INSURANCEBUSINESS.CO.UK ISSUE 1.01 | £14.99
SPECIALIST
RISK MANAGERS 2016
They’re the defenders of corporate Britain – and your best business partners DOCTOR DOOM ZURICH CRO ON PANDEMICS AND SPACE DEBRIS
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ENTERTAINMENT INSURING 60-FT INFLATABLE OCTOPUSES
WORLD RISK
THE RISKS THAT ARE GROWING GLOBALLY
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The power of partnership IFC_01.indd 12
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MAY 2016
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CONTENTS
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UPFRONT 06 Statistics
SPECIALIST
RISK MANAGERS 2016
COVER STORY
28
The most worrisome risks for 2016
08 News analysis
FEATURES
WHEN LIGHTNING STRIKES Your clients are covered – but what about you? What to consider in a professional indemnity package
26
AGENCY INSIGHT How Aldium 4 Couriers built a niche by targeting the courier market’s major players
John Scott, Zurich’s chief risk officer, weighs in on the biggest risks the world currently faces
How can the industry use big data?
14 Technology update
How to avoid being hacked
16 MGAs update
MGAs hit the the UK market
23 Solid foundations build client retention
Tips for servicing construction clients
46 Change or die
Why businesses must adapt to survive
52 Questions to ask when interviewing
Questions that will net the right talent
PEOPLE 44 Broker profile
Mark Boon tapped into his love of music to launch his specialty brokerage
54 Career path
FEATURES
48
IN AT THE DEEP END
Making sense of Flood Re, the UK Government’s beleaguered scheme to pool flood risk
2
12 Head to head
FEATURES
FEATURES
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This month’s big movers and shakers
Six ways to deal with digital risks
Risk managers represent a vital partnership for brokers. We’ve uncovered the details on 40 of the top professionals charged with defending the nation’s businesses
INDUSTRY ICON
10 Intelligence
18 Opinion
SPECIALIST RISK MANAGERS
PEOPLE
24
Industry leaders on the talent crisis
Ben Rose’s multi-continent journey
56 Other life
Cycling glory with Torquil McLusky
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UPFRONT
EDITOR’S LETTER
www.insurancebusiness.co.uk MAY 2O15
The price and prize of progress
T
his February marked the 30th anniversary of the Challenger shuttle disaster, and the revelation in the investigation that followed that NASA simply did not understand risk. Nobel Prize winner and physicist Richard Feynman identified that a tiny component – an O-ring seal – was the cause of the tragedy on that day. But what was most interesting was that while it had been predicted that the O-ring would fail at some point, NASA managers chose to ignore the warnings. The problem was that they deemed the risk ‘acceptable’. Feynman reported that while engineers put the chance of a disaster at around one in 100, management estimated the chances to be closer to one in 100,000. As any pessimist will point out, disaster is guaranteed at some point – it’s just a question of whether the likelihood of that disaster happening is acceptable or not. One in 100,000 was acceptable to NASA, but as the Colombia disaster 17 years later showed, perhaps the engineers were closer to the mark. This year is also the 350th anniversary of the Great Fire of London, another disaster caused by something so small – in this case a stray spark from a bakery – that left a third of the city in need of rebuilding and 100,000 people homeless. Both of these incidents, hundreds of years apart, were the negative consequences of progress – but the economic and social opportunities enabled by them were
Global risks are multiplying faster... and interconnections between these risks are growing stronger
EDITORIAL
SALES & MARKETING
Editorial Director Andy Phelan
General Manager Sales John Mackenzie
Editor James Middleton
Business Development Manager Jonathan Connelly
Production Editor Hayley Barnett Production Manager Alicia Salvati
CONTRIBUTORS Dominic Casserley Michael McQueen Sarah Derry
ART & PRODUCTION Design Manager Daniel Williams Designer Joenel Salvador Traffic Coordinators Kay Valdez Lou Gonzales
Sales Manager Dane Taylor Marketing & Communications Manager Lisa Narroway
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Tim Duce Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
EDITORIAL ENQUIRIES editor@insurancebusiness.co.uk
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decided to be worth the risks. And both incidents, in their way, drove further development of risk mitigation techniques, including insurance. In this, the inaugural issue of Insurance Business UK, we look at how global risks, ranging from environmental disaster, interstate conflict and disruptive technology, are multiplying faster than ever and interconnections between these risks are growing stronger. This is creating a dangerous synergy that could have profound implications for society and the global economy. Our discussions with risk experts from a wide variety of sectors analyse the potential impact of our increasingly risky business existence, and what that means for the UK’s community of insurance brokers. For, as the insurance industry acknowledged at its birth here in London hundreds of years ago, with great responsibility comes great opportunity.
The team at Insurance Business UK
Insurance Business is part of an international family of B2B publications and websites for the insurance industry INSURANCE BUSINESS AMERICA cathy.masek@keymedia.com T +1 720 316 0151
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INSURANCE BUSINESS NZ peter.smith@keymedia.com.au T +61 2 8437 47OO
Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Insurance Business magazine can accept no responsibility for loss.
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UPFRONT
STATISTICS
A world of risk The impact of business interruption, disruptive market developments and cyber incidents are the major risks occupying the attention of companies around the globe at the start of 2016 BUSINESS INTERRUPTION (BI) is once again the greatest concern for 800 risk managers and corporate insurance experts from more than 40 countries who took part in the fifth annual Allianz Risk Barometer. The threat is amplified by the fact that in today’s increasingly interconnected corporate environment many of the other top 10 global business perils, such as cyber incidents and political risks, can also have severe
£1m
BI implications. Natural catastrophes drop two positions to fourth year-on-year, reflecting the fact that insurance claims from natural disasters fell to £19bn during 2015. The risks posed by cyber incidents, such as data breaches or IT failures, push the category into the top three for the first time. Cyber is seen as the top future risk, with increasingly sophisticated cyber attacks the most-feared impact of digitalisation.
£19bn
£64bn
average amount of business interruption insurance claim worldwide
global insurance claims from natural disasters in 2015
total global nat cat losses in 2015
88%
global proportion of business interruption claims unrelated to natural catastrophes
North America Data fraud or theft
Cyber attacks Extreme weather events
MOST LIKELY RISKS ACROSS THE GLOBE Risk managers in different parts of the world face different concerns. Large-scale involuntary migration is the most likely risk to businesses in Europe in the years ahead, according to experts and decision-makers from the World Economic Forum. They rated extreme weather events and other natural catastrophes as other problems the world is likely to face in the near future.
1st
2nd
3rd
Source: Allianz Risk Barometer 2016
BI TOPS GLOBAL TOP 10 BUSINESS RISKS FOR 2016 Business interruption (including supply chain
1 disruption)
Market developments (volatility, intensified
2 competition, market stagnation)
Cyber incidents (cyber crime, data breaches, 3 IT failures)
GLOBAL RISK OF HIGHEST CONCERN FOR DOING BUSINESS, BY COUNTRY When it comes to business risks, things are not quite as globalized as we might imagine. A striking commonality, however, is the relative absence of environmental risks and, more generally, of long-term issues among the top concerns of business leaders.
UK
asset bubble
USA Russia India deflation
cyber attack energy price shock
France Brazil asset China bubble unemployment
failure of national governance
4 Natural catastrophes Changes in legislation and regulation
5 (economic sanctions, protectionism)
Macroeconomic developments (austerity
6 programmes, commodity price increase, inflation/deflation)
7 Loss of reputation or brand value 8 Fire, explosion 9 Political risks (war, terrorism, upheaval) 10 Theft, fraud, corruption Source: Allianz Risk Barometer 2016
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Source: Executive Opinion Survey 2015, World Economic Forum
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Europe
Failure of national governance
Central Asia including Russia
Financial crisis
Interstate conflict
Unemployment or underemployment
Latin America and the Caribbean
Unemployment or underemployment Social instability
Environmental
Unemployment or underemployment
Water crises
East Asia and the Pacific Water crises
Unemployment or underemployment Failure of critical infrastructure
Geopolitical
Extreme weather events
Natural catastrophes
Failure of national governance
Failure of national governance
Unemployment or underemployment
Economic
Energy price shock
Failure of national governance
Middle East and North Africa Sub-Saharan Africa
Failure of national governance
Social instability
Large-scale involuntary migration
South Asia
Societal
Extreme weather events
Technological The Global Risks Report 2016 – WEF/Zurich
TOP 5 GLOBAL RISKS OF HIGHEST CONCERN FOR NEXT 10 YEARS Casting their minds further ahead, risk experts see water crises and climate change issues becoming critical
Water crises
TOP GLOBAL CAUSES OF BUSINESS INTERRUPTION (BI) LOSS BY TOTAL VALUE, 2010-2014
39.8%
1
Failure of climate-change mitigation and adaptation
2
Fire and explosion
36.7% 3
Extreme weather events Food crises
4
Machinery breakdown
26.5%
Storm
Faulty design/ material/manufacturing 5
25.2%
Strike/riot/vandalism Source: The Global Risks Report 2016, WEF / Zurich
Source: Allianz Global Corporate & Specialty Global Claims Review 2015: Business Interruption In Focus
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UPFRONT
NEWS ANALYSIS
OUT WITH THE OLD A looming talent crisis is forcing the industry to appeal to Millennials for fresh blood. And some of the biggest players are the most active
THE INAUGURAL Insurance Careers Month, a grassroots movement aimed at attracting new blood to the industry, took place in February. But although skills are seen as a soft discussion, behind the initiative lurk hard facts. The insurance industry globally currently employs around 2.5 million workers, and a further 400,000 new job vacancies will be added by 2020. But the number of insurance professionals aged 55 and older has increased 74% in the past 10 years, and over the next three years a quarter of the industry will have reached retirement age.
10-15% of the industry’s need for new talent, these captains of industry have their work cut out for them. Brian Duperreault, CEO of Hamilton Insurance Group, who joined the sector more than 40 years ago as an actuarial trainee, is the first to admit a collective responsibility. “We haven’t done a good job in letting today’s generation know what a great career they can have in insurance. Today’s men and women don’t give insurance much thought,” he says. For sure, part of the problem is down to image perception. Insurance is considered an ‘old’ industry and the ‘pale, male and stale’
“There is a talent war ongoing and new business candidates are always in high demand” David Carr, IDEX Consulting In short, the insurance industry is facing a looming talent crisis, prompting industry icons Brian Duperreault, Inga Beale and Dan Glaser to appeal to the Millennial generation for fresh skills. But with less than 5% of Millennials expressing an interest in working in our industry and current insurance and risk management graduates meeting only
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quip is often applied to it. Inga Beale, CEO of Lloyd’s, has become something of an antidote to this malady, although even she sometimes struggles to move with the times. “During my 30-year career in the insurance industry I’ve seen the world transform at an unprecedented pace,” the Lloyd’s chief says, adding that digital natives are living in a very
different world to what the ageing insurance industry is used to. “They’re multi-screening and adapting to new technologies that are quite foreign to someone like me,” she says. Mike McGavick, CEO of XL Catlin, argues that this rapid rate of change forces the industry to constantly evolve. “Our industry reflects everything that’s changing in society and as these new tools allow us to perform our work in new ways, it makes this a highly creative industry,” he says. McGavick suggests that technology should be embraced rather than feared, because the insurance sector will retain a critical dependency on human capital that isn’t going to be automated. “The reality is that about half of today’s current insurance workforce will retire by 2030 and they’re not going to be replaced by technology, but they might be replaced by you [people]. There are 400,000 jobs in the sector that will need to be filled
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THE CHALLENGE
ONLY 5%
of students consider themselves very interested in insurance
Top five jobs in need of new talent: Actuaries Computer analysts Data scientists Insurance agents Sales representatives just in the next handful of years,” he says. This is where the British Insurance Brokers’ Association (BIBA) is looking to make some headway, having signed a
Government’s Insurance Growth Action Plan: to double the number of apprentices in insurance by 2018. BIBA is working with the Chartered
“Half of today’s current insurance workforce will retire by 2030 and they’re not going to be replaced by technology” Mike McGavick, CEO partnership agreement with the Department for Work and Pensions in 2013, highlighting opportunities in our sector and promoting it as a career choice. The creation of a general insurance apprentice standard, where apprentices can earn while they learn, was designed to help the industry achieve its target in the
Insurance Institute (CII), the ABI and Aon to attract young people to insurance broking. For Sian Fisher, newly instated CEO of the CII, education is the greatest driver of social mobility. “It’s a fact that even today lots of people are not from academic backgrounds, and they have trouble at school, and they need a second chance to do professional vocational
Source: US Bureau of Labor Statistics and AARP and the NACE Recruiting Benchmarks Survey
qualifications to make the best of their full potential,” she said, adding: “The purpose of the Institute is to secure and justify the faith of the public in insurance.” Yet in the face of a skills shortage, those in a favourable position can reap the rewards, with the Central London and Lloyd’s markets seeing consistently healthy uplifts across most salary bands. According to David Carr, managing director at specialist recruiter IDEX Consulting, there is a talent war ongoing and new business candidates are always in high demand – even more so if they are in a niche product area. “The focus has been on new business and, with the primary markets looking soft across most lines of business, employers have also looked to recruit those who can on-board profitable niche business,” he said.
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UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Highbridge Principal Strategies
Majority interest in Broker Network
Towergate Insurance will be selling its majority stake for up to £46m
Henderson Insurance Brokers
John Reynolds Group
Combined premiums will exceed £50m annually. All staff at both companies will be retained
PIB Insurance Brokers
Cooke & Mason
Transaction also includes risk management firm Sigerson Associates, a sister company of Cooke & Mason
Seventeen Group
Annandale Insurance Brokers
Annandale handles about £3m gross written premium with two-thirds of business being commercial insurance
Integro
Croton Stokes Wilson Holden
Lloyd’s broker specialises in placement of North American property business into Lloyd’s market
Plum Underwriting
Synergy Insurance Services
Synergy provides specialised personal HNW and lifestyle products to UK brokers
$190TRN TO INSURE THE ENTIRE WORLD’S POPULATION
The cost of insuring the world population is around US$190trn, or roughly 2.5 times the world’s GDP, according to multinational insurance brokerage Willis Towers Watson. The calculation involved giving the world’s 7.3 billion people a US$100,000 whole-of-life insurance policy and was run on the Microsoft Azure cloud platform. It took around 90 minutes for the specialised network with more than 100,000 processing cores to complete the calculation, divided over data centres in Japan, India, Europe, Brazil and Australia, and other areas worldwide.
GALLAGHER ACQUIRES KANE INSURANCE MANAGEMENT
Insurance broker Arthur J Gallagher & Co has agreed with Kane Group to acquire its insurance management operations (KIM). Terms of the deal were not disclosed. KIM is an insurance management form established in 1984 with expertise in the healthcare, insurance, financial services, transportation, and construction industries and the acquisition will complement Artex Risk Solutions, Gallagher’s Bermuda-based captive management and alternative risk programs operation. Robert Eastham, Linda Haddleton, Ann West, and their associates will continue to work for KIM and will report to David McManus, chief of Artex Risk Solutions.
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AON BENFIELD UNVEILS GLOBAL REINSURER TRADING PLATFORM
Reinsurance intermediary and capital advisor Aon Benfield is set to launch a global reinsurer trading platform that aims to enhance placements with realtime data. The international brokerage firm will launch the platform AB Connect Placements, which will be up and running for the July 1 treaty renewals. The company said the new platform will provide “a more integrated, streamlined and documented process” for global treaty reinsurance transactions. The platform also seeks to enhance client service with real-time data and metrics.
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Dot C
Jame
Bill P
UK BROKER BRINGS TAILORED INSURANCE TO LGBT COMMUNITY
An insurance provider has launched policies designed to accommodate the almost 80% of the LGBT community that are unhappy with how insurance companies treat them. Aiming to counter the ‘one size fits all’ approach, Emerald Life will provide home, term life, wedding and pet insurance, with travel to follow shortly, for the UK’s 2.2 million LGBT adults aged 30 and up. Emerald co-founder Steve Wardlaw said that while the industry is very much focused on other matters, the LGBT community is still waiting for a basic equality of experience.
TELEMATICS CAR INSURANCE POLICIES UP 40% IN 2015
Telematics-based car insurance is on the rise, as the number of live telematics policies has increased by 40%, according to the British Insurance Brokers’ Association (BIBA). Designed to promote good driving behaviour, these policies can allow consumers to save up to 25% on premiums. Young drivers, who may struggle finding affordable cover, can save above £1,000. BIBA surveyed 30 of the UK’s leading telematics brands, revealing that there are now almost 455,000 live policies compared to 323,000 for 2014, a 40% increase.
SPECIALIST MOTOR PROSECUTION DEFENCE INSURANCE DISTRIBUTION MODEL LAUNCHED
Road Halo, a motor prosecution insurance provider, has partnered with Arc Legal Assistance to create a distribution model for motor prosecution defence insurance. For the first time, it’s now available either as an add-on or a standalone product. The policy provides legal costs to defend motoring offences such as speeding, prosecutions made in error and pleas in mitigation to reverse or reduce fines in exceptional circumstances. The policy can be enhanced to include injury and uninsured loss recovery cover.
PEOPLE NAME
LEAVING
JOINING
NEW POSITION
Dot Cownie
Barclays Bank
Allianz Global Corporate & Specialty
James Gerry
N/A
Managing General Agents’ Association
Chairman
Bill Puleo
N/A
Chubb
SVP, custom industry solutions for overseas general insurance
John Elkann; Emmanuel Clarke
N/A
Partner Re
Chairman; CEO
Global head of human resources
Mark Meyer
Cozen O’Connor LLP
Crowell & Moring LLP
Partner focusing on high-stakes arbitration and litigation disputes
David Coughlan
N/A
RSA Insurance Group
Managing director, UK personal lines
Tim Rolfe
Canopius
Broker Network
Chief product and underwriting officer
Arthur Manners
N/A
Helios Underwriting
Finance director
Julie Page
Marsh
Aon Risk Solutions
UK national managing director
Jonathan Davey
SSP
HugHub
Chief executive officer
Barbara Bradshaw
Institute of Insurance Brokers
TEn Insurance Services
Non-executive director
Colm Holmes
N/A
Aviva
CEO, UK general insurance
Tony Monnington
Arthur J Gallagher
Swinton Insurance
Head of commercial
Clive Nathan
Towergate Underwriting
Primary Group
Head, UK and Europe specialty portfolios
Towergate Insurance
Chief transformation and change director
James Barnard
Aviva
Davi Tim
Arth
Julie
Jona
Barb
Colm
Tony
Clive
MUNICH RE IN CEO SUCCESSION
Jame
Munich Re has announced that life reinsurance specialist Joachim Wenning will be succeeding the outgoing Nikolaus von Bomhard at the company’s helm, effective April 27, 2017. When asked how he would spend the next 13 months until he becomes CEO, Wenning said: “I will quickly assimilate myself with those areas where I need expertise, and seek to profit from the experience of Nikolaus von Bomhard. He will make decisions as CEO until April 2017. After that, I will take over. He has my full support, as I have his. That strengthens us both.”
Peopl
SCIEMUS APPOINTS NEW BOARD, RICK WELSH AS CEO
Sciemus, a provider of modelling and analytics to global insurance markets, has appointed Rick Welsh as its chief executive officer, as well as its new board of directors. Welsh will replace Andre Finn, who left Sciemus in January 2016. Rick Welsh joined the company in 2015 and was former global head of cyber from AEGIS. Jeremy Attard-Manché, managing partner of Noster Capital, Russell Duckworth, managing partner of Hawkwood Capital, Paul Tillett, commercial director of Sciemus, and Peter Niland, operations director of Sciemus, have been appointed to the board of directors.
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John man Mark
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UPFRONT
HEAD TO HEAD
Big data: is the insurance industry really making good use of it? Insurance big data may be like teenage sex – more people talking about it than doing it
Pollyanna Dean
Anthony Baldwin Chief executive officer AIG UK
Director of general insurance and protection Financial Conduct Authority (FCA)
“A huge amount of data is out there but not being used, or not in the way it really needs to be. I say the seeds of the next crisis are being sewn in what data consumers give to the insurers today. Although insurers need this information in order to write the risk, it’s very difficult to get a uniform approach when you consider how much can we take, how much can we use and when do we have to get rid of it? “There’s also the question of ownership. It’s not a case of if you use the data then it automatically belongs to you.”
“To a point, big data is interesting in that we have products that allow us to transfer risk out, but what’s more interesting is how we can learn how to improve the overall risk profile of the consumer. “Insurers and insurance brokers have great value in data, but we should use that data in a way we can actually help improve the risk profile. “For us as an organisation, we’re definitely shifting that way. Yes, risk transfer products have a role, but it’s risk improvement that has the more significant role.”
“Big data is a buzzword, but we have made a call for input on big data to get a sense of how, where and why information is being used. Then we will consider where we take a market study, with the aim of providing clarity over what big data regulations might be. “You can more granularly price risk for individuals, or find a more efficient way of pricing and marketing products, with big data. But you can also end up with access problems and social tensions, or with certain age groups and pockets of society that then become uninsurable for various reasons.”
Partner Simmons & Simmons
Simon Green
BIG DATA — THE FCA VIEW The use of customer data by insurers is coming under increasing scrutiny by financial watchdogs, as toward the end of 2015 the Financial Conduct Authority issued a call for input into how information from sources such as loyalty cards, social media, aggregator sites and other online platforms is being collated to give a snapshot of consumer behaviour. The FCA acknowledges that big data “brings both benefits and risks for consumers” and indeed is the lifeblood of the financial sector. But there are questions of an ethical nature regarding the harvesting of personal information from sources such as social media.
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UPFRONT
TECHNOLOGY UPDATE NEWS BRIEFS Sapiens releases advanced analytics solution
Sapiens International, provider of software solutions for the insurance industry, announced the general availability of Sapiens INTELLIGENCE, a business intelligence and advanced analytics solution tailored for insurers. It allows businesses to harness self-service analytics to quickly draw conclusions and insights from raw data. INTELLIGENCE is composed of two modules: Sapiens SmartStore, a data hub that houses and unifies data for insurance reporting and analytics, and Sapiens InfoMaster, an insurancespecific tool for enhanced decisionmaking that offers a wide range of advanced data visualisation and analysis capabilities.
Self-driving car on verge of becoming road-legal
Google’s self-driving cars may soon be given the same legal recognition as a human car driver, according to a letter sent by the US National Highway Traffic Safety Administration (NHTSA) to Google. The self-driving car has no steering wheel nor pedals, meaning occupants cannot take manual control of the vehicle. It is controlled by an intelligence called the self-driving system (SDS). The NHTSA decided that in this case, the SDS would be considered the driver since it was the one controlling the vehicle.
FCA commits to InsurTech
The Financial Conduct Authority (FCA) announced that it is developing a ‘regulatory sandbox’ that will help financial organisations test
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innovative technologies with less regulatory burden. With this new development, companies can test new products, services, business models and delivery systems easier, while previously unauthorised firms can avail of restricted authorisation for testing purposes. According to the FCA’s 2016/17 business plan, the sandbox will “accelerate the development and testing of genuinely novel products which benefit consumers and provide a leading example to regulators in other countries”.
Big data pits underwriters against brokers
Big data is a game changer. Increasingly easy access to large amounts of customer data, and the ability to manipulate that data, should be putting the fear into underwriters, according to participants in a recent roundtable discussion. One of the questions that came up at the recent Big Data and Analytics Insurance event in London, was “what happens to the underwriting role in five years’ time?” The consensus was that there is, and should be, “a bit of fear” about how technology will challenge the role, but not necessarily enough to motivate current underwriters to do something about it.
Driverless lorries to be trialled on UK roads
The UK government has confirmed in its Budget 2016 that driverless lorries and cars will be scheduled for road trials. This is in line with the government’s aim for the UK to be “a global centre for excellence in connected and autonomous vehicles”. “Lorry platooning” trials are planned, with driverless vehicles forming a convoy headed by a driver in the leading lorry.
Staying ahead of the hackers Don’t rely on software to keep your data safe – your people are your last line of defence The potential ramifications of a data breach are enough to give even the most laid-back broker nightmares. The leak of the so-called ‘Panama Papers’, files detailing the private dealings of some of the world’s most famous and powerful people who were using the services of offshore finance specialists Mossack Fonseca, was a timely reminder of the need to ensure your systems are secure. And don’t make the mistake of thinking your company is too small to be on the hackers’ radar – last year a small Scottish firm, Ellen Conlin Hair and Beauty, was forced to pay a ‘ransom’ of €1,000 after cyber-criminals took control of its customer database. Most businesses will have professional IT security measures in place, yet still the hackers get through. So where should you focus your efforts if you want to avoid becoming a victim? On your staff, according to cyber-security expert David Lannin. Lannin – director of technology at Sapphire, an IT security firm with offices in Basingstoke, Darlington and Paisley – says with ‘phishing’ attacks (where hackers hide malware within an e-mail) on the rise, educating everyone within the organisation is the best way to stay safe. Reminding staff to be suspicious of e-mails from unknown sources could save you a lot of trouble and money. He told Insurance Business UK: “Businesses think that because they have firewalls and intrusion prevention systems in place they’re secure, but it’s the users that are often the weakest link in the chain, so education of those users is paramount.” If the hackers are successful, the impact
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on companies in terms of business interruption, reputational damage and financial cost can be significant. “It can be dreadful,” Lannin said. “One of the most common things we tend to see these days is a phishing attack resulting in ransomware being propagated across an organisation’s network. A user who is perhaps attached to back-end databases and shared files… the moment he or she’s hit it can spread like wildfire, encrypting data and making it inaccessible.
Where should you focus your efforts if you want to avoid becoming a victim? On your staff “Quite often with ransomware, the only way to fix it is to pay the ransom – and that’s what we’re seeing customers doing these days.” So what’s the one thing insurance businesses should do to lower the risk of becoming the hackers’ next victim? Over to Lannin: “They should tell staff they are likely to be attacked at some point so everybody needs to be vigilant. Educate your people – give them the tools to restore their data, teach them what a suspicious email is and how threats can be propagated across your environment by something as simple as opening a spreadsheet,” he says. “The threat is very real.”
Q&A
Steve Jackson head of financial crime Covea Insurance
Fast fact: In a recent FC Business Intelligence survey on Internet of Things applications, fraud detection came lowest in the vote, with just 4.9%
Fighting fraudsters with technology How is technology changing the way the insurance industry fights fraud? In terms of technology, telematics is something we want to embrace and use more in counter fraud. And there are so many opportunities. We used telematics to prove that a vehicle wasn’t where the claimant said it was at the time of the accident, for example. Then with regards to big data, as an industry we recognised the benefits of analytics quite some time ago. In 2006, when the Insurance Fraud Bureau launched, analytics was one of the main tools in the toolbox to fight organised crime, which had won a foothold. The IFB began to look at big data to spot criminal networks that are linked by social media, phone numbers and registration plates, among other things.
How easy is it to adopt technology to combat fraud? As an old fashioned investigator, you used to be able to pick up a claim form, look at it and say, ‘There’s something wrong with that’. But then efficiencies in turning around claims began to impact our ability to spot fraud. Claims handlers had to consider how to settle a claim quickly and efficiently in order to treat the customer fairly, which reduced the scope for spotting fraud. So we had to think about lots of new ways to spot fraud, which is why we turned to big data analytics. But we then had to pool data from various sources, because our claims systems were never built with this kind of operation in mind. And in some legacy systems you’re lucky if you even have a customer’s first name, so the challenge becomes how to enrich that data set so you have something to target.
So will technology put a stop to fraud altogether? It’s very easy to invest millions of pounds a year in an analytics solution, but convincing the board about return on investment is very difficult. When we look at spending on counter fraud, we have to look at getting a 10 or 12 to one return, otherwise there’s no point us being there. So fraud has to be cost effective. Fraudsters always prove to be challenging and times are changing. We’ve seen legal challenges from fraudsters, saying, ‘That’s our data’ and ‘You can’t use that data against us’. Fraudsters also have much more ease of data usage, because they’re not restricted by data protection for a start. Also, they can move so quickly – as soon as a policy is in place, we get a claim within 24 hours. We can’t move that quickly so we have to think about real time analytics.
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28/04/2016 1:28:52 AM
UPFRONT
MGAs UPDATE
What’s in a name? The MGA defined The managing general agent is now a common fixture of the UK market, but is its role well understood?
there is still some definition lacking in what exactly the MGA’s role is. “We try not to have too many MGAs but we probably do have too many,” Inglis told Insurance Business UK. “We get three or four e-mails a week minimum inviting us to use another MGA for some reason or other.” Inglis also argues that the role performed by traditional Lloyd’s brokers is very similar to an MGA. “With MGAs and wholesalers there
“MGAs are useful for small brokers who don’t have the access or clout in the market”
The term ‘managing general agent’ (MGA) is an Americanism adopted by the UK market to refer to what used to be known as a ‘coverholder’. For sure, the ties between MGAs on both sides of the Atlantic are deepening. But is the role of the MGA as well defined and understood as it needs to be in the UK? In late February, representatives of the American Association of Managing General Agents (AAMGA) and Lloyd’s of London met to discuss the challenges and opportunities both organisations face as business deals across the pond see healthy growth. Indeed, 20% of AAMGA members are based in London.
NEWS BRIEFS
Bernd Heinze, executive director of AAMGA, said the body had met with Lloyd’s executives Inga Beale and John Nelson to discuss such issues as the cost of wire transfers between the two regions, auditing requirements, possible growth for multi-year contracts, and manuscript policies. But does this mean that the role of the MGA, which has struggled for years with its identity, is now well enough understood and accepted? Perhaps not. Robert Inglis, managing director and broker at Riordan Eabry & Co, believes the MGA market is oversaturated, and
Cyber bandwagon picks up MGA
Ryan Specialty Group’s underwriting arm has launched a London-based cyber-risk managing general agency named EmergIn Risk. The MGA has secured an initial £20m of Lloyd’s capacity, allowing it to provide cover to companies from system and network interruptions, data corruption or theft, system and data extortion, digital media liability, and cyber crime. The MGA’s chief executive Jamie Bouloux says specialised offerings are important since the industry has moved on from ‘umbrellastyle’ insurance.
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is considerable argument that they overlap each other. Although we use both to place business, we also use all the other methods such as direct, extranets, telephone quotes and email quoting and so on,” he said. Another broker, Howard Lickens, CEO of Clear Group, said MGAs are “brilliant,” when they are doing something specialist. But he acknowledged that there is an over-abundance of MGAs and that quite a few of them are “just vehicles for insurers to make a bit more money through undifferentiated propositions with a slightly different piece of technology”. “They are useful for small brokers who don’t have the access or clout in the market,” Lickens said, “but for bigger brokers who ought to be able to look after themselves I’m not so sure.”
Hughes closes over half of NIR branches
Hughes Insurance, an independent insurance intermediary based in Northern Ireland, has closed six of its 11 branches, leading to the loss of 20 jobs. The offices in Ballymena, Ballynahinch, Lisburn, Magherafelt, Newry and Omagh will cease operations in April. It is the first major move for the company since it was acquired by US-based Liberty Mutual Insurance in 2014. CEO Brian McDowell cited falling foot traffic in its branches as reason for closure, as half of the firm’s business now originates online.
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Q&A
Peter Staddon managing director Managing General Agents’ Association (MGAA)
Years in the industry The MGAA was formed in 2011 Fast fact It currently has more than 100 members
Unmasking the secret managing general agent What kind of growth is the MGA sector seeing? Is it becoming saturated? The MGA used to be a secret and the market wasn’t sure what they did. So we needed to get the market to understand their role and the first priority was to get the regulator to understand the difference between an MGA, a broker with a binder and a network, and now, by-and-large, it’s understood. The MGA is an intermediary, but it’s not an insurer and not a broker or a wholesale broker; we’re a different animal altogether. So, yes there is strong growth as the MGA sector is writing close to £5bn, but it’s more that the role of the MGA has become significantly better identified. We’re also seeing lots of consolidation, but that means very good people are becoming available, and the MGA route allows underwriters to do what they’re best at, which is underwriting, by tapping into this talent pool.
So why use an MGA? Lots of insurers are looking at cost ratios, and certainly, bigger insurers have larger cost ratios, so a book of business becomes less viable when they add in their operating costs. So the premium against claims could be profitable, but with operating costs it’s not, and they need a different vehicle for placing that. This is where the MGA comes in, because they are specialists and really understand their market.
MGA Guardian support services launched
Cunningham Lindsey has launched MGA Guardian, a range of services for MGAs supported by Ambant Underwriting Services. The services include providing a support structure to ensure regulatory compliance, in particular with the new conduct risk and Lloyd’s reporting requirements. The model allows underwriting teams and investors in start-up MGAs to no longer relinquish equity in their business to obtain the needed regulatory framework or support services.
It’s cost-effective to put business down this route. They also allow brokers which have a small book of business, maybe £30-£40,000, that they are struggling to place with an insurer because of costs, to consider an MGA instead and still get access to good quality people, specialty skills and good rates. Then MGAs are also being used as a vehicle by brokers to handle their binding authority and avoid conflict of interest in the eyes of the regulator. Brokers who have delegated authority have a conflict of interest if they have binding authority, so an MGA allows them to manage that conflict through segregation and the setting up of an independent business. So the regulator understands the role of the MGA, but what effect is regulation having? Something like 80% of UK laws come in from Europe but the UK tends to gold-plate [a pejorative term characterising the process of an EU directive being given additional powers when being transposed into national law], so I’m concerned that the regulator is gold-plating directives and giving the impression that the UK market is defective, because a cornerstone is market integrity but gold-plating challenges that. So the regulator needs to be careful of what it’s doing. So I plead to the government to get their egos out of the equation. And while I think we should be together with Europe, we shouldn’t be controlled by unelected people who look at our laws.
Berkshire Hathaway backs MGA Unicorn
US-based insurance distributor AmWINS Group has secured backing from AA+ rated Berkshire Hathaway International Insurance for its London-based MGA, Unicorn Underwriting. Unicorn will focus first on specialist motor fleet business, including UK-based passenger and road transport industries, in addition to its existing property owners’ offerings. Steve DeCarlo, CEO of AmWINS, stated that it’s the company’s objective to identify opportunities in specialist sectors and that the firm is looking forward to announcing further underwriting developments.
Aro Underwriting launches online platform
London- and Kent-based MGA Aro Underwriting has unveiled an online quotation platform for its key broker partners, accompanying the firm’s rebrand and launch of its new website. Aro, which has more than 40,000 policy holders, focuses on schemes and affinity markets. According to James Bright, Aro’s managing director, this development will improve the services brokers can provide their clients, and allow them to offer more products that are supported by A-rated security in the Lloyd’s and UK market.
www.insurancebusiness.co.uk
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28/04/2016 1:29:27 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? editor@insurancebusiness.co.uk
Playing with fire: the cyber age Dominic Casserley, president and deputy CEO of Willis Towers Watson, discusses risk and reward in a digital world THIS YEAR is the 350th anniversary of the Great Fire of London, one of the largest urban fires in history. Caused by a flying spark in a bakery, the fire destroyed a third of the city, and made 100,000 people homeless. Increased risk of fire was one of the significant negative consequences of urbanisation, arriving alongside a set of new economic and social opportunities enabled by the growth of cities. The risks that came with urban expansion were serious, but did not dissuade people from city living. Instead, society captured the massive benefits through risk mitigation, including insurance. Our joined-up response to urban fire offers a parallel for how we might address one of today’s most pressing issues: the cyber opportunities and threats arising from the digital revolution. Where it came to urban fire, our response was multi-faceted. Governments required building in brick and stone. People stopped heating with open fires in their homes. We developed fire insurance. Deployed in combination, these moves allowed cities to thrive, while fire risk declined. Indeed, our joined-up response to urban fire offers a parallel for how we might address one of today’s most pressing issues: the cyber opportunities and threats arising from the digital revolution. By 2026, five billion people will be connected through four billion smartphones and 50 billion connected devices. Connectivity is driving social progress. Businesses are mining new seams of innovation. The possibilities seem limitless. But with transformation, new opportunities are balanced by new risks.
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Governments and cities fear cyber attacks could disable critical infrastructure, imperil national security and threaten the economy. Intangible digital assets are at risk from economic espionage while privacy breaches cost money and loss of business. So how do we manage these risks so that we can unlock the full benefits of digitisation? The
is a vital protection. It means offering a combination of rewards and disincentives to encourage a culture supportive to cyber security. 4 See technology as one of several lines of defence IT solutions are often the first port of call for organisations looking at cyber defence. It’s important to understand, however, that technological defences are a critical but not sufficient response on their own. 5 Insure for cyber threats we cannot mitigate While insurance is an old and experienced industry, the cyber risk market is young, and because these risks are hard to quantify, insurance companies’ willingness to put capital at risk is currently constrained. No doubt the market will broaden and deepen over time, as we become better at quantifying cyber risk. 6 Allocate enough capital to the right cyber defences Companies need to understand, quantify and
Where it came to urban fire, our response was multi-faceted. Every intervention we made was necessary, and none was sufficient on its own answer is to adopt an integrated approach for building cyber security, one in which organisations in the public, private and social sectors adopt a package of risk mitigation measures. Six priorities should be on every company’s integrated “cyber risk check-list”: 1 Enterprise-wide governance A cyber strategy should be led from the ‘C-Suite’. It needs to be managed on a wholeenterprise basis, with collaboration across corporate functions. 2 Assume hackers are already inside We need to assume not only that hackers are trying to get in, but that they are already inside our companies’ data. Tackling the enemy within requires different measures from trying to keep them out. 3 Invest in making the workforce cyber-smart Investing in enterprise-wide cyber-security training is expensive, but a vigilant workforce
provide for their greatest cyber exposures. This starts with identifying critical assets to create a critical digital asset register. These are assets which impact on financial stability, customer relationships, and regulatory compliance and trust. We are in the middle of a technological revolution in the way we live and do business. It’s a very young revolution, with amazing opportunities and substantial risks. Some argue that the solution lies in technology, some that it lies in institutions, some that it lies in human behaviour, some that it lies in insurance. We think it’s all of those things coming together.
Dominic Casserley is the president and deputy CEO of Willis Towers Watson and also leads Investment, Risk and Reinsurance for the company.
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28/04/2016 1:29:58 AM
PEOPLE
INDUSTRY ICON
DOCTOR DOOM’S WORLD OF RISK John Scott, chief risk officer for Zurich Global Corporate, spends a lot of time thinking about the end of the world. It is, after all, his job
AS ONE of only 750 experts worldwide who have the (somewhat dubious) honour of contributing to the World Economic Forum’s (WEF) annual Global Risk Report, you might expect John Scott, chief risk officer for Zurich Global Corporate, to be full of doom and gloom. If he is, it doesn’t come across in his upbeat, affable demeanour and Insurance Business UK would gladly have him over for a dinner party. But it has to be said, Scott does spend a lot of time thinking about incidents that might wipe humanity off the face of the planet. We are only several minutes into conversation when Scott says: “Clearly a major pandemic of some sort could be the thing that wipes out the human race at some point.” From an office overlooking London’s financial district, that seems a distant possibility, and indeed, the spread of infectious disease didn’t make it into the Global Risks Report’s Top 10 in terms of likelihood this year. But Scott follows up with a reminder not to be complacent. “It is a fact that we’ve had pandemics – the last major one being swine flu. But fortunately, and this is difficult to say, it wasn’t as virulent as it could have been,” he says. “Many, many people died, but it wasn’t as virulent or as fatal as Ebola, and Ebola
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really caught people’s attention because the chance of dying is quite high. However, you do have to be very close to someone to catch it, which raises issues around urbanisation. If outbreaks occur in the countryside, when they get to cities it will be very, very easy for them to spread. So global disease outbreak has been at the forefront of people’s minds because of Ebola.”
of the top risks in terms of impact and two in terms of likelihood. “In recent years there has been more focus on geopolitical and societal risks and their links with social instability leading to the concept of the disempowered citizen. Think about the migration happening in Europe and look around globally at the rise of nationalist and more extremist
“Clearly a major pandemic of some sort will be the thing that wipes out the human race at some point” The bustling London streets below suddenly look more dangerous, but the interesting thing about the Global Risks Report is that the survey is based on perception. So while the global risks and trends don’t change all that much from year to year, people’s perceptions are very much influenced by recent events. As a result, the top risk in terms of likelihood, and also the fourth in terms of impact, was large scale involuntary migration. Significantly, societal risks (of which the spread of infectious diseases is also one) featured in the 2016 report as four
politicians who appeal to people who are disenfranchised, or disconnected with political and other elites,” Scott says. “In the case of migration, some people look round and say, ‘No, I don’t want that in my street’, calling into question the broader values of human rights, free trade and globalisation. The trust between electorates and politicians is under severe strain.” Scott references the annual Trust Barometer published by marketing and branding agency Edelman, concluding: “It’s pretty clear that people don’t trust even the companies they work for, let alone
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PROFILE Name: John Scott Company: Zurich Global Corporate Title: Chief risk officer Career path: 2009 – present Chief risk officer, Zurich Global Corporate 2007–2009 Head of Risk Insight, Zurich 2001–2007 Vice president, Zurich Strategic Risk Qualifications: MBA Cranfield University, Cranfield School of Management PhD Geology University of Wales, Aberystwyth
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28/04/2016 1:30:37 AM
PEOPLE
INDUSTRY ICON BY THE NUMBERS TOP 10 RISKS IN TERMS OF LIKELIHOOD politicians or governments. The disempowered citizen and social instability, driven by issues like geopolitical instability leading to mass migration, is a big challenge,” Scott says. By their very nature, the truly global challenges that Scott considers are unwieldy and tested by a lack of effective global governance, with many elements regulated on a national level. But one thing the Global Risks Report does is create a framework on which all
looking at managing business models.” And for Scott, this is where the insurance industry has great value to bring to society, because it knows how to price risk and also holds a lot of data about risks. “So that means we can not only offer people the ability to transfer risks from their balance sheets to someone else’s, sharing the risks of the few among the many, but also support and influence better management of risks. This is a very valuable social construct.” Risk management expertise might
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“The disempowered citizen and social instability, driven by issues like geopolitical instability leading to mass migration [like we’re seeing in Europe], is a big challenge” stakeholders can build a dialogue and which brings companies, politicians and decision-makers together in discussion. “How can you think about this in a strategic sense? How do the big issues about climate, cyber risk and geopolitics impact the business model? It might impact it many different ways,” Scott says. “Your customers’ needs may be changing, or your global footprint might change, or your product, if it’s created in different parts of the world, might be affected in terms of supply chain interruption, so we use tools like scenario planning to see how things play out. With supply chain resilience we look at how you might be impacted. Or what do you do if all your assets in a country are expropriated due to political change? Companies need to think through all of these risks when
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extend to disaster mitigation, or building community resilience, or helping people in emerging economies who don’t buy insurance for all sorts of reasons to protect themselves by building flood protection or having an evacuation plan. But it might also involve thinking about space weather or space debris, which is typically something brokers and their clients don’t consider. “If something crashes into a GPS satellite, it makes a difference to our world, because we rely on GPS not only for geolocation but for the accurate time synchronisation of computers,” Scott says. And suddenly, having the knowledge that someone, somewhere is thinking through the most obvious and obscure doomsday scenarios that threaten mankind makes the world somehow feel like a more comfortable place.
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Large scale involuntary migration Extreme weather events Failure of climate change mitigation and adaptation Interstate conflict Natural catastrophe Failure of national governance Unemployment or underemployment Data fraud or theft Water crises Illicit trade
TOP 10 RISKS IN TERMS OF IMPACT
Failure of climate change mitigation and adaptation\ Weapons of mass destruction Water crises Large scale involuntary migration Energy price shock Biodiversity loss and ecosystem collapse Fiscal crises Spread of infectious disease Asset bubble Profound social instability Source: Global Risks Report 2016
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28/04/2016 1:30:41 AM
SPECIAL PROMOTIONAL FEATURE
CONSTRUCTION
Solid foundations build client retention, loyalty FEW INDUSTRIES are as diverse as construction, which ranges from your local builder and roofer to civil engineers laying national motorways and international developers putting up landmark skyscrapers. Not forgetting of course the demolition experts brought in to change the urban skyline at the push of a button. This translates into very diversified risk exposure as well as a tangled web of contractual relationships and working practices featuring Principles, Bona Fide Sub Contractors and Labour Only Sub Contractors and JCT conditions among others. So not only is expertise needed to underwrite these sometimes complex and varied risks, but equally just as much expertise is needed to broker them. More often than not brokers will submit a risk submission to market to try and get better terms by simply getting a wider selection of quotes, but Thames Underwriting warns that this is not enough. As part of a risk submission, there will be what is known as a Confirmed Claims Experience but, Colin Baker, business development manager at Thames Underwriting, believes that the true meaning of this does not seem to be well communicated or implemented. “Typically a risk will have an attached spreadsheet detailing dates, type of loss, very brief description, estimates and paid amounts. But this is simply not sufficient enough and could mean the difference of tens of thousands of pounds in premium,” Baker says. “Equally, if this detail is pursued constantly after the first notification, risk management measures can be put in place to prevent future losses and save the customer thousands of pounds in premium, as well as prevent time being wasted in claim investigations and legal representation in subsequent claims.” According to Thames, information on a properly compiled Confirmed Claims Experience
should ask or challenge: • When was the last legal letter sent regarding settlement? • What is the insurer’s/loss adjusters’ current opinion on the settlement? • Give full written details of the event and not just a short description such as “employee damaged knee” or “member of public tripped over scaffold” • What practices has the company employed to prevent a similar loss happening again and what evidence do you have of that. With this process properly in place, risk management becomes a better solution to a risk than higher premiums and higher excesses. But to do this brokers need to be more proactive in keeping tabs on claims and their causes and advising the customer on risk management features that might help prevent further claims. Unfortunately, the insurance industry tends to
EXAMPLES OF RISK MANAGEMENT Problem: A haulage company is delivering goods but has multiple claims by staff for back and knee injuries from lifting goods so the premium is going up and up. Solution: Ask for evidence of a communication signed by each employee about the rules and procedures for lifting goods and ensure this is in place for all new employees. Problem: A roofer is a bona fide contractor to large developers and gets called into claims disputes for events happening after employees have left site. Solution: Insist that all work is signed off as “satisfied” and completed by the principle or property owner before leaving site.
“Risk management measures can be put in place to prevent future losses and save the customer thousands of pounds in premium” focus on splitting the claims process from underwriting, especially in a broker’s office. But keeping close to claims from the first notification can put a broker in prime position to help the customer keep premiums lower and prevent future claims. In certain circumstances, Baker argues it could also prevent possible professional indemnity claims against the broker if a correct confirmed claims experience was not followed. “It’s better for a broker to spend more time on risk management and when they look to place a risk to say to the insurer or MGA, ‘look if these risk management processes were put in place would you be able to write the risk?’ and I would
say as an MGA which hasn’t taken a hit on those claims and which believes risk management can help, that I would rather provide a lower premium and use risk management to mitigate the risk than to just add a further 50% on the premium and carry on as usual,” Baker says. Any institutionalised behaviour is difficult to change, but adopting a proper confirmed claims experience makes sense for the brokers, the insurers and the client. Moreover, with the new Insurance Act looming, brokers need to far more diligent in obtaining and processing the risk information they obtain from both the customer and the insurer dealing with the claims.
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28/04/2016 1:31:06 AM
SPECIAL PROMOTIONAL FEATURE
BROKER PROFESSIONAL INDEMNITY
WHEN LIGHTNING STRIKES Avoiding business disaster with a magnum PI package
PROFESSIONAL INDEMNITY is essential for insurance brokers, yet most regional brokers will have changed PI insurers probably once or twice in the last five years, mainly due to new entrants coming into the market and crashing out several years later. The problem with insurance brokers’ E&O is that it loses money, and can, in some cases, lose a lot of money. The trap some new entrants fall into is that brokers’ own E&O is a fairly long tail line of business, and like most long tale lines it can be written for two or three years before the claim payments catch up, and when they do they really hurt. This is compounded in the case of insurance brokers because they have some spectacularly large losses that the inexperienced don’t see coming, coupled with attritional losses. So catering to this market requires a specialist appetite. The kind of appetite that Manchester Underwriting Management (MUM) has, having launched a Brokers’ Own PI product into the market this year. Charles Manchester wrote his first broker E&O policy in 1986 but it wasn’t until January 2016, six years after MUM launched, that he believed there was a big enough gap in the market for the product. The opening came after, unusually, an insurer approached MUM and said it would like to target this market and would like Manchester to do it for them. According to Manchester, the main source of a large loss is generally a large property
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placement where the insurer doesn’t pay, and that is normally because there is a breach of a fundamental condition or warranty by the insured. Often it’s a survey requirement the insured says they’ve done but haven’t. “So when you get a £20m property in a fire loss, insurers crawl all over it to find something wrong. Brokers typically have £1m to £5m in cover and if there’s a £20m fire claim that’s not properly insured, that just gets wiped out. The premiums just aren’t sufficient to cover multiple large losses as there simply isn’t enough money in the market,” Manchester says. Now with the FCA’s focus on conduct risk and the new Insurance Act coming into force, there is an increasing pressure on the insurer to “do the right thing” when there is a loss. So the culture in insurers is beginning to change to one where the claim starts off as covered until (and if ) it is found to be void. Whereas the starting point historically has been more along the lines of insurers saying “how do we get out of this?” So what Manchester did, to try and head these large losses off at the pass, was to package insurance with a legal support service that actually helps the brokers deal with the situation. “When they get a large loss and the insurer starts to wriggle, before the insurer gets entrenched in kicking out the claim and
finding defects, the broker gets a lawyer,” says Manchester. “And it might not even be a claim under their E&O. There might be no evidence they’ve done anything wrong, or any circumstances that could lead to a claim, but none the less, their client is in trouble. So they get a lawyer that helps them put together a case to justify the insurer paying the claim (if it’s possible).” Manchester, along with several other industry players Insurance Business UK has spoken to, believes there is a significant underinsurance problem in the broker community. “A lot of brokers buy the bare minimum of cover and buy from the cheapest market
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BROKERS’ OWN PI PRODUCT – KEY FEATURES
“When you get a £20m property in a fire loss, insurers crawl all over it to find something wrong. Brokers typically have £1m to £5m in cover and if there’s a £20m fire claim that’s not properly insured, that just gets wiped out” without reading the wording,” he says, recognising that there are those that do read the wording and buy the correct cover. “But, remarkably, many brokers are just like consumers and I don’t think they would buy
PI if they weren’t forced to,” he says. “Ask them what their largest sum covered is and they might say £47m, then they go and buy £2m in cover,” Manchester says. “This is their business, they’ve worked hard for it, and
No contracting out of the Insurance Act 2015 No Basis Clause No warranties No conditions precedent (not even claim notification) Very broad protection against innocent non-disclosure Late notification protection Seven days after expiry to notify claims Civil liability cover including defamation, dishonesty, loss of client money and joint ventures Costs in addition to the limit of indemnity Regulatory investigation costs Compensation for court attendance Automatic binding authority cover Data Protection defence costs cover Hacker cover Loss of client cover – if your business makes a loss in its P&L because of your losing a client following the payment of a PI claim, MUM will indemnify you up to £25,000 for that loss (exclusive to BIBA members) Fidelity automatically covered (exclusive to BIBA members) Totally fair treatment not only promised but written into the wording they will go out of business if lightening strikes and they get a large loss because they’re not covered adequately.” Manchester believes his Brokers’ Own PI product has “a really good wording”, with no warranties and no conditions precedent, coupled with legal support “from a proper lawyer and not just a helpline,” as well as an accreditation from BIBA for the offering. “Sure, times are tough,” says Manchester, “but not as tough as a big PI claim that could have been prevented with the right cover.”
www.insurancebusiness.co.uk
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28/04/2016 1:31:38 AM
FEATURES
AGENCY INSIGHT
Courier focus delivers success for ‘multi-niche’ brokerage Aiming at the major players in a well-defined industry put Aldium 4 Couriers on the right road, writes Jayne Freer FOCUSING ON the major players in the courier market has allowed Aldium Insurance to carve out a successful niche. Based near Chester, Aldium was launched in 1997 by the current managing director and owner Steve Pugh. The firm is now approved by more major courier networks than any other provider, and business is growing nicely. The firm originally focused on the care industry but a few years in, not wanting to compete with the ‘big boys’, Pugh decided to become a ‘multi-niche’ operator. He also wanted to ensure his business had balance when it came down to the ever-challenging insurance rate cycles. Research indicated that the courier market was under-serviced and, while the care industry work continued, Aldium 4 Couriers was born. Pugh said: “There is a unique factor about the courier market in that the industry can be split – the white man van and what we call the ‘big six’, such as Fedex and DHL. We decided to only go for the ‘big six’. The major networks have a brand and a reputation to uphold so they focus on getting their drivers
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trained and they are regularly monitored to ensure a better driving performance. Both need the cover but network drivers should have a lower claims frequency so therefore pay less. There are brokers out there that write more courier business than us but, to our knowledge, we are the only broker approved by all the top six couriers in the UK.” Pugh was reluctant to go into detail about the financial strength of the business, which employs 32 people, other than to describe it as ‘profitable’. That’s evidenced by the fact that 2016 has got off to a strong start – sales are up 23% against the first quarter of last year. Around 3,500 policies are renewed
annually, and the firm expects to write around 1,000 new policies this year. With courier insurance not readily available on the general market, Pugh’s different approach has paid off. “A broker will go along to insurers and say, ‘We specialise in whatever market so will you give us preferential rates?’ We differ in that we have not taken that route,” he explains. “Most courier motor insurance is sold through broker-led schemes so you might get a better rate but they rarely last and scheme brokers equally rarely offer couriers a choice. We give couriers a choice so, when they come to us, we go to the brokers that run these schemes
CARVING THE NICHE Aldium offers vehicle cover for all courier-firm operations – from individual vans, through to full fleets. The firm also offers a product which aims to wrap up all other courier requirements in a single policy, known as ‘CourierOptions’. That can include cover for goods in transit (which in turn includes loss of or damage to the goods themselves, stowage equipment, scanners and the driver’s personal effects) public liability, employer’s liability and personal accident. Aldium also offers breakdown insurance and Guaranteed Asset Protection cover, designed to make up the shortfall between an insurance pay-out following a total loss and the vehicle’s outstanding finance balance or original purchase.
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COURIER INDUSTRY KEY FACTS
£7bn
approx total revenues of UK courier services industry (2% of GDP)
44%
2010-2014 increase in courier and express delivery revenues, largely due to growth of online retailers
“A broker will go along to insurers and say, ‘We specialise in whatever market so will you give us preferential rates?’ We differ in that we have not taken that route” Steve Pugh, Aldium 4 Couriers to find the best deal.” Competition has made it tough for the courier industry and according to Pugh it’s only going to get worse. “The biggest challenge, which has not actually happened yet, is telematics. If you have devices in vehicles telling you how much you accelerate, how many times you break the speed limit etc, that will impact on the national network
and not just individual couriers themselves. Accident rates will improve and as a result there will be lower premiums,” he says. “As a specialist courier broker I think one of our unique features is that we will tap into a wider range of options rather than just offering the one scheme product.” And in Talbot-Jones’ view, that is just as relevant today as it ever was.
UPS 8,000 approx number of employees 2,800 points of access 3,400 vehicles in delivery fleet
TNT Express 8,000 employees 3,500 vehicles 70 locations 150 million packages a year €989m net 2015 UK sales
FedEx UK 31,000 package sorting capacity per hour (incl FedEx Express)
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS
SPECIALIST
MANAGERS These 40 men and women are at the vanguard of the nation’s fight to minimise corporate risk, protecting their organisations against everything from explosives to errant employees INDEX OF SPECIALIST RISK MANAGERS (BY COMPANY NAME)
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COMPANY
PAGE
NAME
COMPANY
PAGE
NAME
Agustawestland
29
Michael Bird
GardaWorld
32
Jo Anthoine
BAE Systems
29
David Patching
GlaxoSmithKline
33
Jacqueline Cosgrove
Barratt Developments
29
Charlie Case
Hays
34
Dawn Clark
Bentley
29
Sarah Stubbs
Heathrow Airport
35
Paul Goulding
British Airways
30
Caroline Ward
Home Retail Group
35
Ian Parker
British Red Cross
30
Gordon Mitchell
Iceland Foods
36
Aileen Spencer
Britvic
30
Hannah Llewhelin
Jaguar Land Rover
36
John Caldicott
Burberry
30
Kate Bell
John Lewis Partnership
36
Adrian Rendell
Christie's
32
Tim Lloyd
KPMG
36
Joe Myles
City of London Corporation
32
Connie Dale
Live Nation Entertainment
36
Matthew Meredith
DFDS Logistics
30
Gareth Williamson
Marks & Spencer
37
John Windsor
Ford Europe
33
Aaron Rollinson-Payne
Ministry of Defence
37
Amarjit Atkar
Fred Olsen
33
Sam Gedny
National Police Air Service
38
Beverley Nichol-Culff
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RISK
S 2016
RISK MANAGERS protect corporate UK from threats of every kind. Identifying potential risks, checking business processes for weakness and identifying brokers who can become trusted partners are all part of their crucial remit. On the following pages, you’ll get to know 40 risk managers behind some iconic british brands and some of the most market-leading and important companies in the country.
COMPANY
PAGE
NAME
Next
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John Gibson
Northgate Vehicle Hire
38
Thomas Strachan
Pearson
39
Priya Pandya
Sony Europe
39
Carlo Giannini
Sotheby's
39
Richard Purchase
Tate & Lyle
40
Richard Storey
Tesco
42
Dan Evans
Thales
40
Mike Squibbs
Thames Tideway Tunnel
42
Chris McTear
The Royal British Legion
42
Elaine Heyworth
Thomas Cook
40
Mark Dawson
TSB Bank
42
Emmanuel Fabin
TUI Travel
43
Chris Allen
Wm Morrison Supermarkets
43
Michael Ritson
AGUSTAWESTLAND Michael Bird
Head of risk management and insurance Yeovil
The Yeovil-based helicopter manufacturer Agustawestland proved to be a risky proposition for Margaret Thatcher’s Conservative government in 1986 when a convoluted row over the company – then known as Westland – provoked the resignation of defence secretary Michael Heseltine. There’s no such drama linked to Michael Bird, who has been with the business, where he looks after risk and insurance, for 14 years. Bird previously worked at Rolls Royce in Derby, where he was senior risk and insurance manager.
BAE SYSTEMS
David Patching Head of group insurable risk Hampshire, UK
Patching has been in the insurance and risk management industry for over three decades. With BAE Systems actively working on future technologies such as optical displays and targeting products, synthetic environments, electronic combat systems and various space systems, Patching’s plate will certainly be full insuring risks as BAE develops new technologies and products with a workforce of over 83,000 in 40 countries worldwide.
BARRATT DEVELOPMENTS
BENTLEY MOTORS
Insurance and claims manager Northampton
Risk and insolvency manager Crewe
Charlie Case
Lincolnshire-raised Charlie Case is insurance and claims manager at Barratt Developments plc, the nation’s largest house builder that once famously sold a house to Margaret Thatcher in Dulwich. Case took up his Northampton-based role at the end of 2015, having worked as assistant insurance manager at BAM, which has been building in the UK since 1874. He started his career as a claims handler at RSA. Case, who describes himself as ‘experienced and dependable’, will be kept busy at Barratt – the FTSE 100 outfit remains active acquiring land and building new homes and generated revenues of £3.75bn in 2015.
Sarah Stubbs
Following Bentley Motors’ recall of over 27,000 Flying Spur models internationally late last year due to faulty electrical joints, Sarah Stubbs, risk and insolvency manager with the company, must have had her hands full at the luxury automaker. The 20-year risk management veteran is responsible for supplier sustainability and financial stability for Bentley and its parent company, VW Group. Additionally, she leads VW Group’s UK insolvency cases. Previous to joining Bentley in 2012, Stubbs worked at Barclays in various positions for eight years. Founded in 1919, Bentley has remained one of the world’s best-known luxury car brands.
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS BRITISH AIRWAYS
BRITVIC SOFT DRINKS
Manager, insurance and claims Southall
Group risk and insurance manager Birmingham
Hannah Llewhelin
Caroline Ward
Overseeing Britvic’s cover isn’t rocket science for Hannah Llewhelin, who has a Masters in Astrophysics from the University of Birmingham. A keen horse rider and rugby fanatic, Llewhelin is head of group risk and insurance for Britvic, which owns brands including Robinsons, J2O, Purdey’s and Tango, and is licensed to make, market and distribute PepsiCo products in the UK and Ireland. The
“To fly. To serve.” Caroline Ward serves as British Airway’s manager of insurance and claims and makes sure that the UK’s largest international scheduled airline takes to the air daily to serve its customer. Flying to nearly 600 destinations globally, British Airways employs over 39,000 people and flew over 43 million passengers in 2015 which in itself is a whole lot of airborne risk to insure. But add in myriad other risks like wayward drones getting into jet engines – as recently happened to a BA Airbus A320 at Heathrow – and the bigger picture starts to emerge.
DFDS LOGISTICS
Gareth Williamson
Claims and insurance manager
BRITISH RED CROSS Gordon Mitchell Insurance manager London
Gordon Mitchell serves as insurance manager for the British Red Cross, which can count Eddie Izzard, Simon Pegg and Tess Daly as high-profile supporters. The charity employs around 24,000 volunteers and almost 4,000 staff and has been providing services in the wake of natural disasters, conflicts and individual emergencies for almost 150 years both at home and abroad as part of the international network of Red Cross and Red Crescent organisations. It generated record revenues of £261m in 2014. Mitchell previously served as insurance manager for the Metropolitan Police and spent more than a decade as the public sector risk manager for Jardine Lloyd Thompson Municipal Risks.
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BURBERRY Kate Bell
Insurance manager London
It seems appropriate that Kate Bell, insurance manager at Burberry, grew up in Croydon – the home of Kate Moss, who has a long history as the face of the iconic British fashion label. It seems the two actually attended the same school, Riddlesdown. While Moss has provided the glamour, Bell has played a lower-profile but equally important role delivering global risk management, negotiating for all classes of insurance and coordinating brokers globally. Bell has more than a decade of experience in the insurance and risk management space, starting at Burberry in 2005 as the company’s audit and risk team secretary and working her way through various risk management jobs before taking her current position. She has a degree in business studies from Kingston University.
Williamson joined DFDS Logistics as Insurance manager in 2014, having worked in insurance since 1999. The logistics business is a division of DFDS Group, northern Europe’s largest integrated shipping and logistics company, and Williamson looks after claims, insurance and risk management for a number of sites in the UK and Ireland. He has insurance experience stretching back more than 17 years. Prior to joining DFDS, he served as senior loss adjuster for Lucas Claims Solutions. He’s also served as a personal injury and motor claims handler for Crowe Insurance. What kind of insurance do you buy? “Our business has a number of different insurance needs. Some of our policies are arranged at local level and relate specifically to each business entity and some are arranged at group level. Our main policy is a combined liability policy for the group which covers various risks to include, goods in transit, handling equipment, carrying equipment, property and public liability.” Which brokers do you use? “Our business is placed through a London market broker, Tysers. Our motor policy is also arranged at group level.”
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What does she look for in a broker? “Comprehensive knowledge and understanding of our business, a global player who is responsive and proactive – ultimately an extension to our in-house team” company has operations in the UK, Ireland, France, the Netherlands, USA, Brazil and India and exports to more than 50 countries, generating revenues of
What do you look for in a broker? “We look for a broker who can deal with the needs of such a diverse business such as ours and one that can provide a professional service at corporate level whilst maintaining client relationships at a local level. Tysers certainly fulfil all our needs.” Is your 2016 spend up or down? “The first quarter of 2016 certainly looks promising from a claims perspective and our spend is certainly down at a local level when compared to
Biggest risk concern for 2016 “Keeping ahead of the game around the ever-changing consumer demands and governmental responses to health – as we’ve expanded globally, seeing the variation in the many different cultures’ responses to sugar has been a real eye opener” £1.3bn last year. Llewhelin has also served in senior risk management positions at MITIE Group, Aecom and Network
the same period of 2015.” What’s your main risk concern for 2016? “A large proportion of our business at local level involves the use of sub-contractors and this obviously presents a range of different risks. We have many other risk concerns to manage and we are always looking for new, innovative ideas on how to manage those risks. We are continually working to improve staff training and risk management procedures.”
Top 3 types of coverage she buys • D&O • Product contamination • Business interruption Rail. She lists her recent achievements as building a global risk framework across Britvic’s markets; supporting the integration of a recent acquisition in Brazil; and implementing the ‘Safe Traveller’ programme.
How have your risk concerns changed over the years? “Our business is exposed to many different types of risk: road traffic incidents, cargo claims, employer’s liability and public liability to name but a few. I am relatively new to the business but I feel that most of these risks would have remained broadly the same over the years. However, our business is growing and changing every day and often this brings additional risks.”
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS CITY OF LONDON CORPORATION Connie Dale
insurance and risk manager London
CHRISTIE’S Tim Lloyd
Group insurance manager London
Tim Lloyd has been group insurance manager at Christie’s since 2002. In that role, he manages insurance and risk issues for the world’s leading art business, which generated sales of £4.8bn in 2015. Lloyd brings more than 35 years of experience to the position, which sees him manage all insurance matters worldwide. He’s also held risk and insurance roles at Crawford & Company and Thomas Howell Group. Lloyd is an associate of the Chartered Insurance Institute and a fellow of the Chartered Institute of Chartered Loss Adjusters.
GARDAWORLD Jo Anthoine
Director - risk, insurance, and welfare
Risk managers have to eradicate the blind spots in their organisation, identifying potential exposures which are often mundane. But not in Jo Anthoine’s world. As Director Risk, Insurance, and Welfare at GardaWorld, the planet’s largest private security company, Anthoine has rather more high-octane risks to mitigate. The coverage Gardaworld puts people, equipment and vehicles into dangerous situations. It conducts its business not on the high street or the retail park, but in war zones. To a company like GardaWorld, says Anthoine, risk ‘is all relative’. So with teams operating where bombs and bullets are occupational hazards, what kind of cover is she buying? “The big one is going to be liability cover,” says Anthoine. “Much of it is dictated by the client’s requirements within the contracts but
32
obviously there are some things that we purchase to cover ourselves because we identify the risk exposure that possibly the client doesn’t see as a requirement for them. “We also take out employer’s liability so we comply with UK law – that’s not so much of
Insurance professionals across the square mile can be confident they’re in safe hands thanks to Connie Dale, the City of London Corporation’s insurance and risk manager. The Corporation is thought to be the world’s oldest continuously elected local government authority, and in 2012 it revealed that its ‘City’s Cash’ account, an endowment fund built up over 800 years, was valued at more than £1.3bn. Dale has more than 20 years’ experience in public sector insurance and risk management, having worked at Surrey County Council and with Surrey Police before joining the Corporation in 2011. She has a degree in Latin language and literature from the University of Exeter.
“Then there’s general liability. We’ve got divisions in the UK, in Dubai and in the USA. We see the exposure stateside on public liability far greater than here. We’re working with the US Government and other US clients using US personnel and that’s where we see the third-party exposure.”
“We have to cover vehicles by law, but for property and equipment, while we do have all-risk policies we don’t really bother in places like Iraq and Afghanistan. The premiums are so high you end up with an exchange going on, so we self-insure” an issue in other countries – and obviously professional indemnity. We’re not just doing guns and trucks overseas; we also give advice and do security assessments. We have intelligence departments which feed into our operations so we have professional indemnity cover.
So with the everyday matters, if you can call indemnifying inaccurate intelligence as ‘everyday’, dealt with, Anthoine turns to the specialist cover she needs – a policy allowing GardaWorld to quickly evacuate employees caught in the line of fire.
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FORD EUROPE
FRED OLSEN
GLAXOSMITHKLINE
Manager, corporate insurance risk Great Warley
Risk and insurance manager Ipswich
Risk insurance manager Twickenham
Aaron Rollinson-Payne Since joining Ford of Europe in 2009 as European corporate insurance manager, Aaron Rollinson-Payne has overseen the company’s insurance needs, heading teams of specialists in the UK, Germany and Spain. Ford Europe employs 68,000 people, manufacturing 1.4 million vehicles in 2014. Prior to his current position, he served as European insurance manager for Ford Motor Credit Company. Rollinson-Payne, who is fluent in German, has also served in senior marketing positions for Towergate Insurance, Ageas, Zurich Insurance Company and TSB Bank.
Sam Gedny
Sam Gedny is risk and insurance manager for Fred Olsen, a company whose roots go back to 19th century Norway. Perhaps best known for its travel operations, Fred Olsen’s main focus is now on renewable energy and it manages more than 25% of the UK’s onshore wind turbines. Gedny brings with her more than 25 years of experience in the risk and insurance space. Prior to joining Fred Olsen in 2015, she served in various positions at AXA Insurance, including technical compliance underwriter, head office technical underwriter for personal lines, and IT business analyst. She also served as a technical underwriter for Guardian Insurance.
Jacqueline Cosgrove Jacqueline Cosgrove is risk insurance manager at pharma giant GlaxoSmithKline, which boasted the FTSE 100’s fifth-largest market cap (£65bn) at the end of 2015. The firm employs almost 100,000 people worldwide, and can boast four Nobel Prize for Medicine winners in its history. Prior to joining GlaxoSmithKline in 2011, Cosgrove served as a property solutions account handler for Bruce Stevenson Ltd. She holds a BA in risk management from Glasgow Caledonian University.
when it’s being put together. I’ll be asking ‘who is the medical evacuation provider?’ That will be very important for the policy, whereas if you’re running a company where people aren’t deploying to hostile environments you’re not going to be as clued up about it and they’re probably not going to care as much.” “We also have medical malpractice – that’s something we place because in these hostile environments there’s limited medical resources, or if we have a risk-averse client who want us to provide GPs on project, obviously we need it for any paramedics or doctors we’re providing.”
“We have a personal accident policy – that’s a big one for us,” she told Insurance Business UK. “We have PA cover with no geographical restrictions 24/7 when we have our personnel deployed. That covers accidental death, temporary
disability and permanent disability but also, and most importantly, it covers medical expenses and medical evacuation. “I would say we’re more involved than other companies might be in the structure of that policy
The gap Unsurprisingly, some risks GardaWorld faces are pretty much uninsurable. Anthoine, who has spent time on the ground ‘in theatre’ with her operational teams, insists the true situation is less dangerous than the perception held by insurers, but for now GardaWorld has to accept there’s little it can do. Anthoine, who joined Aegis in 2007 and stayed on when that business was acquired by GardaWorld last year, says: “We have to cover vehicles by law, but for property and
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS “I look for a global broker who is responsive and proactive in its approach to responding to the changing risks that we face”
HAYS Dawn Clark
Group insurance manager London
Dawn Clark has 20 years’ experience in insurance and risk management. She is currently group insurance manager for FTSE 250-listed Hays, the leading recruitment company. Last year, the company placed 63,000 people in permanent jobs and 200,000 in temporary positions. It employs more than 9,000 people and generated net fee
Top 3 types of coverage she buys • Professional indemnity • Cyber • D&O
income of £764m last financial year. Prior to joining Hays, Clark served as group insurance manager for the Royal Mail. She holds a BA (Hons) in Business Studies with Economics from The Open University.
“We use armoured vehicles. We’re not talking £30,000 Toyota Landcruisers; to purchase armoured vehicles it’s $100,000-150,000, because they have to meet certain specifications. So to insure them for war and terrorism, for damage, again you end up with just an exchange.”
zz
equipment, while we do have all-risk policies we don’t really bother in places like Iraq and Afghanistan. The premiums are so high you end up with an exchange going on, so we self-
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insure. We don’t perceive it as risky but we haven’t yet convinced the insurance market it’s not. If you look at our claims history, we don’t lose much on equipment or property at all.
The broker With GardaWorld operating in such a specialised field, Anthoine has exacting requirements of a broker. So who does she turn to, and why? “We use AON,” she says. “We have different business streams, providing things like low-level security and cash-in-transit in the US. That’s very different to what we do in the Middle East so we need a broker that can cope with a range of different industries, and the geographic reach is a big thing for us. “We’re doing a lot of work in Africa and they have a lot of laws there now to protect local businesses and the local economy so you’ll see non-admitted policies as quite standard. We have to work with local providers, which obviously is absolutely fine and it’s something that we will always do, but it means that your broker must have very good links with local entities or have their own set-up there. “The nature of our business is that you move
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HEATHROW AIRPORT
HOME RETAIL GROUP
Head of insurance London
Assistant claims and insurance manager Milton Keynes
Paul Goulding
Ian Parker
First impressions are everything and when visitors arrive to the UK, Heathrow Airport is usually the first impression. In March 2016, an average of 136 passengers passed through the airport each minute, 24-7. Paul Goulding, head of insurance, makes sure that first impression is a good one for those passengers. Goulding has overseen the insurance programs at UK’s only hub airport for the past six years, assuring that all operations, personnel and visitors are protected through proper risk coverage. Heathrow serves 86 airlines and is the UK’s largest single-site employer. For 2015, Heathrow ranked as the busiest airport in Europe and sixth busiest airport in the world.
very quickly. These projects come up, we have to make sure we’re compliant and meet the client requirements and we have to be able to do that quite quickly, so from my side of things I absolutely do not want insurance holding that up. Our broker needs to be able to respond very quickly and must have an existing network in place. That’s why we would look to one of the larger companies.”
Ian Parker places up to £7m of business annually on behalf of Home Retail Group, the company behind retail brands Argos and Habitat. Milton Keynesbased Parker brings almost 20 years of insurance industry experience to his role with the FTSE 250-listed HRG, which will become part of Sainsburys once a £1.4bn deal is concluded later this year. In addition to his role as assistant claims and insurance manager, Parker serves as Home Retail Group’s health and safety advisor. Prior to joining Home Retail Group in 2006, Parker served as a claims adjuster for Lothian Buses. He’s also worked in corporate credit control for NIG Commercial and as a claims handler for Norwich Union Insurance.
rates because there’s more history to go on,” she says. “It’s slowing down a bit, it’s safer. Insurers are understanding the sector far better than they used to. I think there used to be a lot of panic rating, going on how volatile it was in 2007, whereas now it’s stabilised and our spend has gone down.” Anthoine clearly loves unique challenges working in the private security sector presents.
“Insurers are understanding the sector far better than they used to. I think there used to be a lot of panic rating, going on how volatile it was in 2007, whereas now it’s stabilised and our spend has gone down” The challenge While armoured vehicles remain beyond the realm of insurable risk, Anthoine believes insurers are beginning to recognise GardaWorld and the private security sector may not be such a bad bet in 2016. “Across the board we’re seeing a reduction in
And while those challenges have changed over the years, moving back towards the kind of exposures her counterparts in other industries handle, what she does is still supercharged risk management on steroids. “Engaging personnel from various different
countries can be challenging – from an insurance point of view, that can be difficult, meeting different legal requirements across different geographies, but we also pick up some strange claims as a result of it. ‘Spider bite causing amputation’ is probably one of the strangest and most severe things I’ve dealt with in Iraq. “Does risk change? Yes – in 2004 to 2007, it was IEDs [improvised explosive device] and hostile action, and while that’s still a real threat we haven’t experienced an IED attack on our side of things for a very long time and actually those risks have changed because the environment has changed. You’ve ended up with lots more companies moving in to these countries one perceives as hostile and it’s become a lot more mature. You see oil and gas going in and with the changing client structure you see the exposure change. “It’s a shock for insurers sometimes. They think it’s going to be very volatile but it’s not. Obviously that risk is still there, and that’s why we’re there because we’re a security provider. But our job is to avoid these issues, to prevent the client ever being exposed to them, therefore by default you would hope we ourselves wouldn’t be exposed to them.”
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when ‘who is will be you’re r deploy going t probab “We a someth environ or if we to prov for any
The ga Unsurp are pret spent ti operatio is less insurers there’s Antho stayed GardaW vehicle
FEATURES
COVER STORY: SPECIALIST RISK MANAGERS JOHN LEWIS PARTNERSHIP Adrian Rendell
Insurance administration manager London
ICELAND FOODS
Aileen Spencer Insurance manager Chester
Not to be confused with the once Vikingruled island nation, Iceland Foods operates over 860 store locations across the UK and Aileen Spencer manages the insurance operations at the UK retailer, known for its frozen food meals. “Aileen is a very, very astute insurance manager. She clearly knows her organisation inside out and knows how to get the best out of her suppliers,” says a former consultant to Iceland Foods.
Adrian Rendell graduated in zoology from Newcastle University – but his role as insurance administration manager at John Lewis is a different kind of beast altogether. Rendell joined John Lewis – whose 91,500 permanent staff across its John Lewis and Waitrose brands form a workers’ co-operative which owns the company - in April last year. Rendell brings with him years of experience in risk management. He served as risk manager at BT plc and Amersham, insurance manager at MAT Group, and an insurance officer at British Aerospace. That zoology degree might come in handy yet – John Lewis owns and operates a farm on The Leckford Estate in Hampshire.
KPMG Joe Myles
In-house insurance manager London
Joe Myles became in-house insurance manager at KPMG in 2014 after spending more than four years in a similar role with the global children’s charity Plan UK. While both organisations have worldwide reach, the scale is somewhat different – Plan has 8,000 staff in 68 countries, but KPMG employs 174,000 people in 155 countries. Myles has also served as global insurance manager for Hays Specialist Recruitment and a claims manager for Hart Insurance Brokers.
LIVE NATION ENTERTAINMENT Matthew Meredith
Director of risk management London
JAGUAR LAND ROVER John Caldicott Insurance manager Birmingham
The insurance manager for Jaguar Land Rover, John Caldicott has more than two decades of experience working in risk management for multinational organisations. Jaguar Land Rover, a wholly owned subsidiary of Tata Motors since 2008, produced almost half a million vehicles in 2014, earning the company £19.4bn in revenue. Prior to joining Jaguar Land Rover in January, Caldicott served as UK and Ireland business and risk manager for Mondel z International, a multinational food and beverage conglomerate with more than 100,000 employees. He’s also served as global insurance manager for Cadbury plc, in various lead risk management positions for Cadbury Schweppes, and as risk and insurance advisor for Powergen (now E.ON). Caldicott is a fellow of both the Institute of Risk Management and the Chartered Insurance Institute.
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A former insurance broker, Matthew Meredith is now responsible for risk management throughout Live Nation worldwide, excluding North America (the company’s international headquarters are in London). Meredith manages risk management for touring, concerts and festivals, as well as insurance and artist contract management for the global live entertainment company. As an expert on music and entertainment insurance, Meredith’s knowledge comes in handy when it comes to insuring over 20,000 shows annually for more than 2,000 artists across the world, including Beyonce, Paul McCartney, Billy Joel, Adele and more. Recently, Live Nation has backed legislation seeking the ban of the use of flares, fireworks and smoke bombs by audience members at live music events to ensure the safety of attendees.
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MARKS & SPENCER John Windsor Head of insurance London
Today’s M&S turns over £10.3bn in revenue and has 852 stores in the UK and 480 international stores. A company of this size needs experienced leaders and Windsor brings more than three Amarjit Atkar decades of experience to his role. Prior Chief risk officer to his appointment there, he served as London insurance manager at Amalgamated Metal Amarjit Atkar joined the Ministry of Defence in 2010 as group head of internal Corporation for four years. During the late audit, a position he held for four years before taking up the reins as chief risk officer 70s-early 80s Windsor was insurance and in July of 2014. An expert risk management professional, Atkar has more than 30 risk manager at Brinks-Mat Transport, years of experience in both the public and private sectors. Atkar began his career during which time the company was at PricewaterhouseCoopers, where he worked for 18 years before joining Thomson involved in the now infamous gold robbery Reuters as head of business continuity. He worked in internal audit roles at Reuters of 1983, which saw £26m (today worth and then at the Department of Transport before spending five years working for Plan, around £79m) of gold bullion and cash a nonprofit helping to get children out of poverty in developing countries. stolen from a warehouse. insurance-business-ad.pdf 1 29/02/2016 15:57
MINISTRY OF DEFENCE
HELPING YOU BUILD A SOLID CONSTRUCTION BOOK
GROUNDWORKERS
CIVIL ENGINEERS
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Special terms can be arranged for schemes and affinity groups and large books of business. So, if you have any construction needs from Ground Up to Demolition we will be pleased to help you.
GENERAL CONTRACTORS
Send any submissions or enquiries to:
COLIN BAKER
Business Development Manager colin@thamesunderwriting.com Office: 01702 713636 Mobile: 07946 637082
www.insurancebusiness.co.uk
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS NATIONAL POLICE AIR SERVICE Beverley Nichol-Culff
head of risk management and insurance Leeds
Nichol-Culff is responsible for risk management and insurance for the assets of the National Police Air Service (NPAS), which operates 21 police helicopters from 22 bases across the UK. Nichol-Culff, who describes herself as an ‘experienced, enthusiastic and highly motivated risk, insurance and claims manager’, has received a Chief Constable and Police and Crime Commissioner’s commendation for her work in getting NPAS off the ground. She previously worked at RSA in a variety of roles.
NORTHGATE VEHICLE HIRE
Thomas Strachan UK insurance manager
Thomas Strachan has been UK Insurance manager for Northgate, the UK’s leading light commercial vehicle hire company, since January 2014. He’s responsible for insuring 50,000 vehicles across the UK and Republic of Ireland. In a long career, he has worked with Marsh, HSBC and Zurich, among others. What kind of insurance do you buy? “The biggest part of our portfolio comes down to the motor trade and the self-drive hire side of the insurance programme. Thereafter premiums spend is directed towards risks such as pollution and property then more specific specialist policies, relevant to our business.” Which brokers do you use? “In 2014 we conducted a broker tender and Lockton were appointed mid-term.” What do you look for in a broker? “A broker who promotes and delivers a tri-partite service, who works with us and insurers to understand our risks and support our business.”
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Is your 2016 spend up or down? How does your spend break down by sector? “Our renewal is due this month and the expectation is that we will drive premiums savings. With our business focused on reducing the self-drive hire to the general public so we can better serve our core business-tobusiness customers, whereby these customers are required to insure the vehicles on their own policies as opposed to utilising our self-drive hire policy, this significantly changes our risk profile as a business, generating greater insurer interest.” What’s your main risk concern for 2016? “Our major risk spend will still be associated with the motor trade policy. The central challenge will be any customers failing to insure vehicles properly which then exposes us as registered owners and keepers of the vehicles.” How have your risk concerns changed over the years? “The main focus was previously about de-risking the self-drive hire with tighter controls, this was achieved, allowing us to provide a wider offering to customers. As we are now looking to increase our market share and improve the offering to core business-to-business customers, our attentions are now drawn to the greater exposures that this presents through risk accumulation.”
NEXT John Gibson
Group insurance and risk manager Leicester
John Gibson handles insurance and risk for high street clothing retailer Next plc, a company dating back to 1864, which operates more than 500 stories in the UK and Ireland and around 200 stores in more than 40 countries throughout the world. As Next’s head of risk management, Gibson only works with specialist brokers in retail insurance as “someone who is going to advise us and understands our business.” Prior to joining Next, Gibson had a more bubbly role as PepsiCo’s risk manager for Europe, Asia and Africa and honed his supply chain and logistics risk knowledge as insurance manager at Bramble Industries for three years. Between 1998 and 2003 Gibson was the insurance manager for special projects at the National Grid, which may explain why one of his greatest concerns in 2016 is cyber risk and the reputational damage that can be done through cyber incidents.
www.insurancebusiness.co.uk
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SONY EUROPE
Carlo Giannini
Risk and insurance manager Walton-on-Thames
Rock music and rugby-loving Carlo Giannini’s career at Sony started in 1991, when he joined Sony Italia to work in logistics operations. Ten years later hez moved on to work within Sony’s wider European logistics platform, and in 2006 was tasked with addressing the company’s supply-chain risk, a task given renewed attention in 2011. Today, as risk and insurance manager for all of Sony Europe, Giannini has developed a global risk management strategy that goes far beyond simple supply-chain risk. He reaches a decade in the role in July.
SOTHEBY’S
Richard Purchase
Director of risk management London
You might expect Sotheby’s, the worldfamous auction house founded in 1744, to have an appreciation of entities that have stood the test of time. So it should be of little surprise to find that Richard Purchase, who heads up risk management for Sotheby’s in Europe and Asia, has a history going back over 40 years at the company. Purchase is a Chartered Insurance Risk Manager and prior to taking the lead in risk management for Europe and Asia in 2004, he was the company’s insurance manager for Europe – a job he’d held since 1987. Sold!
PEARSON Priya Pandya
Errors & Omissions, Crime, Property Damage Business Interruption.”
Insurance manager
Priya Pandya started her career with HSBC Insurance Brokers before becoming risk and insurance manager at the Royal British Legion. She has been in her current role at Pearson, the multinational publishing and education company, for four years and is based in London She brings both an expertise and a passion for risk management to her role at Pearson. As Pearson’s insurance manager, Pandya leads the development of the vision and strategy of the company’s insurance team, as well as managing its global insurance programme. In addition to her duties at Pearson, Pandya supports the Chartered Insurance Institute in a variety of roles. What kind of insurance do you buy? “Main coverages such as General Liability,
Which brokers do you use? “Marsh is our main global broker. We also use JLT for their insurance questionnaire portal twice a year.” What do you look for in a broker? “Global reach, expertise, competitive price, innovation, excellent admin and claims support, skilled servicing team.” How does your spend break down by sector? Most of our spend is on PDBI and Media E&0/Privacy.” What’s your main risk concern for 2016? “The evolution of cyber risks and our risk exposures.” How have your risk concerns changed over the years? “From a greater focus on property risks to cyber/data breaches – this is in line with the changing risk profile of Pearson.”
www.insurancebusiness.co.uk
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS TATE & LYLE
Richard Storey
group insurance and risk manager London
Life is sweet for Richard Storey, who is responsible for all aspects of insurance for FTSE 250-listed Tate & Lyle. The company sold its sugar refining business, including rights to use the Tate & Lyle brand name and Lyle’s Golden Syrup, to American Sugar Refining in 2010 for £211m. It now focuses on manufacturing ‘high-intensity’ sweeteners and other food ingredients. Storey has held insurance management positions at global building materials outfit RMC Group and gas multinational BOC. He has a master’s in biochemical engineering from UCL.
THOMAS COOK
Mark Dawson
Group head of insurance
Mark Dawson’s latest home in a career spanning 34 years is the travel giant Thomas Cook, where he is group head of insurance. Prior to taking up his current position, Dawson spent 30 years with Marsh, where he became a managing director dealing with large corporate clients in the UK and overseas. He was CEO of Marsh’s Taiwan operation and also worked in Germany.
THALES
Mike Squibbs
Risk and insurance manager Crawley
Aerospace, ground transportation, defense, security and space are all among Thales’ sectors of expertise, and Mike Squibb’s concern is insurance and risk management. In charge of program placements, enterprise risk management, business continuity management and loss prevention, Squibbs works to create a safer Thales across the company’s 12 UK sites and 6,500 employees, in line with the company’s goal of assuring the security of citizens, infrastructures and nations. Formerly, Squibbs held various risk management positions with Exel, UPS and Lend Lease. Thales, a French company with UK headquarters in Manor Royal, has been making headways in space technology
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What kind of insurance do you buy? “We buy fairly conventional lines – property & casualty, business interruption, public tour operator liability which is quite specific to our sector. We buy some terrorism coverage
“We run an airline so we buy aviation insurances covering the aircraft, and passenger liability and war risks” on specified locations, we buy financial lines in terms of D&O, financial crime, pension fund trustees’ liability. We buy statutory coverage like UK employer’s liability or outside the UK working compensation where we’re required to, we buy motor insurance, personal accident, travel insurance. We run an airline so we buy aviation insurances covering the aircraft, and passenger liability and war risks.”
Which brokers do you use? “We use Marsh predominantly, but we also work with Willis Towers Watson – we operate a captive insurance company and they manage that.” What do you look for in a broker? “I suppose the key things are experience and knowledge of the travel and leisure sector and
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How does your spend break down by sector? “If we’re just looking at commercial insurances, aviation represents about 60%, property & casualty is about 35%, financial lines are about 2.5% and the final 2.5% is what you might term miscellaneous – picking up personal accident and travel insurance and the like. That’s commercial spend - I haven’t included employee benefits such as life assurance or healthcare insurance costs.” What’s your main risk concern for 2016? “We have two really. One is geopolitical and international terrorism, and the other is cyber – we transact more and more business via the web each year, customers are reliant on the web for content as well as booking holidays, so that in itself really increases our exposure and we are doing a lot to better understand that exposure and mitigate it.” How have your risk concerns changed over the years? “In the last couple of years there has been a big change in geopolitical risk which affects the travel sector – that’s probably the biggest risk change we have encountered recently. A number of our destination markets have been affected, that’s definitely been a trend in the last few years. There has also been a shift from tangible their capabilities around programme design and implementing a risk transfer programme, which includes their ability to evaluate risks. We look for strong transactional broking capability and we look at the individuals within the team and their ability to deliver the services we require in a consistent way. We look at capabilities of the network too. We’re an international company, we have operations in lots of countries and we need a broker with a global network with the ability to co-ordinate global activities in a consistent way.” Is your 2016 spend up or down? “It will be down for 2016. One renewal we have just completed on the non-aviation side
“We look for strong transactional broking capability and we look at the individuals within the team and their ability to deliver the services we require in a consistent way” was down. Our aviation programme renews in November – last year it went down and the year before it was flat. The market is still very competitive and we would expect premium costs to be either flat or reducing.”
risks to intangible risks as we’ve become a more digitised company, and the reputational issues associated with companies which have had cyber events, which impact on customer confidence. They are the key developments we’ve seen.”
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FEATURES
COVER STORY: SPECIALIST RISK MANAGERS
TSB BANK
Emmanuel Fabin Insurance manager London
TESCO
Dan Evans
Insurance risk manager London
As insurance risk manager at Tesco, Dan Evans takes charge of casualty, motor, marine, travel and financial lines insurance for the company, as well as working to identify and assess risks within different business units across the country. Evans has also served as a project manager for Lockton Companies, a client manager for Aon and risk control manager for J Sainsburys plc. He holds a BA from Oxford Brookes University.
THAMES TIDEWAY TUNNEL
Emmanuel Fabin cut his teeth on a graduate programme for Allianz where he learned to become an underwriter, before crossing to the other side of the fence and becoming an in house insurance manager at TSB. Fabin brings his underwriting experience to the role where he is responsible for building, placing and managing the bank’s stand-alone suite of insurances. With a bachelor’s degree in accounting and marketing from De Montfort University, Fabin was attracted to the industry by the flexibility of career change, knowing that he can choose between working in the insurance market as a broker or insurer, or continue in a financial or non financial industry
THE ROYAL BRITISH LEGION
Chris McTear
Elaine Heyworth
Chris McTear leads the insurance functions for the new 25km interception, storage and transfer tunnel running up to 65 metres below the Thames river, known as the Thames Tideway Tunnel. Working on the UK’s largest water industry project, with a £4.2bn budget, McTear will be busy for the next eight years of construction, slated to begin this year. A former insurance risk manager for Balfour Beatty Major Projects, McTear now develops and implements the strategy, direction and scope of all insurance issues, leads insurance and budgetary negotiations connected to the large and complex infrastructure project from conception to completion.
Charities large and small feature strongly on the CV of Elaine Heyworth – the woman who looks after risk for The Royal British Legion (organisers of the annual Poppy Appeal) also works with smaller charities including Noah Enterprise, where she is a trustee, and The St Vincent de Paul Society, where she is a member of the audit committee. The RBL is one of the UK’s larger charities, supporting and advocating for HM Forces veterans. It received donations of £82m in 2014. Elaine has a wealth of experience in the private sector too – she was head of risk management at T-Mobile / EE, and has worked at Heathrow Express and Barclays. She was also a board member of the European Professional Women’s Network and a non-exec board director of AIRMIC.
Insurance manager London
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Interim head of risk and insurance London
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INDEX OF SPECIALIST RISK MANAGERS (BY SURNAME) SURNAME
FIRST NAME
PAGE
COMPANY
Allen
Chris
43
TUI Travel
Anthoine
Jo
32
GardaWorld
Atkar
Amarjit
37
Ministry of Defence
Bell
Kate
30
Burberry
Bird
Michael
29
Agustawestland
Caldicott
John
36
Jaguar Land Rover
Case
Charlie
29
Barratt Developments
Clark
Dawn
34
Hays
Cosgrove
Jacqueline
33
GlaxoSmithKline
Dale
Connie
32
City of London Corporation
Dawson
Mark
40
Thomas Cook
Evans
Dan
42
Tesco
Fabin
Emmanuel
42
TSB Bank
Gedny
Sam
33
Fred Olsen
Giannini
Carlo
39
Sony Europe
Gibson
John
38
Next
Goulding
Paul
35
Heathrow Airport
Heyworth
Elaine
42
The Royal British Legion
Llewhelin
Hannah
30
Britvic
Lloyd
Tim
32
Christie's
McTear
Chris
42
Thames Tideway Tunnel
Meredith
Matthew
36
Live Nation Entertainment
Mitchell
Gordon
30
British Red Cross
Myles
Joe
36
KPMG
Nichol-Culff
Beverley
38
National Police Air Service
WM MORRISON SUPERMARKETS
Pandya
Priya
39
Pearson
Parker
Ian
35
Home Retail Group
Patching
David
29
BAE Systems
Insurance risk manager Bradford
Purchase
Richard
39
Sotheby's
Rendell
Adrian
36
John Lewis Partnership
Ritson
Michael
43
Wm Morrison Supermarkets
Rollinson-Payne
Aaron
33
Ford Europe
Spencer
Aileen
36
Iceland Foods
Squibbs
Mike
40
Thales
Storey
Richard
40
Tate & Lyle
Strachan
Thomas
38
Northgate Vehicle Hire
Stubbs
Sarah
29
Bentley
Ward
Caroline
30
British Airways
Williamson
Gareth
30
DFDS Logistics
Windsor
John
37
Marks & Spencer
TUI TRAVEL Chris Allen
Sector insurance manager Milton Keyes
Chris Allen insures risks of all kinds for one of the world’s largest tourism companies, operating in 180 countries. Allen is responsible for all insurance requirements for TUI’s mainstream sector, which includes vacation packages to multiple European nations, TUI’s airlines, Thompson and Island Cruises, and 80 global businesses within the accommodation and destination sector of TUI. From his position, he places aviation insurance, hull & machinery insurance, indemnity insurance and more, including the insurance coverage for Sunwing Airline, TUI’s joint venture airlines located in Canada. Allen has been with his company since 2001.
Michael Ritson
Just two months into the role, Michael Ritson is responsible for insuring the risks of 500 plus Morrisons supermarkets around the country. Wm Morrison Supermarkets started up as an egg and butter stall in Bradford market in 1899 and today is the UK’s fourth largest supermarket chain, with 11 million customers passing its doors every week. Ritson brings a breadth of experience to the role, having served as an underwriter with Aviva, an insurance broker with TSB Group and risk manager for blue-chip companies in both the public and private sectors - including eight years with International Risk Management Group, a global captive management and risk finance consulting company.
www.insurancebusiness.co.uk
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PEOPLE
BROKER PROFILE
La Playa, specialist arts & entertainment broker La Playa began in 1999 when regional insurance broker and guitarist Mark Boon decided the creative industry was often buying the wrong types of products for its needs, writes Simon Miller How did you get into this industry? I played (and I still play) bass and keyboards in a band and insurance was the only job that offered flexi-time at that time. It meant I could play a gig in the evening, travel back late at night and get into the office a bit later the following morning.
Why did La Playa specialise in arts and entertainment? I was a partner at a regional insurance broker, and was starting to handle some music risks. As a musician myself, I realised that too many creative organisations were buying insurance policies that were the wrong shape, the wrong size and the wrong price. So we set up La Playa to support clients with truly specialist policies, expert advice and genuinely personal service. Our private client portfolio also includes many musicians, writers and creative folk.
health and safety policies.
How do you arrange partnerships with art associations? We work closely with sector trade associations like the Association of British Orchestras; Association of Festival Organisers; British Arts Festivals Association; and the International Artist Managers Association. It’s a great way to stay on top of the risk-related and broader issues in the sector and, in turn, we get the opportunity to help educate our market in the dark arts of risk management and insurance. For example, we’re currently organising a seminar around box office data ownership in response to the new General Data Protection Regulation laws.
What issues affect arts and entertainment brokerage? Arts funding is a significant factor. We tend
What do you look for when brokering for a theatre company? We’ve designed a scheme for performing arts companies (Performing Arts Portfolio), which covers just about every angle of risk under a single policy. We can cover almost any theatre company that comes our way, but we like to work with well organised, well run venues, experienced tour managers, and organisations that take their risks seriously, with good practices in risk assessment and well developed
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to work with a lot of non-profit arts organisations, and when their funding takes a hit they have to scale down their operations so the insured sums can yo-yo somewhat. Cancellation is a significant issue – for example weather, power-outs, denial of access to venues and such-like. So contingency insurance is key to our offering. Increasingly, terrorist threats are a cancellation issue, even for false alarms, so we’re encouraging entertainment clients to buy terrorism cover.
What is the most unusual area of your business? We hold an unusual position as one of the few non-alpha brokers with offices in both the UK and the US. We have an office in New York, and we’re just in the process of opening in San Francisco. So we can offer genuinely international capability while remaining small enough
WINE AND SONG Around £2-3bn of fine wine is now stored in home cellars in the UK and architect-designed display cellars are increasingly a lifestyle must-have. But with flooding on the rise, and many private wine collections stored underground, specialist coverage is needed, and La Playa has launched a new product to meet that need.The issues wine collectors face include: • Under-insurance when wine is part of general contents insurance, it’s hard to keep the ‘sums insured’ up to date – especially given the volatile wine market
www.insurancebusiness.co.uk
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ABOUT LA PLAYA Founded: 1999 Size: $15m GWP Number of employees: 40 Areas covered:
media
arts & entertainment
science & technology
fine arts
private client Most unusual coverage requests
“The other day I heard my colleague placing cover for a fashion shoot, asking “And does the cobra have an understudy?” to provide boutique-style, personal service.
What is the most unusual request for brokerage you have had? We have unusual requests all the time [see boxout]. The other day I heard my colleague placing cover for a fashion shoot, asking “And does the cobra have an understudy?”.
Where next for La Playa? Our key focus is on growth and internation-
alisation and we are aiming to treble in size within five years. We’re in the process of becoming a Lloyd’s broker and, as our clients become increasingly global, we need to reflect that. The transatlantic operation has also opened up a new area of business for us – many UK brokers are now placing US client risks through us and US brokers are using us for UK placement. The next territory is Singapore, gateway to the East, and a key hub for tech, media and the arts. Watch this space!
a 60ft inflatable octopus
The Fourth Plinth
yoga for dogs
a steam-breathing dragon wandering around Leeds
a giant spider walking round Liverpool
www.insurancebusiness.co.uk
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BUSINESS STRATEGY
MARKETING
Change or die Even the greatest and most successful businesses need to adapt and change in order to stay relevant, or else face obsolescence. It’s about anticipating, preparing for and embracing change when needed. Michael McQueen reveals how IN THE early 1930s, with the world in the grip of economic depression, a Danish widowed father of four had a vision. Despite the grim fiscal outlook, Ole Kirk Christiansen purchased a small toy shop in the town of Billund and launched a modest business with the name Leg Godt (Danish for ‘play well’). Christiansen was a pioneer from the outset – his was the first toy business to embrace a new technology called plastic. Within a few short years, Lego, as the company was now affectionately known, had become the toy of choice for children worldwide. In the years that followed, Lego evolved and grew. From simple plastic blocks to the release of playsets and the invention of the little yellow man, the company innovated its way to the position of undisputed leader in children’s play. Until the late 1980s, that is. As new generations of children began opting for video games rather than plastic playsets, Lego was faced with a dilemma. The company began an 11-year loss stretch – losing $500 million in just two years at their worst point. By the late 1990s, the casual observer may have been justified in predicting that Lego had run its course and was a dead brand walking. And yet, the story was far from finished. Recognising the need to embrace the digital age, Lego’s strategy was informed by the old adage: If you can’t beat ‘em, join ‘em. Lego entered a series of licensing arrangements with
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well-known movie franchises such as Star Wars, Batman and Indiana Jones to create their own co-branded video games. Buoyed by the success of this new direction, Lego expanded their digital offering with the 2010 release of a massively multiplayer online game Lego Universe. More recently, they have developed smartphone apps that allow users to build Lego shapes while sitting on the bus. There is little doubt that Lego today is more powerful, profitable and relevant than ever – the recent release of their blockbuster movie is testament to this. In contrast, Lego’s one-time rival Meccano has faded into obscurity.
What can we learn from Lego? So, what can other brands and businesses learn from this story of adaptation and reinvention? I would suggest that in order to win the battle to stay relevant over time, organisations and leaders must consistently be willing to do the following:
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Recalibrate
While an appetite for change is critical to staying ahead of the curve, it is important to discern which fundamentals in an organisation should never change. Just as it is necessary to
determine which walls are loadbearing when renovating a house, leaders must identify non-negotiable values, principles and purpose. Tamper with these ‘load-bearing’ fundamentals, and everything may come crashing down. Before embarking on any change agenda, it is vital to recalibrate an organisation with its core DNA and allow this to be a guidepost for strategy and a touchstone for decisionmaking. In the case of Lego, the company’s leadership never lost sight of Lego’s core purpose of inspiring play, creativity and imagination amidst their digital reinvention.
2
Refresh Any gardener knows that regular pruning
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is necessary to maintain the health and vitality of a garden. In the same way, organisations require regular pruning of initiatives, traditions and even people who are inhibiting growth. While pruning can be painful and even disruptive in the short-term, it is critically important. Consider how Sony CEO Kazuo Hirai has recently embarked on a series of necessary pruning initiatives. In the face of $6.4 billion loss for 2012 and a dramatic downgrade of Sony’s credit rating, Hirai recognised that he would need to act quickly to turn around the ailing tech giant’s fortunes.
leaders and organisations to continually re-engineer their internal systems and processes. Too often, being ‘in a groove’ can easily turn into a rut, and simply repeating the habits that have worked in the past can set you on a collision course with inefficiency and irrelevance.
5
Reposition
As times and needs evolve, so must the positioning of businesses and brands. This could mean developing new products and services, tapping into new markets, or completely overhauling a brand’s messaging.
Just as it is necessary to determine which walls are load-bearing when renovating a house, leaders must identify non-negotiable values, principles and purpose His first step was to end Sony’s decade-long marriage with Swedish mobile phone company Ericsson. Next, Hirai spun off any Sony-owned non-core companies, dramatically streamlined manufacturing processes and cut Sony’s global workforce by roughly 10,000 employees.
3
Reframe
We were all raised to believe the lie that great minds think alike. Nothing could be further from the truth! The greatest and most creative minds have always thought very differently from their peers and the prevailing wisdom of their era. Being able to view the world from a different frame of reference is, in fact, the key to innovation and invention. Leaders must pay particularly close attention to the views and perspectives of those who have fresh eyes in an organisation – often owing to their lack of experience. Such fresh eyes have no trouble thinking outside the box because they have no idea what the ‘box’ even looks like yet.
4
Re-engineer Keeping pace with change will require
To see a brilliant example of a repositioned brand, look no further than 160-year-old glass manufacturer Corning. In 1908, half of Corning’s revenue came from making glass bulbs. Over time, the Corning brand extended beyond these roots and became known for its high-quality cook- and kitchenware. Today, however, many of Corning’s most lucrative products are ones that didn’t exist 10 years ago. The company now specialises in cathode-ray tubes, fibre optics for HD TVs, and laser technology that enables mobile phones to be fitted with micro projectors. Corning is a great example of a company rich in tradition and history that has stayed relevant by not being afraid to embrace new products and services as times have changed. Setting a brand or organisation up for enduring relevance involves a principle that every experienced surfer understands well. In order to catch the perfect wave, a good surfer knows the importance of keeping their eyes firmly on the horizon. While a wave is still forming a long way off in the distance, surfers know that this is the time to move – to paddle
SHAKY TIMES: 10 ENDANGERED BRANDS Every year, 24/7 Wall St, which provides critical online analysis and commentary for US equity investors, identifies 10 US brands that it predicts will disappear within a year’s time. Among the selection criteria are declining sales and losses, disclosures by the parent of the brand that it might go out of business, rising costs that are unlikely to be recouped through higher prices, and companies that have lost the great majority of their customers. Last year’s list included:
out and get in position. Move too late or not at all, and you’ll simply get washed up as the wave crashes over you. In much the same way, winning the battle for relevance is about anticipating, preparing for and embracing change – no matter how uncomfortable or confronting it may be. As Charles Darwin once observed, “It is not the strongest that survive, nor the most intelligent. Rather,” he said, “it is those who are most responsive to change.” Michael McQueen is a leading business commentator and four-time bestselling author. His most recent book “Winning the Battle for Relevance” explores the importance of reinventing an organisation or brand before you are forced to. Visit www.MichaelMcQueen.net
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FEATURES
FLOOD
UK flood initiative in at the deep end It’s sink or swim time for Flood Re, the UK Government’s scheme to pool flood risk, but what does that mean for brokers?
FLOOD RE, the UK Government’s scheme to pool flood risk, launched early April backed by £2.1bn in reinsurance. The initiative, which follows the principle of terrorism insurance fund Pool Re, intends to give around 350,000 homes in flood-prone areas access to affordable home insurance, but teething problems impacted the broker community’s ability to sell policies.
Launch controversy A lot of finger pointing took place at the launch of Flood Re, with software houses blaming insurers for delays and insurers blaming the software houses. The issue is that most insurers are offering Flood Re policies via their direct channels, seemingly at the expense of broker access to the same products. Graeme Trudgill, executive director at BIBA, said: “We’ve been in dialogue with the main insurers and software houses over the last few months and have repeatedly raised issues and concerns over competition where it appears direct arms have been prioritised
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over broking channels. It is clear some providers are lagging behind others… We want Flood Re for brokers and we need the market to get it resolved as soon as possible.” Although Flood Re shares similarities with Pool Re, it also has some unique features and requirements that have complicated the process. The main issue here is that because the fund is effectively created from a levy on council tax charges, council tax banding needs to be taken into consideration. According to Trudgill, from the get-go a number of insurers are using systems that won’t automatically be able to accept Flood Re business via brokers. So BIBA is instead urging them to ensure that they have manual methods of processing quotes for flood risk properties. Flood risk is high on the agenda for the global insurance industry. At the opening of the COP21 climate talks in Paris in December, Ban Ki-Moon, secretary-general of the United Nations, pledged to elevate the role of the insurance industry in protecting the vulnerable
against the impacts of climate change, aiming to address the needs of the nearly 634 million people (a tenth of the global population) who live in at-risk coastal areas just a few meters above existing sea levels, as well as those living in areas at risk of droughts and floods. Resilience is a key pillar of the UK scheme, which is designed to help local authorities and communities across the UK to be better prepared for flooding and better educated about flood prevention.
Building Flood Re The regulations to enable the creation of Flood
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“It is clear some providers are lagging behind others… We want Flood Re for brokers and we need the market to get it resolved as soon as possible” Graeme Trudgill, BIBA Re were signed by UK flood minister Rory Stewart in November 2015 and the Prudential Regulatory Authority and Financial Conduct Authority signed off on the initiative late March. Insurers Munich Re and Swiss Re are
known to be contributing significant support, with a further 45 companies providing capacity to meet requirements. The initiative has been largely welcomed by the industry, which sees significant
FLOOD RE: HOW IT WORKS Flood Re takes the flood risk element of home insurance from an insurer in return for a premium based on the property’s council tax band. In addition, Flood Re would charge the insurer an excess on the flood part of the policy of £250. Because Flood Re’s activities are subsidised by a levy on insurers of £180m, the premium charged to insurers is below the rates insurers would normally charge on properties at the highest risk of flooding.
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FEATURES
FLOOD opportunity in a vastly underinsured market as well as major scope for building resilience. Ryan Thomas of Willis Towers Watson says that with Flood Re laying the foundations, “We have to go beyond campaigning and actually start investing in true market development. Can we as an industry make the next step in helping the government in making investments in this area?”
Uninsurable? Mamiko Yokoi-Arai, principal administrator of directorate for financial and enterprise affairs, OECD, applauded the UK government for taking preventative measures and the insurance industry for supplying protection, but warns: “There does need to be investment from the public side, but also a conversation needs to take place so the investment is not made in vain. “Flood has just become uninsurable in a number of countries because it is just not commercially viable or the premiums are just too high,” she says. Martyn Parker, chairman of global partnerships at Swiss Re, refuted this
“If you live on the banks of a river that every second year puts water in your house, that’s probably uninsurable. But you could make it insurable by putting flood defences in, if people mitigate the risk, it can become insurable.” Martyn Parker, Swiss Re comment, suggesting instead that risk improvement initiatives could tip the scales. “I don’t think it’s true that flood is uninsurable,” he says. “If you live on the banks of a river that every second year puts water in your house, that’s probably uninsurable. But you could make it insurable by putting flood defences in, if people mitigate the risk, it can
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become insurable.” Swiss Re, as one of the main backers of the initiative, is understandably positive about the project, with Parker saying that Flood Re should be celebrated as a programme that reaches into a marketplace that was unprotected for a long time. “Just look at Australia during the Brisbane
floods in 2010,” he says. “The government raised income tax by 1% for three years to cover the costs of the rebuild. This was a last resort because it was a very politically unpopular move, but it could have been avoided with an initiative like Flood Re.”
Prevention not cure At its heart, Flood Re is a temporary measure – a transitional arrangement with a 25-year life span. The idea is that insurers will build flood risk pricing into their models, with a view to enabling lower prices and excesses to be offered to consumers by the end of 2039. This outcome is only likely if the UK develops strategic flood defences. The government has come under fire in recent years for cutting back on flood-defence spending between 2011 and 2014 and focusing on post-incident strategy rather than preventative spending.
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Brendan McCafferty, chief executive of Flood Re, says: “If we are to successfully reduce premiums and excesses for flood-prone homes in a sustainable way over the coming decades, action must be taken to reduce the cost of flooding. These properties will need to be made more resilient when flooding happens and action needs to be taken to bring down the cost of repairing flood damage.” There is also the matter of a significant coverage gap in the commercial sector, which is currently excluded from the programme. According to the British Property Federation (BPF), this leaves millions of businesses and homeowners in the rental market excluded and vulnerable. BPF CEO Melanie Leech warned that as
Swiss Re’s Parker agreed. “The supply side is now there but we need to get the demand side moving,” he says. But all things considered, the Flood Re initiative has, for the most part, been warmly welcomed and has generated international interest, particularly in Canada, where Don Forgeron, president and CEO of the Insurance Bureau of Canada (IBC), has been campaigning for a collaborative national flood programme like the UK’s. Extreme weather events driven by climate change are on the rise and the majority of Canadians, like their UK counterparts, mistakenly believe that flood protection is included in home insurance policies. Canadians that suffer flood damage
“If we are to successfully reduce premiums and excesses for flood-prone homes in a sustainable way over the coming decades, action must be taken to reduce the cost of flooding”
DROPS IN THE OCEAN
£2.1BN capacity of the multi-year reinsurance programme
3 YEARS length of reinsurance deal
@ Flood Re is second biggest ‘natural peril’ reinsurance deal struck in Europe, fifth biggest globally
Brendan McCafferty, Flood Re flood does not discriminate, it is unfair to leave businesses, leaseholders and families living in the private rented sector to sink or swim on the open market. “In particular, people who own their own flats will wonder why they should be denied access to affordable buildings insurance under the new scheme, while those who own their own house will not,” she says.
Supply and demand Some believe that focusing on the demand side of the equation, rather than the capacity side, is the key. “If corporates were made to disclose their risks [to flood] like insurers are, it will transform the demand for insurance,” says Willis Towers Watson’s Thomas.
typically rely on the Disaster Financial Assistance (DFA) programs provided by the federal, provincial and territorial governments. But the 2013 floods in Alberta and Ontario caused $5.3bn in damages, of which only $3bn was insured. Those having to rely on the DFA programs discovered that, even with the financial assistance received, they were out of pocket tens of thousands of dollars. And it’s a global problem. The annual economic costs of disasters around the globe have increased five-fold since the 1980s, increasing from US$25bn a year in the ‘80s, to US$130bn a year in the 2000s. So can the UK’s initiative become a life belt for the global economy, or will it turn out to be a failure of Titanic proportions? Parker from Swiss Re sees momentum building for the latter: “In
45 number of insurance backers providing capacity
£1.29bn capital provision, most of which comes from Munich Re and Swiss Re Canada you have massive issues with flooding,” he says, “But Canadian officials are talking to Flood Re chiefs to see if they can share knowledge and methodology with a view to establishing something similar,” he added.
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FEATURES
MARKETING
What to ask when interviewing for your small business Sarah Derry helps you to increase the chances of selecting the right candidate every time with her tips for small businesses
THERE IS a big difference between hiring staff for your small business compared to recruiting within a larger organisation. For a start, not only will you be hiring less staff but it is likely that you will be seeking an employee with a wider range of skills, greater flexibility, accountability and commitment. When beginning the recruitment phase, it is important to look for people who will not just suit your needs with regards to skill and expertise, but who also fit into the overall culture of your small business. Most small business owners wear many hats and don’t have a dedicated human resources department. They are also often extremely time poor and, as a result, do not have much time to spend on the preparation and planning stages of an interview. However, I would like to stress the importance of
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ensuring you make the time to prepare some good questions which will ensure that you recruit the right person for the job. In doing this, you may just save yourself a whole heap of time later on if you discover you have not employed the right person for your business.
keep in mind that every time you interview someone you are creating an impression of your business to the outside world.
What to ask? Questions such as “What animal would you be?” or “What is your favourite food?” are not ok. Not only do they tell you very little about the substance of the candidate but it is likely they may be considered discriminatory or inappropriate. Even if you are a solopreneur, it is always good business practice to be 100% professional in an interview. Word of mouth spreads fast and you never know who your interviewee will share their experiences with. Be sure to
Interview dos and don’ts In order to employ the right person for your business, take a few minutes to consider the following prior to your next interview: • Don’t do all the talking. It is fine to tell the candidate a little bit about your business and the role but then get straight into asking some questions. A good place to start is by asking the open question “Tell
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“Drop the hypothetical questions. The truth is, when you ask a hypothetical question, you get a hypothetical answer”
me about yourself ”. The answers you receive to this question can tell you a great deal about this person in the first few minutes. • Think up a fact-finding question where you can confirm any information included in the candidate’s resume. This will also help them warm up and relax and assist them to feel more comfortable in responding to the more difficult questions you ask later on in the interview. • Drop the hypothetical questions, such as “If you were in the
situation… what would you do?” The truth is, when you ask a hypothetical question, you get a hypothetical answer. These days people are skilled enough to tell you want you want to hear, rather than the truth of what they really did or would do! • Take a leaf out of big business’ book and ask a few behavioural questions such as “Tell me about a time when…” Behaviour-based questions will focus on what a person has done in the past and the success they enjoyed as a result.
Not only will this help you work out if the candidate is a ‘good fit’, it will also give you a strong indication of future behaviour. • Make sure you ask questions specific to small business such as initiative, flexibility, problem solving, ability to work on your own, ability to work under pressure and multi-tasking. • Talk less. It’s better to ask short follow-up questions such as “What happened next?”, “After this?”, and “What was the end result?” Let them tell you the whole story in their own words. • To wrap up, make sure you have a closing question, such as, “If this was your business, why would you hire you?” This is a great opportunity for the candidate to showcase their own unique skills and talent that they may not have had the opportunity to raise during the interview process. • Running a successful small business is often about trust, so make sure you employ someone you have belief in and you feel you can depend on. If you fill your business with staff who are self-motivated then you can be sure your business is on the right track. To conclude, the culture and success of your small business will be determined by your people. So, next time you are looking at taking on new staff, make sure you do yourself a favour by taking sufficient time to plan your questions, giving consideration to the type of business you run. This will assist you in finding the right person every time.
Sarah Derry is the director of People Reaching Potential. Prior to founding People Reaching Potential, she was the regional director of human resources for a large multi-national company. Visit www.peoplereachingpotential.com.au
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PEOPLE
CAREER PATH
IT’S A LONG WAY TO THE TOP It took him almost nine years to find his way back from a six-month trip to Australia, but Ben Rose came back with big plans
2014 2014
MOVED BACK TO THE UK WITH MILLER INSURANCE Rose took a job with Miller back in the UK and started working on Digital Risks. “Australia is very cliquey – even more so than London. And after eight years I wanted to be able to travel again. I never expected to be away for so long. But Miller wasn’t a good fit so I started working on Digital Risks.”
2008 MOVES TO ZURICH INSURANCE After three years at Allianz, Rose followed his boss over to Zurich in Sydney, where he became a senior claims executive. “I was always working with large technology companies and media companies.”
Rose got his first job in insurance at Ageas Retail in Bournemouth, where he worked his way up to senior account executive over three years.
LAUNCHES DIGITAL RISKS Rose launched a startup focused exclusively on broking insurance for other digital and start-up companies. Rose also became a mentor for other startups at StartupBootCamp, as well as organising Silicon Drinkabout, a weekly meet-up for start-ups and techies in a pub in central London. Cheers! “I had lots of business contacts in London, and it was exciting to go from something very old-fashioned to something very different. Things take a long time to happen in insurance and this can be very frustrating for start-ups, so we aim to change that.”
2011 JOINS OAMPS, PRIOR TO ITS ACQUISITION BY ARTHUR J GALLAGHER Rose moved to OAMPS after three years at Zurich, where he became a corporate account executive for the specialist insurer. “At OAMPS I was looking after some cool TV shows like MasterChef and Big Brother. Then OAMPS was acquired by AJ Gallagher.”
2005 GOES TRAVELLING IN AUSTRALIA Bitten by the travel bug, Rose left his car in his parents’ driveway and decided to go travelling around Australia for six months. He was gone for nearly nine years. His first job in Australia was as a corporate claims executive for Allianz Insurance in Sydney.
2002
BEGINS WORKING AT AGEAS
“The Australian insurance market is pretty similar to the UK in that it’s based on UK law. So it’s pretty much doing the same thing as in England but with nicer weather”
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE E-mail editor@insurancebusiness.co.uk
ASCENDANT Torquil McLusky spent 15 years in Lloyd’s, is now commercial director at Pulse Insurance, and always has dreams of cycling glory whenever he is on his bicycle
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TORQUIL MCLUSKY started cycling about 12 years ago when a friend asked him to join him on a sponsored ride to Paris. He immediately caught the bug. “Since then I have ridden quite a few of the famous climbs,” says McLusky. “Especially in the Pyrenees.” He admits to definitely not being the fastest, but that doesn’t matter. “The sense of exhilaration at the top is hard to beat,” he says. “I would recommend it to anyone.” Usually the closest he gets to pro-cycling in his professional life is when he is asked to provide insurance for one of the top cyclists or the team, through his company Pulse Insurance, which specialises in life and protection cover for individuals and groups not covered in the standard market, including sportsmen, aid workers or people with medical issues. “[Business] doesn’t stop me spending a lot of my free time cycling around the Cotswolds where I am lucky enough to live,” he says. “And imagining myself surging to a summit finish in the Alps or Pyrenees.”
£1,500
fundraising target for various charities this year
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number of Twitter followers McLusky has after 12 years of cycling
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E
3
number of Tour de Force stages he is riding this June
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