INSURANCEBUSINESS.CO.UK ISSUE 2.01 | £14.99
TERROR THREATS
Changing perceptions about terrorism cover
RISING TIDE
Weathering UK's flood risk
FEELING THE BURN?
How to chill out, not burn out
BUILDING TOMORROW’S
INSURER R
17 20
BROK E
Chubb’s David Robinson on the ACE-Chubb merger and MGA company’s bright future N the SO s
ve – an d hate – lo ey th t ha w e ar sh rs Broke e of M GA s at st t en rr cu e th t ou ab
Thursday, 8 June 2017 | The Grange City Hotel London
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MARCH 2017
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CONTENTS
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UPFRONT
CHANGING PERCEPTIONS OF TERRORISM
COVER STORY
18
The growing opportunities and challenges of selling terrorism-related insurance products
06 NEWS ANALYSIS
A report on the rapidly changing cyber insurance landscape
08 INTELLIGENCE
Mergers, appointments and a round-up of new products
12 TECHNOLOGY UPDATE
FEATURES
28
WHEN CYBER MEETS D&O
What coverage do clients need in an increasingly litigious business world?
Chubb’s David Robinson talks about his role in the ACE-Chubb merger
14
Insurtech, customers and new opportunities
Charting the growth of the MGA sector over the coming year
The numbers are crunched on what the broker community thinks about the current state of MGAs
INDUSTRY ICON
04 STATISTICS
10 MGAs UPDATE
BROKERS ON MGAs
PEOPLE
threaten brokers?
7 201
FEATURES
24
s
BRO K
02 EDITORIAL
ON MGInsuring against an uncertain future S A HEAD TO HEAD 03 ER Does the surge in insurtech activity
Is insurtech an overhyped threat? Plus, the rise of social brokers
17 OPINION
The need to embrace insurtech, not fight it
FEATURES 30 BROKER PROFILE
C&M Insurance’s Sunil Shah
34 AVOIDING BURNOUT
Tips on chilling out, to stop you burning out
PEOPLE
FEATURES
32
FLOOD RISK RISING
On the eve of the first anniversary of the Flood Re scheme, a look at the development of the UK’s flood threat
36 CAREER PATH
Sharon Long – a career up in Neon!
37 OTHER LIFE
Geoff Stilwell’s need for speed on the Utah salt flats
INSURANCEBUSINESS.CO.UK
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1
UPFRONT
EDITORIAL
Confusion reigns and insurance wins
W
hat single noun would you pluck out to describe the current environment in which we’re living? Confusion? Disorder? Maybe even chaos? Chances are the vast majority would pick a word that reflects the unstable landscape in which we’re attempting to not only live, but also do business. Here in the UK, the uncertainty largely surrounds the decision to pull out of the European Union and where it will leave us in terms of the single market, which Theresa May has outlined we will depart from, and passporting rights with the continent. Then, of course, there is the arrival of a new president across the pond – one who amassed 2.5 million fewer votes than his rival. Of course, to those who did vote for President Trump in the USA, there is renewed hope and belief that America can rediscover its foundations and be “great again”. However, among the naysayers there are genuine fears about what lies ahead globally. So where does that leave insurance? Insurance is designed to provide reassurance in times like these – and as fears grow there are emerging opportunities for the industry. The Allianz Risk Barometer 2017 pinpointed that cyber risks, for example, have risen to stand as the chief concern for businesses in the UK and third globally, only narrowly behind business interruption and market volatility. For brokers who are able to quickly capitalise by understanding the businesses they work with and presenting a cyber product that genuinely meets their needs, there is potentially a new, relatively untapped area of business for them to reap rewards from.
For brokers who are able to quickly capitalise … there is potentially a new area of business to reap rewards from Yet the insurance industry, it seems, faces its own state of confusion with smaller brokerages struggling with digital innovation, new players emerging, and larger industry names contemplating moving some areas of their business outside the UK post-Brexit. In turbulent times like this, then, it is vital for brokers to work with a managing general agent (MGA) they can truly rely on – one whose focus is on providing first-class underwriting services and who can be consistently turned to for the provision of products, such as professional indemnity insurance, for some of the most important firms in the country. That’s why in this edition, Insurance Business is letting you, the insurance broker, tell us about the leading MGAs in the country. It could be argued the consistency they can provide in choppy waters is now more important than ever.
The team at Insurance Business UK
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www.insurancebusiness.co.uk MARCH 2016 EDITORIAL Editor Paul Lucas Journalists Lucy Hook, Heather Turner, Libby Macdonald, Tim Garratt Editorial Researcher Hannah Go Production Editor Bruce Pitchers
CONTRIBUTORS Karen Gately, Philipp Kristian Diekhöner
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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
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UPFRONT
HEAD TO HEAD
Does the surge in insurtech activity threaten brokers? As insurtech moves from the fringes to the mainstream, brokers caught in the oncoming wave are grappling with change
Daniel Schreiber
Donna Peeples Chief customer officer Pypestream
Managing director, commercial intermediary AXA Insurance UK
Short answer: there’s enough room for everyone. The surge in insurtech is beneficial for those who are underserved by the traditional carriers. These are folks who look to self-serve in every field. They’ll book an Airbnb over a hotel and swipe for an Uber instead of calling a cab. When insurance shopping, they’ll go for a user experience that is instant and hassle-free. However, there are those who prefer buying insurance from brokers and look to storefront agents to discuss their policy in length before committing to coverage. So while insurtech seeks to accommodate those self-serving customers, it does not threaten brokers.
The broker advice model will continue to evolve and has an opportunity to improve with insurtech. Change is here. Insurers are embracing intelligent automation and the use of chatbots to provide 24/7 real-time support in mobile messaging, allowing brokers to focus on higher-level tasks and support.
Brokers are used to being challenged by advances in the market, especially in the personal lines space. The rise in price comparison sites challenged the position of brokers long before insurtech arrived on the scene. New technology threatens to do parts of the broker’s job in a much quicker and slicker way, allowing people to buy cover in the same way they would order a taxi from Uber. Brokers can’t be complacent and must evolve, and should also look at ways of partnering with, or even investing in, insurtech firms to ensure that they stay relevant and to safeguard their future.
Co-founder and CEO Lemonade
To redesign the customer experience, brokers and agents must understand how their customers and carriers want to engage and what pain-point areas they can make a positive impact on, or what passion points can be amplified. It’s about moving from transactions to relationships. Maintaining a human element is always important.
Jon Walker
INSURTECH GOES MAINSTREAM One of the key findings of a study released in mid-2016 by PricewaterhouseCoopers was the fact that 74% of insurance companies believe that some part of their business is at risk of disruption. The same study reported that 90% of insurers were afraid of losing some part of their business to new tech initiatives. So where does this leave brokers? In a recent report, global ratings agency S&P Global warned that “traditional insurance brokers’ business model may be considerably altered by technological changes”. While the report posited that the high cost of entry would protect the industry for longer than other financial services fields, insurtech is clearly a tide that won’t be turned back.
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3
UPFRONT
STATISTICS
Insurtech and consumers
KNOW YOUR CUSTOMERS Accenture’s survey divided insurance consumers into three groups based on their behaviours and preferences: Nomads, who are very interested in shifting to online-only activity; Hunters, who seek value, expertise and advice from people; and Quality Seekers, who prioritise integrity regardless of the channel.
Insurtech is altering the consumer journey – and opening up new opportunities for insurers ADVANCES IN digital technology, combined with shifts in consumer behaviour, have opened up a world of opportunity for insurers looking to enhance their relevance and value. That’s the message of a recent survey released by Accenture, which identified three main groups of consumers – Nomads, Hunters and Quality Seekers – each of which have distinct preferences about how they want to interact with insurers.
Of key concern are Nomads, who are interested in shifting to online-only activities. This group is highly digitally active and ready for a new model of delivery. They place a high value on innovation and want new ways of accessing service and advice. For this group, which represents 46% of US consumers, increased digital connectivity is key to going beyond the traditional insurance value proposition.
14% CONSUMER BREAKDOWN Hunters
Quality Seekers
40%
29%
Percentage of consumers willing to buy insurance from online service providers
38%
Percentage of consumers who would consider peer-to-peer auto insurance
32%
Percentage of consumers who would consider peer-to-peer homeowner’s insurance
46%
Nomads
30%
Percentage of consumers willing to buy insurance from a retailer or supermarket
Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
ONLINE INFO IS OPTIMAL
CONSUMERS ARE ROBO-READY
The share of consumers who prefer to use online channels (including websites, mobile, email, chat/IM and social media) to look for information about insurance has gone up markedly in just three years.
Consumers who look for insurance information online 2013
2016
The vast majority of consumers are willing to receive computer-generated advice about various aspects of their financial affairs – almost three out of four are willing to take this kind of advice on what type of insurance to purchase.
7% Willing
19%
Not willing
5%
8%
17% 24%
74% 78%
54%
68%
Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
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Insurance
Don’t know
Investment asset allocation
68%
Retirement planning
Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
How they seek advice 70% 60% 50% 40% 30% 20% 10% 0%
52%
Online
How they seek advice 70% 60% 50% 40% 30% 20% 10% 0%
51%
Agent
How they purchase insurance 70% 60% 50% 40% 30% 20% 10% 0%
51%
Online
How they seek advice 70% 60% 50% 40% 30% 20% 10% 0%
58% 38%
Online
Agent
How they purchase insurance 70% 60% 50% 40% 30% 20% 10% 0%
51%
Agent
Most valuable source of insurance advice 70% 60% 50% 40% 30% 20% 10% 0%
QUALITY SEEKERS
HUNTERS
NOMADS
29%
30%
Online
Agent
35%
Online
Agent
How they purchase insurance 70% 60% 50% 40% 30% 20% 10% 0%
57% 40%
Online
Agent
Most valuable source of insurance advice 70% 60% 50% 40% 30% 20% 10% 0%
62%
33%
37%
Online
Agent
62%
34%
Online
Agent
Most valuable source of insurance advice 70% 60% 50% 40% 30% 20% 10% 0%
42% 25%
Online
Agent
*charts may not add up to 100% as multiple responses are permitted Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
OK WITH P2P
FASTER AND EASIER
Peer-to-peer insurance is increasingly seen as an acceptable alternative to conventional models, especially among younger consumers.
Of those willing to receive computer-generated advice about the type of insurance to purchase, most are swayed by the speed of delivery and greater convenience of online platforms.
50%
Millennials who would consider P2P insurance
Reasons for seeking computer-generated advice 40% 35%
43%
Gen Xers who would consider P2P insurance
30% 25% 20%
Baby Boomers who would consider P2P insurance
32%
15% 10% 5%
Seniors who would consider P2P insurance
27% Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
0%
Think it will be faster and more convenient
Think it will cost less
Think it will be more impartial
Source: Financial Providers: Transforming Distribution Models for the Evolving Consumer, Accenture, 2017
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5
UPFRONT
NEWS ANALYSIS
Cyber boom on the horizon As the industry enters what’s predicted to be a benchmark year for cyber insurance, how will the landscape change and what challenges lie ahead?
THE COMING year looks set to be the biggest one yet for cyber insurance. Just a few days before the new year, Lloyd’s CEO Inga Beale revealed that the London insurance market is bracing for a surge in the sales of cyber policies in 2017, after seeing a 50% rise in sales during 2016. Global firm CFC Underwriting also reported that the number of cyber claims it received had shot up 78% in 2016 compared to the previous year. But with increasing take-up set against a backdrop of rapidly developing risks, is the market prepared to evolve? “Cyber insurance will transition into a mainstream product with significantly increased penetration among small and mid-market clients, both in the US and internationally,” predicts Graeme
underpins the policy wordings,” he says. “We expect to see greater clarity introduced to policy wordings and a shift away from the liability constructs that dominate current forms, towards the constructs found within more traditional crisis management classes, like kidnap and ransom, crime and terrorism.” High-profile cyber attacks were in no short supply over the past 12 months. Tech giant Yahoo had two enormous data losses come to light during the year, and its second reported hack – revealed in December – became the largest known data breach in history after more than a billion user accounts were compromised. But the archetypal data loss event is just one of the many cyber risks that companies
“I don’t think we can say that there’s one industry or another that is more at risk – I think they are all at risk” Michelle Lopilato, HUB International Newman, chief innovation officer at CFC Underwriting. The focus will shift from cyber being a privacy breach product to a more all-encompassing cyber incident response solution, he adds. “There will be a greater focus on incident response and the claims service that
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are now facing. Ransomware – malicious software that allows hackers to block access to a system until a sum of money is paid – is becoming increasingly widespread, and the potential for business interruption to companies of all sizes is significant. “It’s one of those types of events that is highly impactful and very successful,”
says Michelle Lopilato, SVP and director of cyber and technology solutions at HUB International. HUB is seeing at least one ransomware event per month among its clients, Lopilato says, due largely to how easily attainable and inexpensive the software is. “The availability is somewhat astounding,” she says. “The reality is that because they’re so available and so successful, we are going to see a lot more of these types of ransomware families being developed and used.” As cyber products respond to these diversifying risks, solutions are likely to become increasingly tailored to both the size and type of business. “At the SME/MM scale, we will continue to see cyber being incorporated into other products, whereas for larger risks, standalone products that cover all cyber perils are the obvious evolution,” says Alessandro Lezzi, international technology, media and
CYBER INSURANCE BY THE NUMBERS
£16bn
Projected amount of global written premiums for cyber insurance by 2025
15
Different types of cyber cover introduced by Lloyd’s in 2016
23,000 to 35,000
business services team leader at Beazley. There are signs in the market of a move towards industry specialisation, Newman adds, “with a growing recognition that you can’t sell the same cyber insurance product
smaller companies are more likely to suffer significantly from a cyber event, even going out of business in some cases. But in some respects, Lopilato says, companies are on an equal footing: “I don’t
“Cyber insurance will transition into a mainstream product with significantly increased penetration”
The average number of ransomware infections per month in 2015
£168m
Amount paid to ransomware criminals in the first quarter of 2016 Sources: Allianz, Lloyd’s, Symantec, CNN
Graeme Newman, CFC Underwriting to a bank as you can a hospital or a school.” Small and medium-sized businesses represent the biggest growth potential in the purchase of cyber policies, according to Lopilato, who explains that many hackers will target them as “the lowest-hanging fruit”. Without the resources – particularly financial ones – of their larger counterparts,
think we can say that there’s one industry or another that is more at risk – I think they are all at risk.” So what should brokers and insurers focus on in terms of cyber insurance in the coming year? “Cyber exposure and the nature of the risks change very rapidly, so the challenge
for the industry is to keep abreast of the changes in order to identify new ways to assess risk,” Lezzi says. For Newman, the handling of claims is a more pressing issue. “Many insurers have not developed an appropriate internal or external claims infrastructure to support the products they are selling,” he says, “and this should be the biggest area of concern.”
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7
UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Charles Taylor InsureTech
Otak
Otak is an insurance technology platform business that specialises in delegated authority solutions.
Blackstone Group
Aon's benefits and HR platform
£3.8bn transaction sharpens Aon's focus on risk, retirement and health.
Global Risk Partners
Higos Insurance Services
Higos serves the business community in the south-west, handling in excess of £50m GWP.
Life Company Consolidation Group
Reliance Mutual Insurance Society
Deal ends the 100-year mutual ownership of Reliance, a Kent-based life insurer with 200,000 policies and assets of £1.9bn.
Jardine Lloyd Thompson
Construction Risk Partners
JLT acquires for about £39m a 50.1% stake in CRP, a construction risk and surety specialty insurance broker in North America.
DWF
Triton
Triton is acquired from its administrators, securing the future of the UK and global claims manager and its 215 employees.
Zurich
Cover-More
£448m acquisition will see Zurich expand to become one of the three biggest travel insurers in the world.
Marsh
Bluefin Insurance Group
Bluefin employs around 1,500 people across the UK, providing guidance on creating insurance solutions to over 150,000 businesses and individuals.
TRAVEL COVER EXTENDED AMID TRUMP’S TRAVEL BAN
Two global insurance giants are extending cover to customers affected by the travel ban imposed by US President Donald Trump on several Muslim-majority countries. AXA UK said individuals who have been denied entry as a result of Trump’s order will be able to claim on their policy. Aviva will also compensate customers for costs arising from the travel ban. Standard travel cover will be extended for those unassisted by travel providers and for those in the US who need an alternative route home.
RESIDENTIAL OIL SPILL INSURANCE UNVEILED
MARSH BUYS BLUEFIN FROM AXA
Global broker Marsh has acquired Bluefin Insurance Group from AXA for £295m. Completed in the first quarter of 2017, the deal will see Marsh combine Bluefin and Jelf into a single business unit to be led by Jelf CEO Phil Barton. The unit brings together two leading community brokers with complementary regional offices across the UK, serving over 250,000 clients in 80 locations. It will also include around 400 network broker members and a strong affinity and digital offering.
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Oil Spill Insurance Brokers has unveiled HomeSpill, a new product designed to protect heating oil users from the costs and liabilities arising from destructive spills and leaks that pollute land or water, including groundwater. The latest policy offers an annual oil tank inspection, emergency response service and environmental damage cover. Oil Spill Insurance said brokers can now access and sell a stand-alone, specialist risk management, environmental damage insurance and incident-response package to their oil-using clients through a quick and easy-to-use online quote-and-buy platform.
AON LAUNCHES BREXIT NAVIGATOR
Aon has launched Brexit Navigator, a bespoke and proprietary solution meant to help organisations quantify the impact of Brexit risk exposures and redesign their risk management and financing structures. The Brexit Navigator is a “three-step solution” that presents scenario-based insights for each of the EU four freedoms – goods, capital, services and people – that help assess the impact of Brexit. “Brexit Navigator will help clients measure and respond to risks and opportunities created by Brexit,” says Eddie McLaughlin, Aon Global Risk Consulting’s chief commercial officer, EMEA.
TOUCHSTONE’S MANAGEMENT LIABILITY PACKAGE
Touchstone Underwriting has launched a new, RSAbacked management liability package, which provides a single policy that responds to directors and officers liability, corporate liability, employment practices liability, internal and external crime and cyber risk. Touchstone noted that a claim in one of these areas often leads to claims in subsequent areas of cover, compelling clients to make multiple claims for each incident. “With our cover, you make one claim. We then take care of all the areas affected in the policy,” the firm said.
NEW PRODUCT FOR MEDICAL MALPRACTICE MARKET
Underwriting agency CFC has expanded its presence in the UK medical malpractice insurance market with a new product, which is backed by a consortium of Lloyd’s syndicates. A flexible bespoke package for a wide range of healthcare professionals and organisations, the new product provides “clear” and “unambiguous” cover that can be tailored depending on the client’s needs. It offers public liability, employers’ liability and legal expenses cover. Cyber and privacy cover is also offered as an optional extra, protecting against various cyberattacks and scenarios.
PEOPLE NAME
LEAVING
JOINING
NEW POSITION
Brendan McCafferty
Flood RE
AXA Insurance
CEO for intermediated and direct
Louise Dennett
Prudential
Hiscox
Group director of finance change
Neil Perry
Willis Towers Watson
Ed
CFO
Andrew McKee
MS Amlin's Lloyd's business
Cathedral Underwriting
CEO
Ian Hilder
Novae Group
DUAL Underwriting
Chief actuary
Gary Corke
SHA Specialist Underwriters
Ed
Chief executive of underwriting
Andy Briggs
N/A
Aviva
CEO of UK insurance
Maurich Tulloch
N/A
Aviva
CEO of international insurance
Reeken Patel
N/A
Novae
CFO
Jeff Davies
Ernst & Young
Legal & General
CFO
Karl Helgesen
Zurich
RSA
Claims director, UK, Western Europe and the Middle East
Clare Bousfield
Aegon UK
Prudential UK and Europe
CEO, insurance
Patrick Tiernan
Starstone Insurance
Aviva
CFO, general insurance
Charles Crawford
N/A
Arthur J Gallagher
UK operations director
Tulsi Naidu
N/A
Zurich
UK CEO
EX-FLOOD RE BOSS HEADS AXA INSURANCE
Former Flood Re chief executive Brendan McCafferty (left) has started as AXA CEO for intermediated and direct. He will report to AXA UK group CEO Amanda Blanc and will assume responsibility for the four strategic business units and £2.4bn GWP that make up AXA Insurance: commercial intermediary, personal intermediary and corporate partnerships, personal direct and retail partnerships and AXA Business Insurance. He played an important role in the launch of the Flood Re scheme after several other high-profile positions.
AVIVA NAMES UK CEO IN MAJOR SHAKE-UP
Aviva has changed its organisation to reflect its strategic focus on customers’ needs. It is combining its life, health and general insurance businesses under the leadership of Andy Briggs (left), the new CEO of UK insurance. Aviva has named Maurice Tulloch as its new CEO of international insurance, responsible for operations in France, Canada, Ireland, Spain, Italy, Poland, Turkey and India. As a result, Aviva Europe CEO David McMillan has left the company.
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9
UPFRONT
MGAs UPDATE
Charting MGA growth in 2017 The MGA sector keeps growing, but is it ready for the industry’s new legal landscape?
MGAs believe that the sector will be able to sustain the current levels of growth and success over the next three years. Just over 21% disagree with the idea. In addition 65% of MGAs see soft market conditions as the primary factor impacting the sector’s growth. It replaces regulation and compliance, which is now ranked second at 57% after topping the list in 2014. Other factors seen as affecting growth are
“There is greater onus on MGAs to maintain the highest levels of efficiency and profitability”
There has been a change of emphasis in the approach of MGAs in the UK when it comes to charting growth, according to the latest survey by the Managing General Agents’ Association (MGAA). The trade body polled 75 MGAs last December and discovered that for 65% of companies, increasing business development and marketing was the main strategic priority for 2017. In a similar survey in 2014, the top priority was moving into new lines of business. This year, the second highest priority for
NEWS BRIEFS
MGAs is updating technology (53%), followed by increasing business efficiency (52%), moving into new lines of business (48%), increasing capacity base (41%), staff training and development (25%) and securing external investment (6%). “MGAs remain optimistic about their opportunities to grow and it’s no surprise that they are looking to broaden the scope and reach of their distribution partnerships,” said MGAA managing director Peter Staddon. Based on the survey findings, 48% of
Pen Underwriting names chief executive
Pen Underwriting, the MGA owned by Arthur J Gallagher, has appointed Jonathan Turner to the role of chief executive. Turner, who first joined Pen as executive chairman in September 2015, has core objectives that include international expansion, development of the company’s specialist underwriting portfolio and looking at alternative ways to provide capacity for customers. Turner takes over the leadership of the £500m GWP underwriting business from managing director Mark Armitage, who joins AJG’s UK retail operations.
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increased competition (56%), availability of underwriting cap (28%), M&A and consolidation (19%), Brexit uncertainty (17%), outdated technology (16%), talent recruitment and retention (12%), and lack of understanding of the MGAs’ role (12%). “The survey reveals that MGAs expect a further period of sustained growth for the sector,” said Castel CEO Mark Birrell. “The fact that regulation and compliance has now dropped to second in the list reflects the investment that has been made by MGAs to ensure they meet regulatory demands. “With soft market conditions at top spot, there’ll be a greater onus on MGAs to maintain high levels of efficiency and profitability to meet the needs of their capacity providers.”
MGA initiative of the year announced
Ascent Underwriting’s quote-and-bind portal Optio has been voted MGA Initiative of the Year at the London Market Awards. The online system, created for direct use by brokers, delivers multiple insurance products, including Ascent’s client-focused Lloyd’sbacked cyber solutions. Through Optio, brokers obtain instant quotations for comprehensive cyber coverage and for niche products, including healthcare regulatory in the US and professional indemnity in the UK. Ascent said thousands of policies have been issued to SME and microbusiness clients.
Q&A
Harnessing IT for MGA success Jason Anthony Founder and CEO MGAM Limited
Fast fact Jason has 27 years’ experience in the Lloyd’s and London market. He is the former managing director of OIM Underwriting, the MGA owned by Arthur J Gallagher. In 2016, Jason launched MGAM Limited, an innovative MGA focusing on the London and provincial markets.
What is MGAM Limited? We act as custodians of carrier capacity and provide insurers with access to markets by partnering with unique and/or niche distribution channels via a traditional coverholder binding authority model. We provide a full underwriting management service and manage distribution costs via sophisticated IT systems, which provide an improved service to coverholders and deliver better underwriting results to insurers.
How do you set yourself apart from the competition? We have invested significant capital, effort and time to establish a particularly robust infrastructure that has been described by one insurer as the best coverholder management system they have ever seen. Our processes are scalable and handle the entire scope of business, from onboarding of coverholders to providing detailed and extremely high-quality underwriting management data. Our system provides the additional benefit, through rigorous screening, of enabling us to select only the highest quality coverholder partners. MGAM has developed a bordereau management system that validates and standardises written and claims bordereau data, including automatic upload to the ELD of ERN data, to ensure quality MI. These systems not only allow us to service traditional coverholder/binder business, but also offer services to insurers who require management of their data and back-office services. We have developed an online quote and bind
Horizon switches from insurer to MGA
Gibraltar-based Horizon Insurance has ceased writing new business and changed its status from insurer to MGA. Horizon, which was formerly known as Octagon, said its directors decided to stop renewing or accepting new motor policies in 2017, after failing to secure additional funding that would enable the company to meet its business plans for this year and beyond. All policies issued up to 31 December 2016 remain in force and all claims should still be submitted to the claims handler, Catalyst Consulting Solutions.
product that we can white label for our coverholders, saving them the typically six-figure sum required to purchase similar systems themselves. This same product provides MGAM with unique distribution to markets that previously we were unable to access insurance product directly. We also geo-map our liability claims data to compare with that of the publicly available industry health and safety statistics in order to bring an additional layer of underwriting scrutiny. This data enables more specific targeting of resources that, in turn, delivers higher profitability.
What are the challenges and opportunities in the MGA sector this year? The key opportunity for the MGA market is to add value to carriers and clients by disrupting the market and finding untapped distribution channels. One of the challenges will be to ensure infrastructure is in place for the sector to grow sustainably, at the same time discovering new distribution channels in an extremely heavily regulated UK market. We are also seeing considerable interest from insurers to improve their back-office process. This presents a significant opportunity for MGAM given our focus on the delivery of first-class IT into a market that lags other industries in terms of tech capabilities. I believe we are on the brink of tectonic change in the industry, and I predict that in a short time frame our working environment will be unrecognisable when compared to how we operate today.
IIGL to help Gable brokers
Incorporated Insurance Group Limited, the MGA specialising in construction insurance, has offered to help brokers of Gable clients following the news that the insurer has gone into administration. IIGL will provide brokers with various deals, including additional discounts for Gable business. For brokers with individual cases, IIGL has negotiated additional discounts of up to 25% to help ease the cost to the client. For brokers looking to move several cases, IIGL will provide clients with free cover up to the policy renewal date.
Limehouse Agencies launched
Lloyd’s broker RFIB has launched Limehouse Agencies, an MGA that will capitalise on the latest innovations in technology to provide greater services and products. Appointed as the firm’s non-executive chairman is Jack Gressier, who noted that disruptive technology has created a new paradigm in risk transfer. He said Limehouse Agencies has been set up to be at the forefront of this development. Gressier will soon announce the appointment of a “world-class” CEO to lead Limehouse.
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UPFRONT
TECHNOLOGY UPDATE NEWS BRIEFS Underwriters most at risk of automation
Carl Frey, the director of Oxford University’s programme on technology and employment, has released new research findings on the impact of automation on future employment. Frey looked at office jobs that pay more than £40,000 and made a list of occupations that are most likely to disappear due to the threat of automation. Topping the list of jobs at risk of being automated are insurance underwriters, with a 98.9% probability of being replaced. Next are loan officers, at 98.4%, motor insurance assessors, at 98.3%, and credit analysts, at 97.9%.
Two-in-one insurance for driverless cars
The Department for Transport has proposed new rules requiring owners of autonomous cars to have a single insurance cover for both motorists when they are driving and the vehicles when in self-driving mode. Under the proposed rules, full control and responsibility will be handed over from the motorist to the autonomous car as soon as it goes into driverless mode. Claims made against cars in a collision while in self-driving mode will be paid out by insurers, who will recover costs from vehicle manufacturers.
Most clients would take advice from robots
According to a new study by consultancy firm Accenture, 74% of customers worldwide are willing to exclusively receive robo-advice to help determine what insurance coverage to purchase. Consumers
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view robo-advice platforms as faster and cheaper services, the report said. Customers also think that AI systems are more impartial and analytical than humans. However, the study also found that nearly two-thirds of consumers still want human interaction in financial services, especially to deal with complaints and advice about complex products.
Insurance giants join blockchain consortium
Fifteen major industry players have joined a consortium that aims to study the potential use of blockchain in improving processes in the insurance sector. The consortium members will collaborate to explore the ability of distributed ledger technologies to increase efficiencies in the exchange of data between reinsurance and insurance companies. The members include Hannover Re, Generali, Ageas, Liberty Mutual, Achmea, Aegon, Allianz, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Swiss Re, Tokio Marine, XL Catlin and Zurich.
Lloyd’s sees surge in cyber insurance uptake
Lloyd’s of London is expecting a huge growth in cyber insurance uptake in 2017 after the market saw a 50% surge in policies last year. Lloyd’s CEO Inga Beale said the insurer introduced 15 different types of cyber cover in 2016 in anticipation of the increasing demand this year. Meanwhile, Allianz estimates that cyber insurance written premiums could grow to £16bn by 2025. The US continues to be the biggest market for this type of coverage, the majority being written in London.
Insurtech: an overhyped threat? Start-ups and disruptors continue to emerge, but is the insurance industry overestimating their market impact? Over the last few years, the industry has seen many big companies pour investments into insurtech, as a stream of start-ups touted as the next disruptors entered the market. This continued rise of insurtech is worrying the sector; in total 90% of insurance firms fear that they will lose business to a start-up, according to a 2016 PwC survey. But for S&P Global Ratings, insurtech’s perceived threat to the industry may be overblown. In its most recent report, the agency said insurtech is both a challenge and an opportunity, and material effects may only start to emerge in 10 years’ time. According to S&P, insurers’ market shares and revenues are unlikely to be affected over the medium term, as insurtech companies are not expected to fully replace traditional insurance business. This can be attributed to the nature of the insurance sector, which is highly regulated, capital-intensive and has many entry barriers. “In our opinion, the boards of insurance companies may be overestimating the market impact of many of the small insurtech companies that have arisen,” said S&P, as it downplayed insurtech firms for lacking the back book and strong client relationships that many old insurers have. “Compared with established insurers, we regard many insurtech companies as very small, with weak business positions, relatively limited datasets, and relatively scarce financial resources,” S&P said. So far, most of the insurtech start-ups are
niche players targeting a single segment of the industry’s value chain, S&P noted. This makes them less able to seriously disrupt large insurers with diversified product offerings. As for brokers, insurtech will eventually force considerable changes, S&P said, but it will not substantially threaten the distribution model for most business lines within the decade. This is because agents and brokers have succeeded in remaining relevant through their client relationships and by updating product offerings through digitalisation.
“We don’t expect insurtech to make human contact obsolete … insurance will always need personal interaction” “As yet, emerging brokers are not threatening the existence of the current insurance model – in fact, we view their ability to reach underinsured sections of the population as positive for the further development of the whole insurance sector,” S&P said, adding that insurtech would complement, rather than replace, prevailing business models. “We do not expect insurtech to make human contact obsolete – some areas of insurance will always need personal interaction because the insurer has a fiduciary role and its agents will have to outline the potential risks associated with complex product structures to clients, and track that interaction for regulators.”
Q&A
Stuart Rose Director of market strategy Guidewire Software
Fast fact Stuart has over 25 years’ experience in the global insurance industry. He is currently the market strategy director, predictive analytics at Guidewire Software, after previously serving as the global insurance practice leader at SAS, a market-leading business analytics software vendor. Stuart has worked with insurance companies in the US, UK, Europe, Latin America, China and South Africa. He is a regular contributor to insurance publications and a frequent speaker at industry conferences.
Social brokers: new kids on the block What exactly are social brokers? They are a new type of online intermediary that help people obtain coverage for non-standard insurance or unusual insurance. For example, property insurance for a thatched-roof cottage or travel insurance for an individual with an existing medical condition. Social brokers work by using analytics and online content to identify segments with poorly served insurance requirements, or groups of customers with similar interests and insurance needs. The social brokers then negotiate insurance on behalf of that group to obtain affordable insurance coverage.
What sets them apart from traditional intermediaries? The insurance industry is often seen as a laggard when it comes to new technology. Social brokers provide a great opportunity for the industry to identify and utilise publicly available online data to increase premium revenue. A common challenge for any insurance company is the cost of acquiring new customers, so keeping the ones they have and increasing wallet share is critical to success. The advantage of social brokers is that they offer a cost-effective method to increase new business; they can connect with a unique audience that traditional brokers may struggle to reach. In addition, research has shown that retention rates for policies written through the agency of social brokers are higher than those of traditional distribution channels.
How are social brokers changing the industry? Do they present opportunities or threats to established players? Social brokers can offer a win-win opportunity for both customers and insurance companies. Customers that use social brokers can obtain substantial savings. The market-leading social broker, Bought by Many, claims that its customers save, on average, 19% on premiums by using its collective buying powers. Conversely, social brokers allow insurers to diversify their product portfolios and enable them to write business that they previously would have declined. The more diversified an insurer’s book of business, the more efficiently they can hold capital to comply with regulations like Solvency II. In today’s financial environment, this is of considerable benefit to all insurance companies.
What is the future of social brokers? The future for social brokers is bright. In today’s digital environment, success is closely connected to customer experience. Insurance customers not only require the ability to buy online, but expect an experience that is comparable to companies like Amazon. Social broking is a great example of how insurance companies of all shapes and sizes are using new technology to find new opportunities and enhance the customer experience.
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Building tomorrow’s insurer Chubb’s David Robinson talks about bringing the best of two businesses together and the opportunities the combined company sees on the horizon DAVID ROBINSON’S career began at Chubb Insurance in 1991. In November 2015, he became head of the UK and Ireland retail business of the new Chubb, formed after ACE’s acquisition of Chubb for US$29.5bn (£23.6bn) in cash and stock. Today, Chubb is the world’s largest publicly traded property and casualty insurance company. Robinson cites leading the integration of the legacy ACE and Chubb businesses in the UK and Ireland as a standout highlight of his career. “What we’ve done so far … we’ve achieved an awful lot and I think the team has done brilliantly,” he says. “Of course, we still have a lot to do. But I think there’s an awful lot of work that’s all coming to fruition now that enables us to meet the clients’ needs … I’m really happy with the speed of it and I’m really happy with the enhanced propositions that we’ve been able to put together.” During his earlier career, Robinson spent extended periods with both of the legacy businesses. Did this help inform his approach to leading the integration? “You know how lucky you are in terms of the quality of people you have, but also the quality of the two companies,” he says. “And because you know both sides, you can actually start to see if you put the strength of ACE with the strength of Chubb … what that
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can mean as a combined company. I think I was very lucky to have that unique view.”
The results Robinson says a wider risk appetite, greater capacity and increased expertise are some of the key benefits that will emerge from the integration. “We’ve got greater client relationship management capability,” he adds. “You look at some of the things we’re doing with data. It allows us to focus the products on
“We bought out our cyber enterprise risk management product, which goes everywhere from loss mitigation to post-loss recovery, and a very rapid response in order to handle that claim because a key of that is the quick response,” he says. “We’ve launched a business travel and accident product, which really takes the best of both the ACE and Chubb world and combines it. We’ve got new casualty products out … for our brokers, we run a cornerstone proposition for a panel of 25 brokers. We just had
“You look at some of the things we’re doing with data. It allows us to focus the products on clients’ actual needs, rather than guess what those needs are” clients’ actual needs, rather than guess what those needs are. And they can be predictive. You can use some of that data to actually look at loss trends and work with clients, through the engineers, to prevent loss. Ultimately, no one wants to have that loss, so the more you can do to mitigate it … it’s better for business. It also then enables us to price risk more accurately and, where appropriate, lower premiums.” Robinson is excited about the new Chubb’s product offerings.
the conference for that and, taking both companies’ combined capability, we were able to bring more to that to help them grow their businesses.” On the crucial subject of claims service, Robinson emphasises the importance of ensuring an outstanding experience for clients, but, in doing so, recognising that one size doesn’t fit all. “An 18-year-old probably wants to go through a different claims experience than
PROFILE Name: David Robinson Company: Chubb Group Title: Executive vice president, Europe, and president, UK and Ireland Years in the industry: 26 Fast fact: Robinson spent almost 14 years working in the legacy Chubb business before, in 2004, moving on to spend several years with the legacy ACE business.
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someone in the global accounts space,” he explains. “So, how do we tailor that claims proposition to meet the needs of different client bases? “Part of that’s obviously got to be an investment in digital. We have started this work and, for example, we have introduced an online claims portal for accident and health consumers, which makes it very easy for clients working on their PC, their iPad or their phone. You can upload documentation to support the claims handling process, and I think there’ll be a lot more work in that area of claims.”
their needs, including pollution cover for the first time in response to their feedback, rather than (as we have too often tended to do as an industry) sitting in a room and trying to guess what they needed.” More generally, he sees significant future opportunities for Chubb in the environmental risk space. “Both companies have invested in that over the last four or five years, and we’re really seeing that business might grow exponentially,” Robinson says. He also mentions the opportunities to create focused industry solutions.
“We really believe if you put the customer at the heart of everything you do, you don’t just end up with a better result for them but, as a company, you also end up with a better result” Change and opportunity Customer centricity, Robinson says, is his passion and, since 2012, he and his team have called on their colleagues to challenge business as usual. “We’re not interested in the status quo,” he says. “We really believe if you put the customer at the heart of everything you do, you don’t just end up with a better result for them but, as a company, you also end up with a better result. “If you went back 10 years, I think you would find underwriters would huddle in a room; you would get some competitor products and you would try to derive your own new product. “The first thing we said was let’s move away from that, actually engage with the client and the broker, and ask them what they need. We did that with our oil and gas product four years back. We actually delivered to the client a product that met
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“Whether it be life science, infotech, cleantech – they are all great opportunities for us. “We’ll see in the early part of [2017] some enhanced financial lines products, infotech, even packages that are tailored to specific industry segments.” He says Chubb is also hearing more and more from brokers about the need for coverage for regulatory risk. “They are at very early stages of conversation,” Robinson says. So, what will Robinson’s team’s focus be in 2017? “We’ve got to execute on what we’ve built in 2016, maintain that underwriting discipline, and then really focus on the service side to make sure that we’re meeting the needs of clients and brokers,” he says. “Based on everything I’ve seen so far, it looks like it’s going to be an absolutely great year in 2017, so I’m very excited about that.”
CHUBB BY THE NUMBERS
54
The number of countries and territories in which Chubb has local operations
30,000
The approximate number of Chubb employees worldwide
£23.6bn
The approximate value of the ACE/Chubb acquisition transaction
£130bn
The approximate value of Chubb’s assets
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email editor@insurancebusiness.co.uk
A match made in heaven? If the customer experience is the bottom line, then it’s time for the industry to start working with insurtech instead of fighting it, writes Philipp Kristian Diekhöner A GAME DESIGNER, a hipster and a digital nomad meet in a boardroom. No, this is not a joke. Insurers are increasingly bringing in customer experience-focused talent from start-ups and major tech giants to work in their newly established digital and innovation functions. In essence, they are building pockets of inspiration into a heritage structure. It’s a two-way street – many insurtech start-ups are founded by industry veterans who have left their safe, well-paying jobs and are looking to introduce a breath of fresh air into the industry. The same can be said of start-ups and corporations. According to a recent report, a large chunk of venture capital funding volume comes from corporate VCs. While these are most likely involved in more late-stage deals, there is an evident trend of corporations getting more involved. Start-up accelerators (however critical we may want to be of them) have done much to foster this proximity. In my view, fintech start-ups and financial institutions have increasingly come to realise that they benefit more from collaborating than competing. It paves the way to innovative operating approaches, such as institutional licence-sharing with start-ups. In some fintech verticals, the risk exposure that comes with running a financial services business serves as a perfect rationale for forming symbiotic relationships between disruptors and established players. Insurtech is a great example, take Slice and Munich Re, or Lemonade and their liaison with Berkshire Hathaway and Lloyd’s of London.
The more start-ups explore creating actual financial (especially insurance) products, the more potent and widely prevalent these mutual beneficial partnerships will become. They can serve as an effective strategy for managing regulation and reaching scale quickly via large existing pools of customers that have already been through KYC.
usually only solving one small wedge of customers’ overall needs. Most of us would need a variety of fintech services provided by different start-ups to take care of all our financial needs – a great user inconvenience and a tremendous market opportunity, which I believe will be solved by new types of service aggregators for fintech, covering a range of functionality in one digital-native experience and customer proposition. Life insurers would be in an excellent position to provide such a holistic value proposition, given that wealth management and life insurance both have a mandate to take into consideration a person’s overall financial health. A financial planning one-stop shop would be a very ownable territory for them, but it would require incumbents to rethink the nature of their business. If we were to reframe their purpose from being a financially stable and dependable provider of long-term, big-ticket financial products to being a single place for people to take care of their present and future financial health, the industry would future-
“Fintech start-ups and financial institutions have come to realise that they benefit more from collaborating than competing” The extent of collaboration occurring at the moment is almost antithetical to what public perception has made of banks in the years since the global financial crisis. Goldman Sachs estimates that globally financial institutions represent a £5trn industry in danger of disruption from fintech companies, so the need to collaborate may be driven, in part, by a survival instinct. Insurance, a vertical within finance that has been a little late to the innovation party, is facing the most fundamental threats and opportunities. According to CB Insights, the insurtech domain attracted over £800m in venture capital funding in the first half of 2016 alone. Perhaps the biggest discrepancy between corporations and start-ups is that the latter focuses single-mindedly on a specific customer problem, which means they are
proof itself in a highly effective and relevant way. It would involve curating and working proactively with start-ups that are already providing the individual bits and pieces. Overall, we should be very optimistic about present and future interactions between start-ups and financial institutions, especially in the domain of insurtech. Both sides have a long way to go in terms of assimilating. Great potential awaits progressive entrepreneurs and intrapreneurs who are resourceful and realistic about finding natural connection points that create mutual benefit.
Philipp Kristian Diekhöner is an emerging fintech thought leader in Asia and a pre-eminent voice in the Singapore start-up and innovation ecosystem. His vision is to shape the future of finance through customers’ eyes.
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FEATURES
COVER STORY: BROKERS ON MGAs
BROKERS ON
MGAs Brokers share what they love – and hate – about the current state of MGAs
OVER THE past three years, managing general agents (MGAs) have become an increasingly important force in the UK insurance market, alongside carriers and brokers. As the UK moves closer to triggering Article 50, MGAs will be at the forefront of developing insurance products, redefining distribution channels and seeking out innovative underwriting capacity. Their innovation and expertise are indicative of the insurance sectors, and as larger insurers look at their operating cost ratios, MGAs provide a cost-effective route for them to be able to continue their involvement and generate profitable business for smaller and specialist businesses within certain trades and classes without pressure on their overheads. This then
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has two advantages. For the insurer, they can continue in this arena and are able to realign their costs for the smaller SME’s business. For the broker, there is an additional source or distribution channel to market. This position highlights the need for MGAs to not only set themselves apart from brokers holding binding authorities, but to operate to the same ethical standards a broker would expect to see from the insurer themselves. MGAs have additional skills, expertise and knowledge to bring to the table, and these can often be overlooked in an environment where price is seen as king, especially by the regulator. We need to ensure that brokers seeking solutions for their clients see MGAs as a viable
source of underwriting and access to the insurance market. MGAs are here to stay and, by providing additional access to the market and forging relationships with brokers, are ensuring policyholders have access to the right products that they need to protect their businesses. 2017 will see further MGA growth, bringing even greater specialist skills and expertise to provide the SME insurance sector with ever-widening product options.
Peter Staddon Managing director Managing General Agents’ Association
HOW IMPORTANT ARE THE FOLLOWING MGA ASPECTS?
HOW WELL DID MGAs PERFORM ON AVERAGE PER CATEGORY?
Underwriting responsiveness & turnaround time
Underwriting responsiveness & turnaround time
9.39 Claims responsiveness & turnaround time
9.10 Premium pricing
8.89 Range of schemes
7.58 Online services and capabilities
7.27 Range of insurers
6.97 Marketing support
6.66 The presence of MGAs has been growing nationally and internationally as their role in the broker community expands – in fact, managing general agents are far from general nowadays. As the insurance market rapidly evolves, MGAs are playing a large part in the continued growth and innovation of the industry. When considering the UK’s vote to leave the European Union, the role of MGAs will undoubtedly become paramount as the industry starts to navigate a changing economy and regulatory environment. Insurance Business UK wanted to know what matters most to the broker community when searching for an MGA. Using a scale
8.77 Premium pricing
8.69 Claims responsiveness & turnaround time
8.26 Range of schemes
7.82 Online services and capabilities
7.49 Range of insurers
7.51 Marketing support
6.91 of one (not important at all) to 10 (very important), brokers were asked to rate seven key aspects of an MGA based on how important it is to them when looking for an MGA partner:
Underwriting responsiveness & turnaround time Premium pricing Range of insurers offered Range of schemes offered Claims responsiveness & turnaround time Online services and capabilities Marketing support
Brokers then rated the performance of their MGA(s) in each of those categories on a scale of one (poor) to 10 (excellent), while specifying how MGAs could improve in those areas. So how did MGAs fare? The results of the survey were very encouraging. Out of the hundreds of responses received, 15 MGAs gained top marks, scoring eight or higher in at least one category. Those MGAs were awarded a top five-star rating for their superior service to brokers. Some MGAs rose above the rest – several received five stars in multiple categories. Congratulations to all those MGAs singled out for praise on the following pages.
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FEATURES
COVER STORY: BROKERS ON MGAs
Arista Insurance Beech Underwriting Agencies Bluefin Underwriting CFC Underwriting DUAL International Millstream Underwriting (Nexus Group of Companies) Nexus CIFS (Nexus Group of Companies) Nexus Underwriting Management (Nexus Group of Companies) One Commercial Pioneer Underwriters Touchstone Underwriting Towergate Insurance U-Sure UK General Insurance White Oak Underwriting Agency
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SUP MARK POR ETIN T G
O CAP SERV NLIN ABI ICES E LIT AN IES D
RA O F F O F SC N G E ERE HEM D ES
& T RESPO CLAIM URN NS S IV A TIM ROUN ENES S D E
UN & T RESPO DERW URN NS RI T I A TIM ROUN VENES ING E S D
R OFF OF INS ANGE ERE UR D E RS
PRI PREM CIN IUM G
MG
A
WHICH MGAS EARNED FIVE-STAR RATINGS?
UNDERWRITING RESPONSIVENESS & TURNAROUND TIME FIVE-STAR MGAs Arista Insurance Beech Underwriting Agencies Bluefin Underwriting CFC Underwriting DUAL International Millstream Underwriting (Nexus Group) Nexus CIFS (Nexus Group) Nexus Underwriting Management (Nexus Group) One Commercial Pioneer Underwriters Touchstone Underwriting Towergate Insurance U-Sure White Oak Underwriting Agency It is no surprise that underwriting responsiveness and turnaround time came in on top as the most important aspect brokers look for in an MGA, scoring 9.39 out of 10. And why? As one respondent concisely wrote, it is “key to us so that our own service standards and customer expectations are met”. Luckily, MGAs performed very well in this category. On average, MGA performance scored 8.77 out of 10 in underwriting and turnaround time – their best-performing category with 14 MGAs in total receiving five stars – the most (tied with premium pricing) out of all categories. Many brokers were more than pleased with the underwriting service they receive from their primary MGA. “Quick responses with good information always provided,” one broker said. Turnaround times can make or break a broker-client relationship. “Crucial and an area that all insurers fail to understand,” said one frustrated respondent. “Sometimes they are really quick, other times they take a long time.” Just as important is consistency, especially if a broker becomes accustomed to having responses within a certain time frame, as expressed by one broker: “Can be slow sometimes, quick at others. Overall lack of consistency.” Though many were satisfied with the underwriting and turnaround times of their MGAs, there was an overall consensus among brokers that underwriting turnaround times can “always be quicker”.
Importance to brokers
MGA performance
1st
1st
CLAIMS RESPONSIVENESS & TURNAROUND TIME FIVE-STAR MGAs Arista Insurance Beech Underwriting Agencies Bluefin Underwriting CFC Underwriting DUAL International Pioneer Underwriters Touchstone Underwriting Towergate Insurance U-Sure UK General Insurance White Oak Underwriting Agency Claims responsiveness is a close second in terms of importance, taking a score of 9.10 out of 10. Responses were divided between brokers who have in-house claims department/service and don’t process claims via their MGA, versus brokers who pass claims through their MGA’s claims handling department. One broker was quick to say that “claims service is king with all insurers, not just MGAs”. It is during claims when clients and brokers get an accurate sense of the quality of service and the integrity of the MGA in delivering what is needed, when it is needed. As such, brokers appear to agree that MGAs have been providing WHAT BROKERS WANT
Adopting a more cost-effective claims handling model driven by e-enabled services “excellent claims service” and “solid claims response times”, with performance scoring 8.26 out of 10. One broker found the process “acceptable”, but realised the need for more use of technology to improve access and efficiency, and proposed “more e-enabled services to be incorporated into the claims process”. For brokers who oversee the claims process themselves, what’s important is that MGAs are ready to step in when needed. One said that “claims assistance is always offered and turnaround time is good”.
PREMIUM PRICING FIVE-STAR MGAs Arista Insurance Beech Underwriting Agencies Bluefin Underwriting CFC Underwriting DUAL International Millstream Underwriting (Nexus Group) Nexus CIFS (Nexus Group) Nexus Underwriting Management (Nexus Group) Pioneer Underwriters Touchstone Underwriting Towergate Insurance U-Sure UK General Insurance White Oak Underwriting Agency After underwriting and claims responsiveness, premium pricing is considered the next important factor for brokers in rating MGAs, with a score of 8.89 out of 10. Most of the brokers find that the MGAs are consistent in offering competitive and fair prices, and performance in terms of pricing actually exceeds expectations, as it ranks second, scoring 8.69 out of 10. Along with underwriting responsiveness and turnaround times, 14 MGAs received five stars in this category. What brokers have also repeatedly mentioned is MGAs being accommodating enough to extend flexible terms. One broker said it is “key to us selling their products”, as brokers are then enabled to approach clients with the confidence that things can always be negotiated and rearranged to the latter’s satisfaction. Other brokers describe their MGAs as “very receptive to [their] rating requests” and “always trying their best to achieve target rate requirements”. As a respondent succinctly described, “Price is important, but the right cover even more so.” What makes prices fair and acceptable is that they “reflect the risk profile”. It’s important for brokers that MGAs recognise the growing and evolving needs of the market and see the potential of the solutions in the long run. One broker commended their MGA for “great support and responses on each of their schemes” and for “being focused on growth”.
Importance to brokers
MGA performance
Importance to brokers
MGA performance
2nd
3rd
3rd
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FEATURES
COVER STORY: BROKERS ON MGAs RANGE OF SCHEMES OFFERED
ONLINE SERVICES AND CAPABILITIES
FIVE-STAR MGAs Beech Underwriting Agencies Bluefin Underwriting Millstream Underwriting (Nexus Group) Pioneer Underwriting Touchstone Underwriters U-Sure UK General Insurance
FIVE-STAR MGAs Nexus CIFS (Nexus Group) Pioneer Underwriters U-Sure
In this category, the MGAs’ performance seems quite at par with the expectations of brokers, as the category is ranked fourth for both, receiving a score of 7.58 out of 10 in terms of importance and 7.82 out of 10 in terms of actual performance. To some, having a good range of schemes might seem like a bonus or plus. One broker remarked that they “use a limited number of schemes, but there is a wide range on offer”. Others said that thus far their MGAs have been “able to provide quotations on a variety of wordings and products” and are “open to consider different options when requested”. WHAT BROKERS WANT
Broaden the product base, and provide instant quotes online with a refer option in case any changes in terms are required As for challenges in this area, a broker commented on how schemes are mostly “limited to retail trades, and restaurant and property owners”. Meanwhile, another explained how their MGA does “offer a diverse range of schemes, but sometimes getting access to this can prove difficult, i.e. trying to set up both personal lines and commercial-style schemes has proven challenging”. Finally, one broker hinted at the competition in the market and the trend of establishing a niche, saying that it may seem like the “more the better, but it is more important to be expert in one field”.
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Importance to brokers
MGA performance
4th
4th
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Based on the ranking, it may seem as though MGAs are not performing according to brokers’ expectations, though comments show that there are varying perspectives. Brokers gave a score of 7.27 out of 10 for importance, and 7.49 out of 10 for performance. Only three MGAs received five stars for online services and capabilities, the least out of all categories alongside marketing support. The few brokers who gave higher scores for performance in this category mentioned the expected benefits, such as facilitating an easier process and being “able to provide additional coverage to support a wide range of client activities”. One insisted that online services provide “efficient capabilities and instant documentation, which are friends of the brokers – time is money”. WHAT BROKERS WANT
Better and more interactive websites Yet, a number of respondents still have not used the online portals of their MGAs, some finding them “unimportant” and “not required”, while one referred to how their schemes are “managed through [their] own bespoke platform”. One broker talked of how using the online system to document the risks for assessment seems pretty easy and straightforward, but there’s “no automatic quote – all quotes are referred”, thus pointing to the need for personal exchange/contact. Another broker confirmed the need for a personal touch as well as improved efficiency in his assessment: “For our business, [the online portal] can sometimes be clunky to use. I often need to share more information than what you are able to on the portal. It has increased my workload for each renewal as well.” It’s not simply about incorporating technology any way, anyhow to merely appear updated, but about harnessing its capabilities effectively to really improve productivity. Furthermore, there may still be some brokers who are wary of online services and see them as threats, instead of value-added services, as can be seen in this response: “[Our MGA] has launched an online Broker Pal system, which I hope will not prove to be a competitor for the products we currently distribute.”
Importance to brokers
5th
MGA performance
6th
RANGE OF INSURERS OFFERED
MARKETING SUPPORT
FIVE-STAR MGAs
FIVE-STAR MGAs DUAL International Nexus CIFS (Nexus Group) Pioneer Underwriters
Bluefin Underwriting DUAL International Millstream Underwriting (Nexus Group) Pioneer Underwriters U-Sure For many of the brokers who took our survey, having a wide range of insurers was the least of their concerns, so it is no surprise that the category came in sixth in order of importance for brokers, scoring 6.97 out of 10. Overall, MGAs performed well in terms of meeting brokers’ preferences, with an average score of 7.51. “We have no need for a range of insurers, preferring to deal with one to leverage relationship,” said one survey respondent. “Not so key to us as long as the primary capacity is strong, good rating and sustainable,” said another, indicating that many brokers prefer to have strong working relationships with a few insurers rather than manage relationships with a vast range.
Finally, we come to marketing support. Just three MGAs garnered a five-star rating in this category, and although this was not perceived as the most important aspect overall – scoring a 6.66 out 10 among brokers – many were quick to mention that an MGA’s marketing support is valued and highly important for a successful business. Several criticisms that brokers shared were the lack of marketing literature for products offered. “Little or no literature but good advice offered and support when there is a claim,” said one broker. “Improved marketing support [and] marketing literature for certain products,” said another. Overall, many felt that the need simply was not there. “Not important. We have our own marketing team,” said an individual. “[Marketing] available and offered but not needed,” commented another. WHAT BROKERS WANT
WHAT BROKERS WANT
Offer more lines of business, a larger panel of insurers and flexible premiums If the insurer offered by the MGA holds a high security rating and has the capacity needed from the broker, then the need for the broker to have multiple insurers is diminished. For example, a few respondents echoed similar interests when it came to the range of insurers offered by their MGA. One commented, “As long as the insurers used are of a good security rating.” Another said, “They do not offer a wide range of insurers, but the capacity provided is adequate for most of our needs.” That is not to say that all brokers were pleased, and a few responses marked their MGAs poorly based on the range of insurers provided. When asked how their MGA partner could improve, one broker asked for a “broader range of carrier partners”, while another simply said, “the more [insurers] the better.”
Importance to brokers
6th
MGA performance
5th
There needs to be more co-ordination between the various departments within our MGA. This coupled with a slowness to respond to rating requests are the two main areas of improvement Although many brokers who responded to our survey stated that they use their own in-house marketing support for promotional and informative news, some do take advantage of the marketing support offered by their MGAs. Comments such as, “The limited occasions we have asked for [marketing support] the response has been reasonable,” and “We are always able to get their assistance with marketing-related details, such as press releases, etc” indicate that although this service is not always utilised, having it available is helpful and appreciated.
Importance to brokers
7th
MGA performance
7th www.insurancebusiness.co.uk
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FEATURES
SECTOR FOCUS: TERRORISM COVER
Terrorism cover: changing perceptions Though the UK’s terrorism threat is severe, brokers face a battle selling the product to clients who assume it won’t happen to them TERRORISM … it’s one of those things that you see on the news, isn’t it? Something that makes you shake your head in disbelief, but that ultimately only happens to other people. Or is it? The reality is that terrorism is not something restricted to Islamic states with the
Western Europe has been occurring with unsettling frequency. According to figures from datagraver.com released in 2016, there have been people killed in terrorist attacks every year in Western Europe dating back to when its records began in 1970. While there are one-off events that
The banks are becoming very terrorism proactive … they are looking to make sure that they have terrorism covered Geoff Stilwell, CEO and MD of Beech Underwriting Agencies occasional, albeit devastating, attack in the western world similar to the 11 September 2001 attack on the World Trade Center or the 7 July 2005 London bombings. The fact is that even prior to last year’s shocking attacks in Berlin, Brussels and Nice, terrorism in
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cause a spike in the number of lives lost – such as the attack on the Pan Am flight over Lockerbie, which claimed 270 lives in 1988, or the attacks in Madrid in 2004 that saw 192 lose their lives – the threat of terrorism has always existed and sadly shows no signs of
going away. Pool Re’s Terrorism Threat and Mitigation Report for August to December 2016 states that the threat to the UK remains “severe”. Yet despite the statistics it seems many of us still assume that it only happens on television – creating an uphill battle for brokers looking to sell clients on the importance of terrorism cover. “Most brokers are aware that terrorism is to be sold, but it’s difficult to convince a client to buy because they don’t see it as a necessity, as they think they are not a target,” says Geoff Stilwell, CEO and MD of Beech Underwriting Agencies. “Of course, when a terrorist does an act they don’t care where they are … so you have to bear in mind that someone who works in the centre of London is likely to be more aware of terrorism cover than someone who works in a sleepy area of Cheshire – but that doesn’t mean that there can’t be an act there. “There have been events all over the country. There was an incident where someone tried to set off a bomb in a restaurant in Cornwall a couple of years ago. So there is no area that is necessarily more prone to terrorism activity. It can happen anywhere.”
The reality of the threat In Pool Re’s report, it was highlighted that there were 10 bladed terrorism attacks during the last four months of the year in Europe, including the murder of Jo Cox MP, in the UK; 10 firearm incidents and 10 attacks involving person-borne improvised explosive devices (PBiEDs) or suicide bombings. Of particular note for the UK has been a rise in far-right extremism; the Home Office assesses around 850 people have travelled from the UK to engage in the Syrian conflict and about half have returned. The report states that “managing this extremist travel … is likely to present extensive casework for the police and MI5.” Threats of chemical, biological, radiological
WESTERN EUROPE: UNDER THREAT and nuclear terrorism in the UK were described as “high impact, low probability”; while cyber threats were seen as “increasing”, some proving to be internal from employees with malicious or hostile intent and others external from a range of sources. An emerging threat is “unmanned terror”, and the report highlights that “there have been significant developments in the commercial and consumer drone markets over the last three years.” While the rapid development of these threats is nothing to celebrate, clearly there are opportunities to be taken if insurers and
brokers are able to ram home the importance of the coverage and overcome the uncertainty surrounding the products.
The sales job Brokers may have a challenge on their hands when it comes to putting across the need for terrorism cover to their clients – but it is a battle they must win, according to Stilwell. “There are two factors to stress,” he explains. The first is the obvious point about how the world is changing due to all the terrorism activity and the potential threat, but the second is the financial aspect.
175
The number of people killed in terrorist attacks in Western Europe in 2015.
1988
The most violent year for terrorism in Western Europe to date.
191
The number who died in the Madrid attacks of 2004. Source: datagraver.com
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FEATURES
SECTOR FOCUS: TERRORISM COVER
A FEAR NOT GOING AWAY 10
The number of attacks involving PBiEDs or suicide bombings in Europe from August to December 2016.
$17bn
The market for consumer drones by 2020 – an emerging threat source.
816
Individuals reported to Europol for terrorism-related offences from August to December 2016. Source: Pool Re Terrorism Threat & Mitigation Report Aug-Dec 2016.
“The banks are becoming very terrorism proactive because if they are lending a lot of money for a property they are looking to make sure that they have terrorism covered.” Stilwell explains that any business that has a mortgage, a loan or an overdraft will need terrorism cover because if an incident does occur, the banks will still continue to demand their money. Without terrorism cover, servicing these loans is going to be highly difficult – and so if something happens the broker can be the saviour by having provided the protection that allows the business to continue trading. “For anybody who is involved in property owners’ insurance where they have lots of flats or a housing estate, terrorism cover is a must,”
cover emergency accommodation for tenants after an incident takes place – whereas Beech Underwriting, which has all of its terrorism policies 100% underwritten by Lloyd’s, includes emergency accommodation not only for those displaced, but for their pets, too. In particular, however, Stilwell believes that brokers need to consider whether or not their commercial client has operations – or intends to have operations – beyond the UK mainland, because the bulk of policies in the UK won’t offer cover in these regions. “What many people don’t realise is that a lot of these cover options don’t cover the Channel Islands, the Isle of Man, Northern Ireland or Eire,” he explains. “They are
“For brokers, there is a simple question to ask: ‘Do you have a mortgage on your commercial business?’ It’s as simple as that” Geoff Stilwell, CEO and MD of Beech Underwriting Agencies he says. “As far as a mortgage company is concerned, if there is an incident they are still going to want to be paid. So anyone who has a mortgage or lease in an apartment block should make sure that the block has terrorism cover.” He added: “For brokers, there is a simple question to ask: ‘Do you have a mortgage on your commercial business? Do you have any loans from the bank or any bank overdraft?’ If they do, then they should be buying terrorism cover – it’s as simple as that.”
What should be covered? Stilwell highlights that brokers shouldn’t assume that one size fits all for their clients when it comes to providing appropriate cover. For example, many policies will not
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often purely mainland UK only. “What we can offer to businesses that, for example, have manufacturing facilities overseas but have warehouses or distribution centres here, is that we can insure the manufacturing facility overseas, the product, and the depots where all these things are stored, as well as their operations at home.” Stilwell, who has been writing terrorism insurance with Beech Underwriting for 16 years, believes that many companies have overlooked the need for cover beyond the UK mainland, adding that his firm is doing business in “Italy, Germany, Austria and Hungary.” “For example you have a hotel chain and you decide to open up a property overseas – we can cover that and others can’t,” he says.
BIBA 2017 CONFERENCE & EXHIBITION
connections Manchester Central. May 10-11
WELCOME TO BIBA 2017 The most important event in the insurance calendar On May 10 -11, 2017 Manchester will become the hub of the UK’s insurance sector. If you’re looking to do business, extend your knowledge, make new contacts or reinforce existing relationships, then BIBA 2017 is the only place to be.
biba2017.co.uk www.insurancebusiness.co.uk
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FEATURES
SECTOR FOCUS: MANAGEMENT LIABILITY
Where cyber meets management liability What coverage do clients need in an increasingly litigious business world?
IN TODAY’S fast-paced landscape, the risks for businesses are evolving at lightning speed. The prevalence of litigation is helping management liability cover to increasingly become a must-buy for businesses looking to protect themselves from exposures. While management liability and directors and officers (D&O) cover are often used interchangeably, the differences between the two are becoming ever more important, says Kate Lyes, management liability practice leader at CFC Underwriting. D&O “does what it says on the tin”, covering directors and officers, and any subsequent liability that arises out of wrongful acts that they might commit in the process of running the company, Lyes says. Management liability, however, encompasses a wide range of coverages. “Management liability tends to be used more in conjunction with private companies,” Lyes says. “It’s more all-encompassing –
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covering not only the directors and officers, but the entities themselves.” Important areas of coverage include employment practices liability, employee benefits liability, commercial crime, kidnap
need to be aware of most is their cyber exposure,” Lyes explains.
Businesses under threat Cybercrime and cybersecurity issues have barely been out of the news headlines in recent years. Most prominently, two major Yahoo breaches came to light last year, putting the company in the glare of the global spotlight. The first saw 500 million user account details exposed, and was thought to be the largest single data breach in existence until it was eclipsed by news of a second breach just two months later. Details of the second breach, which came to light in December, revealed that data from over one billion Yahoo user accounts was compromised by a third-party back in August 2013. But it’s not just those on the other side of the Atlantic who are facing a threat from cyber criminals. The infamous TalkTalk hack, which lost the firm 101,000 customers and cost £60m, is the stuff of nightmares for many businesses in the UK. But new research has given them even more reason to worry.
“The reality is that, certainly from a management liability perspective, one of the things that brokers and directors of companies need to be aware of most is their cyber exposure” Kate Lyes, management liability practice leader at CFC Underwriting and random and, increasingly, some kind of cyber and privacy cover. “The reality probably is that, certainly from a management liability perspective, one of the things that brokers and directors of companies
Businesses in the UK faced an average of 230,000 cyberattacks each in 2016, according to a report by internet service provider Beaming. In November last year, the firewalls of individual companies battled up to
THE COST OF CYBERCRIME Cyberattacks may have cost British businesses as much as £30bn last year Source: Beaming
36%
36% of ransomware victims report loss of business income due to the attack Source: Advisen
Large companies are confused about who should be in charge of dealing with the aftermath of cyberattacks Source: BAE Systems
1,000 breaches per day, on average. And the public sector has been hit, too. In January, the largest NHS hospital trust in England was hit by a ransomware virus that affected thousands of sensitive files. But while many assume that large corporates are the main targets of cybercrime, SMEs have been warned not to underestimate their level of exposure to cyberattacks. The most recent government security breaches survey found that 74% of small organisations reported a security breach in 2015 – a figure that had gone up from the 2013 and 2014 surveys.
A changing market In particular – when it comes to take-up – CFC is seeing technology and life-science firms buying into management liability policies, Lyes says. Typically, clients are firms that raise debt or equity to fund their activities – which often includes start-ups that are heavily reliant on the cash they raise. “Traditionally, D&O was quite a difficult sell, but the market penetration has increased significantly, so a lot of your publicly traded companies will buy D&O, and the penetration in the SME marketplace has
definitely increased as well,” Lyes says. As take-up increases, the next step for brokers is to look at what exposures are faced by directors and officers who aren’t potentially covered under a management liability or D&O policy. “I certainly believe that one of those is cyber and, more specifically, the first-party aspect of cyber,” she explains. Brokers should look at whether entities are covering their cyber risks via a standalone policy, or as part of their management liability package. Where cyber isn’t included, brokers should definitely be asking their underwriters to affirmatively cover cyber under their management liability or D&O policy, Lyes says. Looking to the future, while regulation is an ever-present issue, the key hurdles look to remain the rapid pace of change in both the business and technological environment. Lyes says: “You do generally get people talking about an increased regulatory environment, but to my mind that is constantly evolving, and it’s something that directors and officers should be aware of on an ongoing basis.”
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FEATURES
BROKER PROFILE
From personal to commercial Having personally built his brokerage, C&M Insurance, from the ground up, Sunil Shah lifts the lid on a firm that’s keeping pace with a changing industry
IN THE two decades since it was founded, family-run brokerage C&M Insurance has inevitably gone through changes, but the biggest by far was its transition from selling personal lines to commercial lines, its managing director tells Insurance Business. “We went from doing everything, as a general insurance broker, to now, pretty much just doing commercial,” Sunil Shah says of the shift, which happened in 2011. The challenge with personal lines was that the brokerage was giving the same “personal, professional, thorough service” to an account covering two cars as it was to one covering a commercial premises. “You’ve really got to be really slick with personal lines to make any money,” Shah explains. “We’re not geared that way – we’re very much a boutique-style brokerage that really gets involved with the clients.” C&M made the change at a good time, Shah says: “When we switched the market was turning. It’s harder for a broker now to trade in personal lines.” In the commercial arena, however, there is a great deal of value for brokers, he says. “Clients can get that personal, face-to-face
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service. At the end of the day, they’re insuring and protecting probably some of their most valuable assets.”
Starting from scratch Shah started the firm in 1996, beginning with just himself, and has built the Essex-based company up to its current team of ten. “We pretty much started from nothing really,” he says of the firm. “We had no real clients and just built the business up over the years.” Regulation and compliance are ongoing challenges for the brokerage, but Shah says the emphasis is on doing a proper job for the client first and foremost. “Brokers nowadays are getting sued not necessarily for bad advice, but for no advice,
so we’ve got to make sure we cover off everything,” he explains. “No one client is the same – you can’t put clients in boxes. We’ve got to look at each one individually and see exactly what they need and where they are at risk.” C&M’s client base is fairly evenly spread across industries, though Shah says the firm can particularly add value to manufacturing, warehouse and wholesale operations.
A new challenge The brokerage has recently been making a “big push” towards directors and officers insurance, driving awareness and helping clients understand why they need it. “It’s very easy to go to a slightly larger, more corporate client that has got a turnover of
A DIFFERENT PATHWAY INTO INSURANCE Shah began his career as a qualified accountant, working in merchant banking. The opportunity to start C&M Insurance came when he had already planned to leave his then-profession, which he had grown bored with … and he has “never looked back”. He admits he never thought he would still be in the industry 20 years later, having built a team and an established name in the area, but thrives on the variation in the industry, as well as its sociable nature.
FAST FACTS Company name: C&M Insurance Year founded: 1996 Location: Essex Offices: One Employees: 10
TYPES OF COVER Commercial combined High net worth Combined liability Cyber liability insurance Directors and officers liability Property owners
“We’re very much a boutique-style brokerage that really gets involved with the clients” between £3m and $20m – they’re a bit easier to sell the product to because they get it, and for the amount of premium they might as well take the cover because it’s a cover worth having,” Shah says. “The challenge is the smaller business, which actually, probably, needs the cover more than the larger client.” Right now, there is something of a gap in the market, where many brokers don’t fully understand D&O, and Shah says that there’s
a risk that “one day, if something comes out of the woodwork and [the client] hasn’t been advised on that product, it could come back and bite the broker.”
Embracing modernisation Technology has been both a help and a hindrance to the firm. The brokerage is still recovering from the SSP outage, as many are, but Shah says the upside is that the business is now aware of an additional risk
Motor trade Motor fleet
that was not on its radar before. Social media however, has opened a new door to engage with clients – “so they can see that we’re not just the insurance broker who knocks on their door a couple of weeks before renewal asking for money – there’s a lot more going on. There’s compliance, training, developments, risk management.” Looking forward, sustained growth is on the cards for C&M Insurance, which has grown 25% year-on-year in the past two years. “We will continue to do that,” Shah says, “but the difference is we’re not doing it by acquisition – we’re doing it organically.”
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FEATURES
SECTOR FOCUS: FLOOD RISK
WHILE FLOODING is certainly not a new phenomenon in the UK, many now argue that the risk, both in severity and frequency, is increasing. Storm Desmond, which hit the country in December 2015, was one of the biggest of the past century, and caused severe damage, particularly in Cumbria and Lancashire. The insurance bill was estimated to have come in at around £1.3bn. Experts have since revealed that the months surrounding it – November 2015 to January 2016 – were the wettest three months since UK records began, in 1910. A national review prompted by the events said the government should plan for a 20-30% increase in extreme downpours. It found that 530 critical infrastructure sites, including water and telecoms, are at serious risk from floods, which could each potentially affect at least 10,000 people. As part of the review, an extra £12.5m was allocated for more temporary defences at strategic locations around the country.
The insurer view
Flood risk rising? As we approach the first anniversary of the Flood Re scheme, we take a look at how the UK’s flood threat is developing 32
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“We’re seeing evidence from third-party bodies, who are independent, that future flood risk is going to increase,” says Ralph De Mesquita, senior risk analyst at Zurich. “We’ve also seen in the last couple of decades an increase in the frequency and severity of storm events,” De Mesquita adds, pointing to Storm Desmond, the summer floods of 2007 – which cost insurers just over £3bn – and flooding in Cumbria and Carlisle in 2005. Looking back on the previous decades, the 1980s and ’90s, there was “nowhere near the severity and frequency of flood events,” he says. Despite a clear escalation in flood events, De Mesquita warns against necessarily assuming that the pattern will continue.
A DELUGE OF FLOOD DAMAGE An estimated 19,000 homes were flooded across northern England during Storm Desmond in December 2015 Source: Defra
Insurers pay Flood Re a combined total levy of £180m per year Source: Flood Re
£20,000–£45,000: The average cost of repairing and restoring a flooded home
“Having said that, windstorm events over recent years do not seem remarkable, and we have not had a 1987 or 1990 type storm yet this century.”
A change to the market The introduction of the Flood Re scheme in April last year was a significant moment for the industry, in terms of covering the dangers associated with floods. In its first six months of operation, Flood Re took on over 53,000 policies, and revealed at the beginning of this year that it is on track to take on 130,000 policies by the time of the scheme’s first anniversary.
Driving awareness The speed and reach of news in the digital age means we are increasingly informed when it comes to flood events but, despite this, many are misinformed when it comes to their coverage. “There is still quite a lot of confusion in the domestic market,” De Mesquita says He says that Zurich points customers towards the National Flood Forum – a charity founded with funding from the Environment Agency – for more information. Government grants for property level flood resilience – available at up to £5,000 per property, to help improve the property’s
Source: ABI
34%
Among natural catastrophe losses worldwide, floods accounted for 34% of overall losses last year Source: Munich Re
“It’s whether you say that the last 17 years, from 2000 onwards, is a continuing trend,” he says. “But all the evidence from these independent bodies … is all pointing to the fact that we’re expecting to see increasing levels of frequency and severity.” When it comes to rising flood risks, RSA is also hesitant to confirm a trend. While admitting that there have been a number of high-profile floods in the last 20 years, an RSA spokesperson said that the company sees no immediate evidence of increasing flood frequency, pointing to the fact that this winter has been free of any major flooding thus far. “December 2015 was associated with record rainfalls and a run of three consecutive storms, so perhaps the intensity of the incident was significant and may be a trend,” the spokesperson said.
“We’re seeing evidence from thirdparty bodies, who are independent, that future flood risk is going to increase” Ralph De Mesquita, senior risk analyst at Zurich In the domestic market, the scheme has helped lower the cost of insurance to households in those high-risk flood areas. “Since Flood Re, we are able to provide competitive cover for customers who have experienced extreme flood risks or the presence of past flood claims,” RSA’s spokesperson said of the scheme’s impact. “We have also been able to remove flood terms and loads on existing policyholders and cede the flood risk to Flood Re.” In the commercial space – deliberately not included in the scope of Flood Re – De Mesquita says that, on the whole, customers tend to be able to obtain cover quite easily. “There may be a few individual cases that present challenges but, generally speaking, it’s a very competitive market,” he says.
resilience or resistance to damage from flooding – are seeing a fairly low take-up. A recent report from Zurich found that there is a need for better communication of hazard, probabilities, risk and what actions to take when providing early warning services to communities. According to De Mesquita, ultimately, both households and businesses need to look at their residual flood risk. “Our focus as an industry has been on the fact that we know flood events are going to continue and are going to increase in severity,” he says. “We can’t just rely on the government building up walls higher and higher; that is not a practical solution from our point of view.”
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BURNOUT
Avoiding burnout Leadership expert Karen Gately explains the six typical drivers of burnout in business leaders and offers practical tips to help you avoid them HAVE YOU ever reached the point where you felt like you simply couldn’t go on? Have you found yourself losing concentration and lacking the motivation to do the things necessary to drive the performance of your business? It’s common for CEOs and senior leaders to experience periods of disengagement from their roles and teams due to the extreme exhaustion they feel, and many fail to recognise the state of burnout they have reached. Burnout is a state of emotional, mental and physical exhaustion caused by excessive and prolonged stress. Typically reflected in our energy and behaviours, burnout unquestionably undermines any CEO’s ability to lead a thriving organisation. Despite its devastating impacts not only on job performance but also on quality of life, many of the senior leaders I work with fail to take the necessary steps to avoid reaching this state of exhaustion and disengagement. The following are six typical drivers of burnout in business leaders and some tips on how to avoid them.
1
Overcommitting
There are always more things you could do in any given day. But the reality is that it isn’t possible to explore, plan and execute all of the ideas and even priorities you are likely to have. Your ability to invest energy and resources wisely depends on your ability to know what matters most. While deciding what you will do is important, arguably more so is deciding what you won’t.
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TIP Create a business plan on one page. Identify the priorities that will have the greatest influence on your success, and anchor your focus, and that of your team, to them. Review progress regularly, and identify ways in which you need to bring back focus to these critical objectives. Strike things off your to-do list that add little value and distract you from your main mission. Learn to say no.
2
Avoiding
The need to make tough decisions and have difficult conversations is inevitable when leading a team or organisation. And yet so many of the leaders I work with
“Strike things off your to-do list that add little value and distract you from your main mission. Learn to say no” avoid them. The consequence of failing to address issues is continuing to live with the stressful impacts of underperformance and uncertainty. Fear of having the conversations or implementing the actions necessary to drive change is common among leaders who experience burnout.
TIP Work with someone who is able to guide you in shifting the thoughts and feelings that cause you to hesitate to do what is necessary. Find a mentor or coach you trust to challenge your thinking and hold you
accountable for dealing with issues that arise.
3
Executing poorly
Even when decisions have been made, executing them can be difficult. Most often what I observe are senior leaders who recognise what needs to be done but fail to act decisively. These leaders fail to apply disciplined approaches that ensure priorities are achieved. Commonly, a lack of planning, review, and deliberate decision-making about priorities and resource allocation leads to costly mistakes and wasted resources. The pressure
conflicted between the demands of a job and the desire to be with friends and family. We are likely to reach burnout if we fail to give our minds, bodies and spirits the nurturing needed to thrive.
TIP Establish routines that ensure you take time out for you. Switch off the technology that allows you to stay connected with your work world, and spend time with the people you love and doing the things that energise your spirit. Maintain a level of activity and diet that allows your mind and body to be healthy.
6
Worry and regret
Reflect for a moment on how much time and energy you waste worrying about things that are outside of your control. How often do you worry about things that haven’t yet happened and may never happen? Do you expend vital energy on concerns that can’t be resolved? Feeling helpless and regretful drains our energy and is likely to erode our resolve to keep striving.
and workload demands on leaders and teams when things go wrong can be immense.
TIP Develop your organisation’s ability to manage projects well. Develop your own ability to set a clear vision, establish priorities and drive change. Also develop the capabilities of leaders at all levels of your organisation to drive strategic priorities through to successful implementation.
4
and resources in striving for standards beyond what our staff or customers expect is a common reason CEOs are overworked.
TIP Understand the 80/20 rule and apply it. The rule states that 80% of your outcomes come from 20% of your inputs. The important thing to understand is that in your life, 20% of the activities you do account for the majority (80%) of your happiness and success.
TIP Recognise when you are worrying. Start by asking yourself whether the problem is something that can be solved, and whether it can be solved by you. For example, is the problem something you’re actually facing, or is it just a “what if ”? Is your concern realistic? Can you do something about it or prepare, or is it really out of your control? If it’s an unsolvable worry, recognise that fact, put it out of your mind and move on. Avoiding burnout comes down to making necessary and balanced choices – those that allow you to deliberately invest time, energy and resources in achieving what matters most. Know when to let things go, choose to focus on today and keep an eye on the future.
Aiming for perfection
Let’s face it – worrying about being perfect all the time is stressful. Many of the perfectionists I have worked with have recognised this tendency in themselves but have failed to see the seriousness of its consequences soon enough. The simple truth is that none of us, or our businesses, are perfect. Investing unnecessary time, energy
5
Work-life imbalance
We all need time away from work to slow down, unwind and recharge. No matter how much we love our work, if the time we spend doing it disproportionately consumes our focus and energy, our health and relationships are likely to be impacted. It’s difficult to avoid feeling stressed when
Karen Gately is a leadership and people management specialist and the founder of Ryan Gately. She works with leaders and HR teams to drive business results through the talent and energy of people. Gately is also the author of The People Manager’s Toolkit: A Practical Guide to Getting the Best from People and The Corporate Dojo: Driving Extraordinary Results Through Spirited People.
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PEOPLE
CAREER PATH
UNLOCKING POTENTIAL Throughout her career, Sharon Long has always turned her focus towards getting the best out of people
Sharon arrives in London having studied law and international trade, with her sights set on America as her ultimate destination. Serendipity leads to a technical marine claims job in the Lloyd’s Claims Market. “I had exceptional training. Lloyd’s claims office had a number of average adjusters on the brink of retirement and it was their job to train us. That never happened again – we were extremely fortunate.”
1989
MOVES TO LONDON
2004 CHANGES STREAM TO JOIN AIG Deciding that it’s time to try a type of business that she’s yet to sample, Sharon leaps at the opportunity to join AIG, handling medical malpractice cases. “I found it absolutely fascinating. It was a different lens to look at the industry through. I’d spent 14 years doing boats, yachts, oil rigs; the opportunity to do something so different was really interesting. It was a very arduous area, but a great learning experience.”
2014 CREATING THE CONDITIONS TO THRIVE The year Catlin is acquired by the XL group Sharon not only maintains her position as head of claims but is also charged with the task of merging the two claims departments. “I had the brilliant opportunity to bring the two teams together. It was really interesting from a cultural perspective, creating the conditions for those individuals to thrive.
2016 BRINGS LIFE TO NEON Sharon is brought aboard the new insurer, with an eye to building a world-class claims team that puts the client first, positioning claims as part of the front line with underwriting for product and business development. “Good claims service is about more than just technical service. I like bringing out the best in people technically and creating highly performing teams who enjoy what they do and understand the power of servicing clients’ needs.”
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1996 JOINS AXA Sharon gets a look at a very different slice of insurance when she joins AXA. With a desk near the lift, she is often mistaken for the receptionist, thus manages to meet every client who comes through the door. “It was fantastic. They were the beginnings of long-term relationships and gave me a real understanding of what clients need and what service is all about, because I had the opportunity to really listen to clients.”
2006 JOINS CATLIN AT A TRANSFORMATIVE MOMENT The catalyst of the Wellington takeover provides a transformative moment for Sharon when she joins Catlin. “We had taken a bet on the future – when we combined with Wellington – that the future of claims would be about service. Claims service was an area we could excel in. The Good to Great plan was about achieving the No.1 position for claims service in the London market and, more importantly, sustaining it. We maintained that position for six years.”
2015 QUALIFIES AS A COACH Sharon is accredited as an Associate Certified Coach with the International Coach Federation; she utilises this skill to implement an in-house coaching model within Catlin claims. “In a service-oriented industry, it makes sense to understand people’s emotions; it’s a good skill set to have. I use it more than any other training I’ve done in the last 27 years. If you have the skills to make people think more rationally and logically, you enable them to reach and often exceed their potential.”
PEOPLE
OTHER LIFE
NEED FOR SPEED
Insurance may be his day job, but Geoff Stilwell has his sights set on a land speed record STAFF AT many firms love to chat about their boss, but at Beech Underwriting, the water cooler talk is likely to be a little different than at most firms. After all, its CEO and MD, Geoff Stilwell, will be attempting to set a new world land speed record this August, on
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the Bonneville Salt Flats in Utah, USA. “We’ve already run 200mph in the car and we’re hoping that we can run 250mph-300mph in it,” he says. “If I hit 250mph, I know we will have a record.” Stilwell has been around motor racing since he was a child and remembers going to his first drag race in the 1960s. He then raced semi-professional bikes before being offered a land-speed deal in 2015. “You get bitten by the bug … you just want to keep doing it and doing it,” he explains. “The routine is incredible … you get up at 4.30am, dress, get a McDonalds to eat … have the car on the track at 7am … off at 7pm … get something to eat, shower, fall into bed and, before you know it, it’s 4.30am again and you’re doing it all again.” You can follow Geoff ’s attempt at a land speed record at buamotorsport.com.
250mph
Geoff’s minimum target to hit the land speed class record
30mph
Extra speed found by playing with cardboard in a wind tunnel
1350F
The temperature at Bonneville as practice takes place
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