inturn, more quotes can then be traded, referrals reduced, and ultimately better operational efficiency can be obtained. Brokers can also enjoy increasing eligibility on e-trade platforms having had access to business, property and person data at the point of quote, and there can be less time spent on referrals. Broking account handlers can free up their time to assess more complex risk, which needs rationale, rather than just ticking the box about floor or wall type. With access to data enrichment tailored by product opening up to the commercial insurance market, a future in which an insurance provider is able to pinpoint exactly where their appetite sits or predict the likelihood of a commercial prospect facing financial difficulty within the next 12 months is now within reach.
by Martyn Mathews, Snr Director of Commercial & Personal Lines, at LexisNexis Risk Solutions page 23
TEMPORARY JOBS • LIFE • GRADUATE • CONSULTANTS • TEMPORARY JOBS • LIF OBS • £100K+ • CONSULTANTS • TEMPOR IMMEDIATE JOBS • £100K+ • CONSULTAN ATE • PENSION • IMMEDIATE JOBS • £100K LIFE • GRADUATE • PENSION • IMMEDIAT PORARY JOBS • LIFE • GRADUATE • PENS SULTANTS • TEMPORARY JOBS • LIFE • G £100K+ • CONSULTANTS • TEMPORARY MEDIATE JOBS • £100K+ • CONSULTANTS ENSION • IMMEDIATE JOBS • £100K+ • CO RADUATE • PENSION • IMMEDIATE JOBS JOBS • LIFE • GRADUATE • PENSION • IMM • TEMPORARY JOBS • LIFE • GRADUATE • CONSULTANTS • TEMPORARY JOBS • LIF OBS • £100K+ • CONSULTANTS • TEMPOR IMMEDIATE JOBS • £100K+ • CONSULTAN
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search & selection Senior Data Scientist
Senior Capital Actuary
General Insurance Up to £75,000 Per Annum London
General Insurance Up to £120,000 Per Annum London
A reputable London Market insurer is seeking an experienced Data Scientist to join their Strategic Analytics team. This hire will be conducting analysis and creating predictive models using R, Python and SQL to drive business performance and profitability. Excellent communication skills required in order to work across detailed knowledge of statistical theory.
Multi-line start-up reinsurer has an opening for a qualified or qualified by experience Senior Capital actuary. With Lloyd's experience, you will take complete ownership of all capital related work and lead the development of the model and ensure its compliance. As the first capital actuary you will play a key role in the business including direct access to CEO.
REF: ZB 001810 JC
REF: ZB 001792 ZB
Nearly / Newly Actuary
General Insurance Up to £80,000 Per Annum London
General Insurance Up to £120,000 Per Annum London
Top 5 Lloyd's syndicate is seeking a business facing actuary. Ideally you will have pricing experience or have worked across casualty / financial lines in a pricing capacity. The role will involve working closely senior actuaries, covering case pricing and analytics work, supporting the underwriters and contributing to strategy.
Global insurer is seeking a Reserving Manager to head their syndicate function and manage two direct reports. This role is less focussed on reporting and more specific to the quarterly reserving exercises for a variety of classes of business. You will be a qualified reserving actuary within the Lloyd’s/London market well versed with ResQ.
REF: ZB 001774 MM
REF: ZB 001732 HT
General Insurance Up to £75,000 Per Annum London
General Insurance £65,000 - £100,000Per Annum London
Specialty Re(insurer) seeks experienced Reserving Actuary. Reporting to the Senior Reserving Manager, this role will contribute/add value to the Actuarial team and group wide business through involvement in the Actuarial function, particular focus on technical provisions under Solvency II. Microsoft Excel, VBA; Access and SQL ResQ a plus.
If you are personable, commercially minded and a qualified actuary, this opportunity may be of interest. Our client, a global broking house is looking to expand the team and further establish its cutting edge analytics offering to its clients. London market experience is key, and additionally those with casualty or motor backgrounds will be very well received.
REF: ZB 001793 SC
REF: ZB 001692 MM
www.bolton-associates.co.uk page 24 26 +44 (0)207 250 4718 Bolton Associates, 5 St. John’s Lane, London, EC1M 4BH