The Journal CII- August/September 2019

thejournal.cii.co.uk August – September 2019

Well built Why construction cover is bouncing back

Lesson learned?

Looking ahead to a post-PPI world

Cancelled cover An alarming trend for the sector examined

TURNER ON TRUST New CII president Nick Turner on why consumer trust is the ultimate reward for the insurance sector’s hard work

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right people. right skills. right technology.

www.carpentersgroup.co.uk

END-TO-END COMPLETE CLAIMS & LEGAL SOLUTION CII.08.2019.002.indd 2 Carpenters Limited FP.indd 1

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AUGUST - SEPTEMBER 2019

C O N T E N TS NEWS 26-27 Fraud A look at new sector-wide initiatives aimed at fighting fraud

5 President’s letter New CII president Nick Turner sets out his theme for the year 6 -11 News UK and international news from the CII 12-13 Regional news News from the local institutes

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22 Regulatory radar The latest legislation updates from the UK and Europe 49 Disciplinary matters

40 Risk coalition How firms can improve their risk management practices

14-15 The Interview Nick Turner talks trust, talent and bringing stability to consumers’ lives

18-20 Hot topic Responding to the recent spike in cancelled insurance policies

34-35 Future skills Review of recent debate on the importance of upskilling staff 38-39 Construction New opportunities but rising costs for UK insurers

FEATURES

16-17 Network conference Key feedback from the annual summit of local institutes

28-30 Payment protection insurance Lessons learned as the PPI misselling scandal comes to a close

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STUDY ROOM

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44-46 Study room: Dual pricing The latest from the FCA consultation 49 Q&A The big ten questions to test your knowledge

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24-25 Public Trust Index Examining the results of the latest consumer trust survey

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50 CII blog Lessons learned during the first two years of working in the City of London

CONTACT US

The Chartered Insurance Institute 21 Lombard Street, London, EC3V 9AH Tel: (020) 8989 8464 Fax: (020) 8530 3052

The Journal is the official magazine of the Chartered Insurance Institute (CII).

Views expressed by contributors or advertisers are not necessarily those of the CII or the editorial team. The CII will accept no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this publication.

The Journal is online at www.thejournal.cii.co.uk

Chief executive: executive: Sian Sian Fisher Fisher Communications director: Editor:Ann LukeHughes Holloway Emma (020) 7417 4778 Editor: Luke Holloway luke.holloway@cii.co.uk (020) 7417 4778 Contributing editor: Liz Booth luke.holloway@cii.co.uk Art editor: Yvey BaileyLiz Booth Contributing editor: Picture editors: Art editor: Yvey Claire BaileyEchavarry, Charlie Hedges Picture editors: Claire Echavarry, Production: Jane Easterman Charlie Hedges Printing: GD Jane Web Off set Production: Easterman Printing: GD Web Offset

Cover Image: Xxxxxxx Richard Gleed

your magazine’s plastic– wrap RecycleRecycle your magazine’s plastic wrap check– check your localfacilities LDPE facilities to fihow nd out how your local LDPE to find out

Publisher: Redactive Media Group Level 5, 78 Chamber Street London E1 8BL Tel: (020) 7880 6200 For sales and advertising please contact us on cii-sales@redactive.co.uk or 020 78807880 76617661 020 ISSN 0957 4883 © 2016 Chartered Insurance Institute.

Average total net circulation more than 82,000

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PRESIDENT'S LETTER NICK TURNER

BUILDING TRUST TOGETHER In his first article as CII president, Nick Turner outlines his vision for the year ahead

Distribution Directive, fair treatment of customers or the review of fair general insurance pricing. While the regulator will continue to progress its business plan, there is still much we can do on an individual level. The strapline of the CII was a big influence in defining my own presidential theme. It reads to me as an equation – Standards + Professionalism = Trust – and is a reminder that it is not just related to the actions of insurance and personal finance companies, but also the actions of individuals who influence consumer trust.

CHALLENGING OURSELVES

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t was a tremendous privilege to be elected as the 109th president of the CII in June, especially after having served as Personal Finance Society (PFS) president between 2016 and 2017. The list of CII past presidents is long and distinguished, and as I received the President’s Jewel during the ceremonial transfer of office, it was a chance to reflect on the accomplishments of the Institute.

I take over from Jonathan Clark, whose presidential theme was to ‘develop a united profession’. During my predecessor’s presidential year, we saw the launch of the Society of Insurance Broking, the Society of Claims Professionals and soon, the Society of Underwriting Professionals. I am looking forward to building on the outstanding work undertaken by Mr Clark and the CII team, and with the help of the new societies, to make big progress on the mission of building public trust in the insurance profession.

During speeches to local institutes as deputy CII president, I spoke of the key individual behaviours that drive trust: benevolence, integrity, competence and predictability.

All of these ‘pillars of trust’ need to be taken seriously for trust to be built. How often do we challenge ourselves after an interaction with a customer on whether we met the pillars of trust test?

Many in our profession fully recognise that our key ‘product’ is often not a tangible item, it is a promise we make.

Therefore, the importance of being trusted and trustworthy plays a huge part in whether consumers engage in products and services in the right way and to their maximum advantage. Many of the consumer challenges we face, where we as an industry have tripped up, are usually down to a breach of one or more of the four pillars of trust.

There is so much we do brilliantly across our professions and I am immensely proud of the positive difference we make to people’s lives and businesses, however, there is still work to be done.

During my presidential year, I will seek to increase understanding and awareness of how individual actions build or destroy trust and impact the perception consumers have of the insurance industry. If everyone, every day, consciously prioritised building trust in every interaction with consumers... then just imagine the difference we could make.

I see an exciting year ahead! ●

THE KEY INDIVIDUAL BEHAVIOURS THAT DRIVE TRUST: BENEVOLENCE, INTEGRITY, COMPETENCE AND PREDICTABILITY

STANDARDS. PROFESSIONALISM. TRUST. Since the 2008 financial crisis, we have seen a number of moves by the regulator to build consumer trust in the financial services industry. The Financial Conduct Authority’s business plan includes some excellent examples of how focus has been applied to building consumer trust, whether that is the Insurance

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Nick Turner is president of the CII

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NEWS

FROM THE CII TWITTERATI »

@A R AG_UK Delighted to be at @UWEBristol today attending the @UWEBusinessSCh @CIIGroup #Insurance #Business Sponsor Group Information Seminar for the #new MSc Risk Management and Insurance

@Aon _ U K Congratulations to Aon’s Alex Kazanjian who was featured in the ‘Multicultural and International Role Models in Insurance’ book by @CIIGroup and @I_CAN_UK

@ j o h n ny t i m p s o n 1 @TheFCA reveals to @CIIGroup what it expects from the insurance profession and also the SM&CR, now just 3 months away.... #AccessToAdvice #AccessToAppropriateInsurance and #SignpostToSpecialists

D I V E I N F E ST I VA L

CII TO HOST DIVERSITY EVENTS

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The CII is hosting a series of diversity and inclusion events with local institutes in September, celebrating the benefits of diversity and inclusion for the profession during the Dive In festival.

As part of the Dive In festival, which promotes diversity and inclusion in the global insurance sector, the CII and three local institutes will host events exploring ways to make the insurance profession more inclusive. The festival itself will be spread across three days from 24 to 26 September, in 33 countries.

With the Insurance Institute of Cardiff, the CII will host an event titled, The Power of Inclusion, on 24 September 2019 at the Holiday Inn in Cardiff. The event will

feature key speaker Nathalie McGloin, the first female with a spinal cord injury to be granted a racing licence in the UK. On 25 September, the Insurance Society of Edinburgh and the CII will run an event at Ghillie Dhu, Edinburgh, featuring Josh Littlejohn, co-founder of Social Bite, a social enterprise with a mission to eradicate homelessness in the country.

On 26 September, the Insurance Institute of Ipswich, Suffolk and North Essex and the CII will host an interview with footballer Kelly Smith, who was spotted by Arsenal Ladies Football Club scouts at the age of 16.

CII members can sign up to attend these events from 11 July onwards via the

website: www.diveinfestival.com The 2019 event asks festival-goers to consider ways to make an impact, under this year’s theme of #inclusionimpact

AWARDS

CII AWARDS WINNERS REVEALED The best and brightest in the insurance profession have been recognised at the 2019 CII Awards.

Initiative of the Year – a category that celebrates an individual or team that have made a special contribution that is innovative or progressive – was awarded to Edirisinghe Pubudu Wasawa Wimalaratne, CEO of Cooperative Insurance. He created the Cooperative Insurance Training Academy, reaching out to the underprivileged community in Sri Lanka with regards to risk management.

Chloe Butterick-Roche, of Aviva, picked up New Professional of the Year award, while the Unsung Hero award went to Erik Johnson, of the Insurance Institute London, for significant contributions to the profession and commitments to helping others.

were presented at the end of the 2019 CII Network Conference held in York.

Alexander Clegg, of Kendal Insurance Institute, won the Local Institute Council Member award for the significant impact he made to championing the institute among the profession and the wider public.

The awards, sponsored by Aviva,

Full list of award winners: ● Initiative of the Year: Edirisinghe Pubudu Wasawa Wimalaratne (Co-operative Insurance Co/Sri Lankan Insurance Institute) ● New Professional of the Year: Chloe Butterick-Roche (Aviva) ● New Professional of the Year: Laura Eccles (Ecclesiastical Insurance Group) ● Local Institute Council Member of the Year: Alexander Clegg (Kendal Insurance Institute) ● Unsung Hero of the Year: Erik Johnson (Insurance Institute London) ● Unsung Hero of the Year – Highly Commended: Tony Coxon (Retired)

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NEWS

@hollowaylwrites Really enjoyed interviewing our new @CIIGroup President, Nick Turner, for our latest episode of CII Radio. Listen here!

@ l o o pyl u n a_ h aye s After 6 years of studying & trying to gain my @CIIGroup Diploma, I received confirmation yesterday that I now have it after passing my final exam, insurance law, last Friday!

@MelissacCollett So proud to be a part of this, sharing medical data is such a vital issue for our profession @CIIGroup #CIIBuildingTrust #dataethics @SAMI4sight @MunichRe @ZurichLife

#CIIGroup Twitter

17,009 Followers and counting...

SOCIETY OF INSURANCE BROKING THE SOCIETY OF CLAIMS PROFESSIONALS

SIB ONE YEAR ON The Society of Insurance Broking (SIB) has celebrated its first anniversary since its launch in September 2018.

The dedicated professional body has gone from strength to strength in supporting the broking community through good practice guidance, thought leadership and a dedicated programme of continuing professional development.

SIB now has almost 15,000 members and Kevin Hancock, chair of SIB, said: “The first year has been a year of providing material and content to our membership, with the SIB giving our part of the profession a higher profile in the wider insurance community. We will continue to encourage our members to improve their knowledge and skills to lead to better customer outcomes and greater public trust in the broking profession.”

The SIB panel at BIBA 2019

Members receive a fortnightly e-newsletter with updates on new available content and events as well as a quarterly ezine with articles written from professionals across the broking sector.

SIB was also represented at the BIBA conference in May, hosting a fringe session panel debate discussing public trust in insurance broking.

For more information, visit: sib.org.uk

CHARTERED

CII SIMPLIFIES CHARTERED APPLICATION PROCESS The CII has made the application and renewal process for corporate Chartered status easier.

In May, the CII revealed it was relaunching its corporate Chartered proposition for the insurance and financial planning profession.

From July, anyone applying for, or wishing to renew, their corporate Chartered status will be able to do so using a new application form.

Unlike with the previous application and renewal process, the new form will

automatically calculate whether a business meets the criteria for staff.

For Chartered insurers and insurance brokers, it will automatically count if all of the board are members, and it will automatically calculate if 90% of customerfacing staff are members – a significant improvement on the previous manual process.

The new application form also asks whether the applicant is seeking Chartered

GOOD PRACTICE GUIDE FOR CUSTOMER DISPUTES In response to members’ requests, the Society of Claims Professionals (SOCP) has released a good practice guide for the management of customer disputes.

The guide, produced in collaboration with Flaxmans Insurance Agency, while not exhaustive, has identified seven points that define good practice for disputes handling.

These include: ● Always thanking the customer, within two or three days of receiving the complaint, for taking the trouble to bring it to the notice of the company ● Never requiring the employee responsible for the decision that causes the complaint to be responsible for dealing with it ● Considering the complaint from the viewpoint of the customer, not just from the viewpoint of an experienced insurance expert ● Treating the customer with respect and courtesy throughout the process and avoid using jargon.

To read the full report, visit: www.socp.org.uk/83579

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status for a division or the entire company.

There is also a new section about corporate social responsibility and what the business is doing to give back to the profession. This has been introduced in order to allow firms to demonstrate how they contribute to building public trust and promoting professional standards.

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NEWS

UNDERWRITING

CII REPORT TO IMPROVE UNDERWRITING FOR CONSUMERS The CII has produced a report examining how to shift the medical profession and insurers towards sharing electronic health records (EHRs) to improve access to insurance for consumers.

The report outlines what work needs to take place in order to build trust in EHRs, to avoid the insurance profession having to make underwriting decisions and decide claims based on paper reports from GPs.

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The report, which was produced in collaboration with SAMI Consulting, explains how digital medical records could speed up the underwriting and claims handling process. The report outlines four things that need to happen to allow medical professionals to share digital medical records.

To read the full report, visit: www.cii.co.uk/83586

Q U A L I F I CAT I O N S

ETHICS

CII AND UNIVERSITY LAUNCH POSTGRAD QUALIFICATION

ETHICS FOR THE DIGITAL AGE

The University of the West of England (UWE Bristol) and CII have launched a postgraduate MSC risk management and insurance qualification to be delivered from January 2020.

The course, which graduates can now sign up for via the UWE Bristol website, will see representatives from major insurers and brokers delivering guest lectures and allow workshadowing for graduates who sign up to the year-long programme.

Designed to prepare graduates for senior roles in the industry, the programme develops core skills in risk management and insurance practice, alongside a deep understanding of the contemporary business environment.

The course includes opportunities to visit companies such as Lloyd’s of London, work on consultancy projects

The CII has launched a new guide to digital ethical standards, setting out five core areas of responsibility for insurance professionals.

The code provides a framework of principles for professionals to use in ensuring client interests remain at the heart of technological progress.

This includes such issues as how to make ethical use of client data and analytics, helping practitioners to consider the wider ramifications of their digital initiatives, and guidance on how to navigate conflicts of interest.

The code also addresses the issue of the innate bias of digital technology and helps insurance professionals to consider the risk of discrimination.

The guide has been put together by the CII’s Digital Ethics Forum, including digital and policy experts from the Association of British Insurers, the British Insurance Brokers’ Association, Aviva, Worry & Peace and Capital Law. For more information, visit: cii.co.uk/code-of-ethics

and attend networking events.

According to UWE Bristol, as a result of interest from the profession there are now plans in place to offer a two-year, part-time version of the postgraduate qualification in the future.

Completion of the course will also significantly shorten the study path for the CII’s qualifications, including ACII. For more information, visit: courses.uwe.ac.uk/N32012/riskmanagement-and-insurance

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NEWS

I N T E R N AT I O N A L

CII INTERNATIONAL ENGAGEMENT WEEK

Keith Richards and Sainesh Dar

During August, the CII welcomed a selection of the Institute’s international directors to the Lombard Street offices, as part of the first ever International Engagement Week.

The visit was aimed at giving international colleagues a chance to see how the London offices operate first-hand, while learning more about operations, products and services, to aid them in promoting the CII and its qualification framework.

The visiting directors included: David Thompson, CII international director; Sainesh Dar, regional

corporate development director of SAARC; Gaenor Jones, regional director in the Middle East and Africa; and Kenny Sui, regional corporate development director in the AsiaPacific region.

During their time, the directors met with various teams, including qualifications, assessment and accreditation, to learn more about different CII initiatives, as well as taking a tour of Lloyd’s of London and experiencing demos of CII products, such as Assess.

Mr Dar also appeared as a guest on the CII Radio podcast series alongside Keith Richards, CII director of engagement, and hosted by editor of The Journal, Luke Holloway.

The trio discussed the regulatory landscape of the insurance profession, leveraging regulatory reform and the development of the CII in India and Bangladesh.

MEMBERSHIP

CII INVITES MEMBERS TO JOIN RESEARCH PANEL The CII is seeking insurance professionals to join its research panel. They will play an active role in helping shape the guiding principles for learning solutions and member services to better serve the changing needs of the profession.

Panel members will be consulted via quick surveys and

on occasion by participating in focus groups. Participants decide which surveys to respond to and can terminate their membership at any time.

They will be entered into a prize draw for every completed survey.

For more information, visit: www.cii.co.uk/researchpanel

LETTER

UNITED WE STAND I was very pleased to see that CII past president, Jonathan Clark, adopted development of a ‘united profession’ as his theme during his tenure.

Through the years, many insurance policies have become increasingly complex and shrouded in small print, as insurers vie to provide more cover than most policyholders require or need. Even the experts have problems interpreting them on occasion and I have encountered situations where claims handlers have been unable to interpret their own policies correctly.

As a result, the ‘word on the street’ is that many consumers think the industry is out to rip them off.

In the past, insurers were well represented by their branches throughout the country and policyholders had direct contact with people that they came to know, thereby generating goodwill and trust.

However, strategic exercises aimed at achieving economies and arguably improving efficiency resulted in the ‘hands-on’ relationship between insurers and their policyholders diminishing, which did nothing to enhance their image.

Initially, adjusters filled the vacuum but the introduction of small claims handling schemes, which questionably save costs, failed to consider that claims at all levels create stress, especially for the uninitiated and elderly people who are often nervous and overawed by the experience. Nothing replaces the friendly face and the need to demonstrate a caring relationship.

The principle of ‘utmost good faith’ is not confined to the actions of policyholders; it equally applies to all insurers and provides an industry benchmark.

The industry needs to remember this: criticisms of individual insurers’ practices and attitudes impact on the industry as a whole.

In my view, the CII provides the essential ingredients for integrity in insurance, by setting standards and responding to the overall needs of the industry. The independence of the CII – and its qualifications – demonstrates that its members have taken the time to learn their trade and are capable of impartial judgement.

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Neil Kelly FCII, FCILA

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I N T E R N AT I O N A L N E W S

DIVE IN 2019

UNLOCKING YOUR TALENT The Dive In Festival, which promotes diversity and inclusion in the global insurance sector, marks a milestone as it reaches its fifth year, with a record number of countries expected to host events. Events will be spread across three days from 24 to 26 September in 33 countries.

The Dive In Hong Kong event – Unlocking Your Talent: How to get the best from your current talent pool – will be held on 25 September at 14:00-18:30, at RPC Hong Kong.

The theme for this year is focused on unlocking talent and supporting professionals at all stages of their career. In a diversified society, coaching conversation will help in developing talents for both men and women to look at things from a different perspective, which leads to supporting colleagues at different stage of their career, from entry to senior level.

To sign up, visit: www.diveinfestival.com or download the new app, available on Android or iOS.

MENTORING EVENTS

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CIIHK SPONSORED UNIVERSITY MENTORSHIP EVENT

LUNCH & LEARN SUCCESS

The CII Hong Kong sponsored the Future Insurance Leaders Hong Kong mentoring event in June.

Students from the Hang Seng University of Hong Kong joined the event with their mentors, who shared knowledge on topics such as the insurance career path, CII learning and qualifications, as well as current insurance-related topics with the mentees.

The event continued with networking and afternoon bowling.

In June, the CII Hong Kong (CIIHK) hosted a Lunch & Learn event on the topic of anti-money laundering, supported by ComplianceAsia. More than 50 industry professionals joined the seminar.

In July, CIIHK hosted a separate Lunch & Learn event focusing on the insurance-linked securities market. The event was supported by Swiss Re and attracted another 50 financial planning professionals.

To find out more about future events, visit: cii-hk.com/about/networking-events

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I N T E R N AT I O N A L N E W S

CHARTERED INSURANCE INSTITUTE

NEW CII JOURNAL FOR THE ASIA-PACIFIC REGION Starting in July 2019, the CII launched The Asia-Pacific Journal.

The Asia-Pacific Journal magazine will be keeping all the main features and regular articles from the UK Journal, while adding more local-focused topics and content tailored to readers from Hong Kong and the Asia-Pacific region, as well as a regular update from CIIHK director, Kenny Sui, on market trends and CII initiatives happening across the Asia-Pacific area.

Kenny Sui, Director

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CII SUPPORTS ASIA TRUST AWARDS CII Hong Kong (CIIHK) has supported the fourth Asia Trusted Life Agents & Advisers Awards 2019, as part of the Asia Insurance Review.

The awards gala dinner event was held at Bangkok in July, with more than 400 entries from some 50 companies and 15 markets.

Categories included Insurance Agent of the Year, Financial Adviser of the Year and InsurTech of the Year, with CII corporate development manager in Asia, Alpha Ho, part of the esteemed judging panel.

The CII continues to recognise outstanding professionals who have made great contributions and supported talent development for the industry.

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REGIONAL NEWS

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SEPTEMBER

OVERVIEW AND OUTLOOK FOR THE UK ECONOMY → 8:00 am – 10:30 pm The Insurance Institute of Bournemouth wwww.cii.co.uk/bournemouth

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SEPTEMBER

TAX AND TRUSTS WORKSHOP → 8:00 am – 12:00 pm The Insurance Institute of Sheffield www.cii.co.uk/sheffield

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SEPTEMBER

CREATING AND RETAINING CUSTOMER LOYALTY → 12:00 pm – 1:30 pm The Insurance Institute of Liverpool www.cii.co.uk/liverpool

IPSWICH

MORE THAN £6,000 RAISED FOR SUFFOLK MIND Left to right: Sarah Deacon, Ginny Idehen, Jon Neal, Richard Brame, Lizzie Tuthill and Jess Addison

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During 2018/2019, the Ipswich Institute partnered with Suffolk Mind to raise funds for and promote the charity’s good work. With great support from members, the Institute raised more than £6,000 through various collections, a quiz night and raffle, games and a silent auction at the annual dinner. Further funds were raised by taking part in Red January.

Ipswich past president Richard Brame commented: “All of us have mental health, just as we have physical health. We are all on the mental health continuum and we move up and down it depending on how we cope with the challenges of life and

the stresses it creates. One in four people will experience a mental health problem each year and Suffolk Mind’s ultimate aim is to make Suffolk the best place in the world for talking about and taking care of mental health. “[Ipswich president] Sarah Deacon and I took part in Red January – running every day through January 2019 while raising money for Suffolk Mind through sponsorship. I think that we all learned more about mental health, while raising significant funds for a really important and relevant local charity.” → For more info on the Ipswich Institute, visit: www.cii.co.uk/ipswich

NORTHEAST

NE SEMINAR ON REAL LIFE DISASTER The annual North East Insurance Institutes Seminar takes place on Tuesday 24 September and is based on a real-life case study scenario, such as a fire at a leading North East manufacturer, with experts from the profession examining the impact and outcomes from a general insurance and financial services perspective.

The event takes place at Wetherby Racecourse and is organised by the insurance institutes of Bradford, Halifax, Hull, Leeds, Middlesbrough, Newcastle-upon-Tyne, Sheffield and York.

Topics covered include Health and Safety Executive investigation and implications; business interruption and recovery; key man protection; and legal, civil and criminal liabilities. Speakers include Emma Bowen of DAC Beachcroft, Andy King of Sedgwick International UK Forensic Advisory Services, Robert Betts of Legal & General and Graham Bartlett of Trinity Barristers.

The day runs from 10.30am to 3.00pm, with four hours’ continuing professional development available and tickets

costing £20 per delegate. Places are filling fast, so if you want to be a part of this fascinating seminar, visit: localinstitutes.cii.co.uk/york now to book your place.

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REGIONAL NEWS

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SEPTEMBER

FLOOD IMPLICATIONS AND RISK MANAGEMENT PROCEDURES → 12:30 pm – 2:00 pm The Birmingham Insurance Institute www.cii.co.uk/birmingham

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SEPTEMBER

MENTAL HEALTH AWARENESS → 12:30 pm – 1:30 pm The Insurance Institute of Cheltenham and Gloucester www.cii.co.uk/cheltenham

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SEPTEMBER

DRIVERLESS CARS → 8:30 am – 10:00 pm The Insurance Institute of Bristol www.cii.co.uk/bristol

LIVERPOOL

LIVERPOOL INSTITUTE SUPPORTS LOCAL SCHOOLS

A record number of 80 students from high schools and sixth-form colleges in the Merseyside area attended the annual Liverpool Insurance Institute (LII) careers day on 4 July.

Given the Institute’s limited resources to be able to go into individual schools to discuss the insurance and financial sectors, this is the LII’s way of being able to target as many schools as possible, promoting the many benefits of a career in the sector. Judging by the attendance and feedback, the event appears to be as popular as ever.

After an introduction from LII president Emma Lynch about why insurance and financial matters are relevant to students, both now and in the future, the morning was taken up by the attendees participating in the CII’s Discover Risk and Discover Fortunes exercises.

A healthy level of debate was generated around the tables, as students had to decide how money should be invested in various scenarios and assess the likelihood and impact of risks occurring in various situations, from film production to the music industry. Even those initially reticent were, as the exercises developed, keen to reason with their colleagues as to why their assessment was more likely to be correct.

To round off the day, a number of volunteers from the insurance, financial and legal sectors spent time sitting with the students around the tables, answering their questions on a one-toone basis – including everything from ‘What do you earn?’, to ‘What are the best and worst things about your job?’ – something that those attending really benefited from. → For more information, visit: www.cii.co.uk/liverpool

Glasgow Institute @IASGCII The #IASG and YPs are presenting a new morning course on understanding #flood risks.

Suitable for #brokers, #underwriters and #claim handlers #Learn #develop #CII #Glasgow 13

CII Bristol @CIIBristol Good morning Bristol!

Your CII local council members are hard at work this morning discussing the year’s progress so far #insurancecareers #CII

CHARITY

HAVE YOU BEEN BISSELLED? If you have never met Brian Bissell, then you are in for a treat. The past president of the Royal Tunbridge Wells Institute, known for his boundless energy and enthusiasm, recently abseiled down the 150-metre tall Barclays HQ in Canary Wharf.

Mr Bissell hit the heights on 5 July in aid of The Lord Mayor’s Appeal, which is supporting three inspirational charities – Place2Be, OnSide Youth

Zones and Samaritans – to deliver groundbreaking programmes and solutions to some of London’s most pressing societal issues.

Join us in congratulating Mr Bissell by supporting his Just Giving page at: www.justgiving.com/ fundraising/brian-bissell

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THE INTERVIEW: NICK TURNER

NICK

TURNER

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Current role

Past position

Career success

Nick is sales & agency director at NFU Mutual, responsible for developing life and general insurance business. He also sits on the NFU Mutual board.

He joined NFU Mutual in 2013 from Axa, where he was managing director of intermediary & partnerships in personal lines.

Nick’s career in insurance and financial services stretches back more than 33 years, largely in the field of life and wealth management.

eing part of NFU Mutual, which has developed from its farming roots into a broadbased insurer, Nick Turner is used to growing business around the rural parts of the UK. But in his new role as CII president, what Mr Turner is most interested in cultivating is trust.

“The theme for my presidency is trust and I feel there are four constituent parts to trust – benevolence, integrity, competence and predictability.

“It really would be fantastic during my tenure to encourage people to always be thinking about how they can make a small contribution around each of those four aspects, helping consumers trust us more as a profession so they feel safer and better protected.”

Mr Turner has a strong history with the Institute, having served as president of the Personal Finance Society (PFS) in 2016 after six years on the PFS board.

“My career has been a combination of general insurance and financial services, and I have been incredibly lucky to have had the opportunity to work in both vibrant sectors,” he says.

“After my PFS presidency, I felt there was so much more I had to give.

During my time there, I was asked to sit on the CII board as an observer and looking on, I couldn’t help but want to get more involved.

“CII and PFS members have two very distinct roles within our industry as a whole, doing quite different things but both helping consumers achieve their life goals and aspirations. Having worked on both the insurance and financial services sides of our profession, the thing that

is so important is trust. Whatever we do, however we operate, ensuring that we can be trusted and we are worthy of the consumers’ trust is key.”

VIBRANT PROFESSION Since beginning in insurance in 1985 at Sun Life – later to become Axa – Mr Turner is still amazed by the skill, creativity and talent of the people working right across the sector.

“Every single day I come across people who impress me with their knowledge, diligence and expertise,” he says. “It is such a vibrant profession; you come across so many smart and capable individuals. It is a pleasure to work with these people and get to hear their slant on how we can work better.

“Whether you are in broking, manufacturing, legal, claims or independent financial advice, there is so much fantastic complexity, all constructed for the benefit of customers so they can control their risk and live their lives.

“Whether that is living to a grand old age without running out of money or making sure that nothing costs you your livelihood, we all play our own expert part in making that a reality.”

New talent is something else Mr Turner says is essential to the industry. His theme as PFS president was apprenticeships and, while young blood coming into the profession is a huge part of that, he feels bringing people in at all ages is important, as is creating and promoting modern and relevant career paths.

“The role of the CII is to do two things – highlight opportunities, especially where there is support and help from government or community, but also to create learning paths so when people enter the industry fresh, they can follow a path through to competence.

“We have to continually work on embracing new learning styles and lead the way with how people learn today.

“We have probably had a difficult job in the past of helping people fully understand the potential that either side of our profession has to change people’s lives. My hope is that people can truly see what a positive difference this industry makes and how much the people that work within it get out of the joy of insurance.”

OFFERING GUIDANCE Despite the uncertainty the UK currently faces around Brexit, Mr Turner is confident the insurance industry will deal with whatever outcome occurs. He does, however, believe the absence of clarity is an anxiety for many customers.

“As a profession we need to make sure that when change occurs, our cover and financial plans are as close as possible to the revised needs of our customers as and when they become clear.

“There will be opportunities for the insurance profession as a whole, but also risk. If our strategy is not at the very cutting edge of developments, we may see our customers getting outcomes they didn’t expect.”

Which brings us back to Mr Turner’s core message around trust – being there for customers in times of uncertainty to offer guidance and make sure what matters to them most is protected.

“Our profession is changing and there are new challenges we will have to face together. But most importantly, we need to work hard to build and maintain the trust that consumers place in us and help them feel reassured that their trust is well founded.” ● Luke Holloway is editor at the CII

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THE INTERVIEW: NICK TURNER

THE PILLARS OF TRUST New CII president Nick Turner tells Luke Holloway why trust is the ultimate goal that all in the insurance sector should be striving for

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MY HOPE IS THAT PEOPLE CAN TRULY SEE WHAT A POSITIVE DIFFERENCE THIS INDUSTRY MAKES AND HOW MUCH THE PEOPLE THAT WORK WITHIN IT GET OUT OF THE JOY OF INSURANCE

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NETWORK CONFERENCE 2019

‘E

ngagement in Action’ was the theme of this year’s CII Network Conference, which took place in York in June.

Representatives of 54 local institutes were in attendance, along with the newly elected Local Institute National Forum officers, ensuring that each region of the local institute network was once again strongly represented.

The conference featured the CII Annual General Meeting for the very first time, as well as the inaugural CII Awards, offering delegates a refreshed agenda to include interaction with senior figures from the CII, as well as their peers from fellow local institutes.

In line with previous years, the conference was designed based on feedback from past delegates, with fewer ‘formal’ presentations and more time dedicated to interactive breakout sessions. This gave more time to allow delegates to share best practice and offer their views on some key CII initiatives.

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DEVELOPING YOUR LOCAL MEMBERSHIP PROPOSITION Delegates split off into groups throughout the day to discuss a number of projects and initiatives to improve the local membership proposition.

The main themes were: ● Professional Focus Conferences – 16 centrally run conferences parachuted into the regions to give members the opportunity to gain more than six hours of continuing professional development (CPD) in one sitting. ● Societies – looking at how targeted CPD is changing the way members access CPD content that is relevant and fit for purpose. ● Educational outreach – developing relationships with both schools and universities to ensure there is a talent pipeline to further develop the profession. ● CII Awards – ensuring that the CII is acknowledging the success of its members across the UK.

KEY TAKEAWAYS During the breakout sessions, members who attended the Professional Focus conferences agreed that overall they were excellent, providing a full agenda of diverse content and a great opportunity to network and meet people from other areas of the insurance profession.

The education outreach discussions highlighted the many success stories around education outreach, with institutes sharing feedback on attending school careers events; helping with CV workshops; giving life skills and financial planning presentations; and taking the CII Discover Risk board games into classrooms through the Education Champions initiative.

As the societies continue to launch throughout 2019, breakout feedback from the early stages of the Society of Insurance Broking and Society of Claims Professionals was invaluable to the institute, with discussion around how to further improve

THE BEST CONFERENCE YET. ALL COMMENTS I HAD THIS YEAR WERE MORE ABOUT TWEAKS RATHER THAN OVERHAULS. WE ARE GOING IN THE RIGHT DIRECTION! communications between the societies and local institutes.

Finally, the CII Awards breakout sessions saw a mix of viewpoints in response to the refreshed format of the awards. While almost all agreed they continue to be a great way to recognise professional commitment and reward outstanding individuals, some would have liked to see some of the old categories still in the list. Further categories – such as to commend educational outreach, digital innovation and employee engagement – were also suggested.

ACTION STATIONS The final sessions of the day were focused on ‘Local Institutes in Action’, with each institute presenting a brief update on an initiative, event, activity or other success they have achieved in the past year.

There were many excellent presentations and representatives were full of motivational ideas on how to engage with members, host events, promote best practice and provide CPD. The regional news pages of The Journal (p12-13) are always a great way to see what institutes around the UK are up to. ●

I HAVEN’T BEEN TO ONE BEFORE AND IT FELT LIKE BEING PART OF A FAMILY. EVERYONE GIVES THEIR TIME SO GENEROUSLY AND IT SHOWED HOW STRONG THE FOUNDATIONS ARE

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NETWORK CONFERENCE 2019

INSTITUTIONAL SUCCESS

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This year’s Network Conference once again proved the strength of the local institutes, as explained here in The Journal…

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HOT TOPIC: CANCELLED COVER

T

he number of UK businesses cancelling their insurance coverage due to issues with affordability has risen steeply recently, highlighting an alarming trend for the insurance industry.

Recent research showed that a third of UK businesses have cancelled one or more insurance policies during the past three years, because they could no longer afford them. It is a problem that is worsening as almost half of these cancellations occurred in the past 12 months.

Businesses have cancelled coverage across a range of lines including buildings insurance, directors’ and officers’ liability, product liability and business interruption. Perhaps more concerning is that the list also includes compulsory coverages like employers’ liability and motor.

“It is shocking to see so many UK businesses missing out on vital, sometimes legally necessary, cover due to cost or concerns over payments,” says Adam Morghem, strategy and marketing director at Premium Credit, which commissioned the research.

“Our research shows a rise in businesses cancelling cover as a result of rising premiums and a drop in business income. With rises

WORSE TO COME This is an issue that looks set to worsen in future, as the research shows that many more businesses are considering cancelling one or more of these lines of insurance cover during the next 12 months.

“Worst-case scenario, you are risking your livelihood and the livelihood of your business by cutting back your insurances, or cutting out your insurances, particularly covers like employers’ liability and motor, which are compulsory anyway so

33.3% UK BUSINESS HAVE CANCELLED ONE OR MORE INSURANCE POLICIES IN THE LAST 3 YEARS

GETTY

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in insurance premiums affecting a multitude of businesses across different sectors, we don’t think it’s a massive surprise that large numbers are cancelling cover.

“What is surprising though, and increasingly concerning, is that businesses are cancelling cover that they are legally required to have. If a business continues to operate without the vital insurance, they may be liable for fines and even legal action. It is a legal requirement for businesses to have employer’s liability insurance, for instance.”

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HOT TOPIC: CANCELLED COVER

you could be breaking the law,” says Malcolm Tarling, chief media relations officer at the Association of British Insurers.

“For SMEs, they are putting the very existence of their business at risk,” adds Mr Tarling. “Business owners need to ask themselves: ‘Would I survive if there was a major unexpected and unwanted event like a fire or a flood?’ The answer for me is almost certainly: ‘Nope.’”

According to the British Insurance Brokers’ Association (BIBA), one of the primary consequences of cutting back or cancelling insurance is that it leads to underinsurance.

This may be brought about by either the deliberate intention of the client to pay the lowest premium, or the prerogative of insistent clients to buy insufficient cover and ‘take the risk’.

“The broker’s role,

when they encounter a client that they suspect is underinsured, or will likely to become underinsured, is to point this out and perhaps recommend that the client reconsiders the sum insured, limit of indemnity or indemnity period,” says BIBA. “Some clients may be reluctant to do this, despite their broker’s advice, simply because they prefer not to increase their premium.

“If a broker knows or believes the client to be under-declaring values at risk (or other material facts) the broker is at risk of being in breach of its duty of care, its fiduciary duty and its contractual obligations if it withholds that from the insurer.”

Under the UK Insurance Act, the broker’s knowledge is treated as the client’s knowledge and supplying information that the broker knows may be inaccurate would almost certainly be seen as a deliberate and reckless breach of the duty of fair presentation, and the insurer will be entitled to void the policy.

BROKERS’ ROLE Clearly, insurance brokers have a prominent and vital role to play in ensuring clients understand both the risks they face and the value that the appropriate insurance cover can provide in mitigating those risks.

Anthony Gruppo, CEO at broker Jelf, says: “Ensuring a thorough understanding of our clients’ business strategy, future direction and risk appetite is imperative when it comes to the provision of comprehensive policies that seek to protect them.

“This requires us to educate the client on the real and tangible value of insurance and risk management, and the consequences of not having these. It also involves advising on the immediate issues and exposures that may adversely affect the business, as well as those that may surface down the line.”

Of course, insurers too must play their part in making sure the cover and products they provide are →

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HOT TOPIC

WITHDRAWAL SYMPTOMS Tim Evershed asks: How should the industry respond to the recent spike in cancelled cover?

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HHOOT TT TOOP PI CI C: :CSAUNSCTEALILNEADB CI LOI VT EY R

EMPLOYER CANCELLATIONS Type of cover

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Percentage of managers/executives who believe their employer has cancelled this type of insurance during the past three years because they could no longer afford it

Employer’s liability cover

16%

Directors’ and officers’ cover

14%

Product liability

14%

Buildings insurance

13%

Vehicle insurance

12%

Business interruption

11%

relevant, focusing on better customer service and educating insureds about the value and benefits that insurance can bring beyond the vital service of paying claims.

“It is important that insurers provide value for money, that they constantly improve customer service so that it is meeting the demands of customers, and also look at ways of promoting insurance as a competitively-priced product,” says Mr Tarling.

“People should be aware of how they can buy insurance, be aware of the right insurance for them and be aware of ways that they can reduce the cost of a product, which may be important but most people buy hoping they never have to use. It is never going to be seen as an attractive product, but it can be the difference for a business between survival and bankruptcy.”

It is key that the insurance industry is able to educate its clients on the risks they face, both traditional and emerging, and that it reinforces its own role in providing a valuable

service in times of need.

Mr Tarling adds: “If you look at things like terrorism, flood risk and fire, events like these can happen at any time. So, the right insurance at the right price is essential as well.

“Something like cyber insurance is becoming increasingly important.

Small firms could literally be hacked out of business by cybercriminals.

Every business is at risk but insurers can provide a risk management service and they can provide help and guidance to reduce risks. It is not just about paying out if the worst happens, which is obviously the primary function, it is also about taking steps to reduce the risk of something happening in the first place.

“The industry is constantly looking at providing products that

are more tailored to people’s needs, because people’s needs change rapidly. Also, providing the best possible service at the time when the product is needed the most is important.”

COMPETITIVE PRICING However, it is only natural that business enterprises will focus on the price of the products they purchase.

And as the reasons that businesses give for cancelling cover are primarily financial, it is also incumbent on the insurance industry to find ways to keep premiums as competitive as possible.

“It is also [about] helping people and encouraging people with more help and guidance to shop around.

Insurance is very competitively priced in all sectors but we do need to look at ways of helping people get the most from the market,” says Mr Tarling.

Jelf’s Mr Gruppo adds: “We’re able to leverage our scale and expertise to benefit our clients in terms of product offering and fully tailored solutions.

Working with third parties such as premium finance agencies also helps our clients spread the costs of their insurance, so that they remain protected without compromise.” ●

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LET’S GET DIGITAL The CII are improving your digital options for The Journal You can now choose to receive an ‘Email’ version rather than a printed copy of the magazine, which will be sent to you with quick-links to The Journal online site. Here, you can read all your favourite features, news and interviews, as well as download a full digital PDF.

Manage your subscriptions today at cii.co.uk/preferences

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22/08/2019 11:02

R E G U L ATO RY R A D A R

BREXIT

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FFCA CA AND PRICING POLICY

Speculation around Brexit continues to be The FCA published a feedback statement in July rife, with the likelihood of a constitutional that set out its strategic approach to tackling pricing showdown between the government and issues. This high-level approach will dictate how parliament in October increasing. The Financial the FCA sets about insurance-specific issues such Conduct Authority’s (FCA) guidance for UK as renewal pricing and the fair treatment of insurers stresses that a disorderly Brexit existing customers. should not be used as a reason for not paying One key issue was whether pricing should be claims (around travel delays, for example), viewed from a purely economic perspective, solely “where it would be unreasonable to do so in in terms of creating efficient markets, or if the the circumstances, including how clear the FCA should take wider concerns from society as a relevant provision was to customers”. whole into consideration. The FCA concluded that is It goes on to say: should exercise “judgement using a transparent and “You should be objective framework”. aware that However, it went on to say: “We do think that consumer society’s view of the pricing practice is important not rights only because we regulate in the public interest, but legislation also because if consumers believe particular pricing makes practices are unfair, then there could be damaging clear that effects on trust in markets and institutions.” where there is ambiguity in a The CII takes a look at what’s consumer contract, it will be given a meaning favourable to new on the policy and public FCA GUIDANCE ON VULNERABLE CUSTOMERS the consumer.” affairs front this month In July, the FCA published guidance on the treatment TREASURY SELECT of vulnerable customers. It COMMITTEE – said: “Most firms want to FCA PERIMETER do the right thing and have OF REGULATION made significant progress The Treasury Select in how they treat vulnerable Committee has published consumers. There is still a report on the regulatory room for improvement perimeter, saying it and for a greater degree of is “confusing for consumers of financial consistency across financial services sectors.” services, wh whether they be individuals or small One key area for action was in the training of business businesses”.

It adds: “In fact, that lack of client-facing staff, to recognise different forms und understanding may well be preyed on. of vulnerability, to communicate properly and S to “exercise extra skill, care and diligence” Some firms may also deliberately g when serving vulnerable clients. The FCA game the perimeter to undertake regu gu made it clear that regulatory arbitrage.”

Th has implications for all sectors understanding This vulnerability is a of financial services that are on key element of the borders of FCA regulation. For exa compliance, with example, it covers unregulated invest its Training and investments and warranties that are not classed as insurance. The FCA plans to Competence respon to these concerns by updating its Sourcebook. respond guid da guidance on the perimeter, publishing a an annual report, through ongoing sup supervision and enforcement action, an by working with agencies, and co consumer groups and the industry to im improve consumers’ understanding pro protections that are available.

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WHAT’S ON THE RADAR?

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R E G U L AT I O N

REGULATOR STRESS TESTS INSURERS

T

he UK Prudential Regulation Authority (PRA) has launched its biennial insurance stress test.

The watchdog is asking the largest regulated life and general insurers to provide information about the impact of a range of stress tests on their business.

According to the regulator, the results of these stress tests will be used to inform the PRA’s view of sector risks and assist the watchdog in the supervision of individual firms.

The regulator insisted it is “not a pass/fail exercise and it is not designed to set capital buffers”.

The stress test includes an exploratory exercise in relation to cyber underwriting and climate change.

The set of climate scenarios explores the impacts to firms' liabilities and investments stemming from physical and transition risks.

The stress test also requires insurers to calculate what will happen to their business if there is a downward shift in risk-free interest rates of 100 basis points; a widening in corporate bond spreads dependent on their current credit rating (for example, 150 basis points for AAA-rated assets; or a simultaneous mass downgrade of credit assets plus a fall in other asset values including equities down 30%, commercial property down 40% and residential property down 30%).

Insurers have to reveal the outcome of certain stress tests by 30 September

As the PRA launches its biennial insurance stress test, Emma Ann Hughes looks at what the industry can expect…

2019, with the deadline for other tests set at 31 October 2019.

SCENARIO TESTING Martin Shaw, chief executive of the Association of Financial Mutuals, said: “As an insurer, the one certainty you have about your business plan is that no matter how well crafted the plan

and how carefully honed your budget, the outcome will never be the same as that predicted.

“As the second-best known quote

by Donald Rumsfeld goes: ‘Stuff happens.’ The board of an insurance company therefore doesn’t rely on a single view of the future but develops a range of scenarios to better understand how its business might perform in different market conditions.

“Regulatory stress tests are part of that process and enable the regulators to see the bigger picture. We think they are a vital part of ensuring markets function effectively and the new elements this year in the Bank of England stress tests, on the effects of climate change and on cyber underwriting, reflect some of the most significant sources of uncertainty for many insurers today.

“We hope the Bank of England publishes results from the stress tests that will provide the PRA and all insurers with a common understanding of the risks to factor in for the future. That said, we don’t expect insurers to have to betray competitive advantage through this kind of exercise.”

The PRA has confirmed it will publish a summary of the overall results and findings in the first quarter of 2020, but no individual firm results will be made public. ●

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Emma Ann Hughes is communications director of the CII

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TRUST

PUBLIC PROPERTY Now in its second year, the CII’s Trust Index aims to uncover what the public crucial views as important in building trust in the insurance sector.

Matthew Connell assesses the findings…

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L

ast year, the CII launched the Trust Index, the first in-depth look at what drives trust in insurance in terms that are chosen by the public, rather than insurance experts.

This year, working with the Customer Services Institute, we have refreshed the Trust Index, as part of an ongoing process of tracking movements in trust to see where the profession is headed.

We have also developed a trust tool, allowing members to drill down into factors that are shaping consumer trust, to get a detailed picture of what the public is thinking about insurance and how trust can be improved.

The research underpinning both the index and the trust tool was built from consumer insights gleaned through interviews, process-mapping and video diaries. It found that trust in insurance is made up of nine key ideas about ‘what good looks like’ – both in terms of competent service and ethical standards.

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TRUST

High

OVERALL CONSUMER THEMES Over served

Ease

Performance

Speed (claims) Respect (claims)

Confidence

Maintain Protection Control (claims) Price Loyalty

Relationship

Low

Improve Urgent Action Low

Importance

High

The size of each theme bubble denotes the relative opportunity score in each case.

The bigger the bubble the greater the opportunity to deliver improved service.

The way in which insurers were performing against these indicators was then tested through a survey of 1,000 consumers and 1,000 small businesses to see how important each of these nine building blocks were to the UK public; and how insurers were performing against them.

The 2019 edition of the Trust Index showed that in the motor, travel and home insurance markets, consumers’ experiences of making a claim are significantly more in line with their expectations than they were a year ago.

However, the area that shows the biggest gap between expectations and performance is still the way in which insurers reward customer loyalty (see chart above).

9.1

issue of the ‘loyalty penalty’ and are looking at possible solutions, from greater transparency to the imposition of price caps.

Whatever solution is chosen, the Trust Index will track how well consumers think insurers are performing. So, the index will be the first to show whether these measures are working, or if more effort is needed.

POINTS GAP BETWEEN CONSUMER ATTITUDES EXPECTATION AND comparing the weight PERFORMANCE FOR By given to different answers REWARDING CUSTOMER in the Trust Index, we can a detailed picture LOYALTY, UP FROM 7.64 build of consumer attitudes to

ALICE MOLLON / IKON IMAGES

CONSUMER VOICE The index also brings the voice of the public into debates around good practice and regulation. For example, in the last year the Financial Conduct Authority and the Competition and Markets Authority raised the

complex issues. For example, take the debate around how much data insurers should hold about their clients. Some see the potential for insurers to hold large amounts of data as a threat to trust. Others see better data as a route to better service, increasing consumer trust.

Using the Trust Index tool, it is clear that the truth is more subtle than these polarised views. It is certainly true that consumers do not want their insurer to be in the dark about their needs. Of the

49 statements tested in the survey, the 11th biggest gap between expectation and delivery was ‘My insurer assessed my risk individually, rather than using generic assumptions’. However, it is also clear that consumers are less interested in sharing information that is not relevant to the risk being covered.

There was a much smaller gap between expectation and delivery when it came to the statement, ‘My insurer knows me and what is important to me’. This statement only had the 37th highest rating out of 49.

The message is that people want insurers to have as much data as they need to assess risk, but they are not interested in having an overfamiliar relationship with their insurer. It is a bit like the relationship we might have with a waiter at a restaurant – we want them to be attentive to all the things that we may want as we have our meal, and we may chat with them along the way, but we don’t want them to sit down and join us when we eat.

In this way, we can build up a more subtle view of data than the polarised views of ‘insurers should have as much data as they like’ or ‘insurers should have no access to data’. It is a view that says insurers should know more about their clients than they do at present when it comes to doing their core job, but exercise restraint in the way they use the data. It highlights the importance of concepts in data protection regulations that are often neglected – such as using data in the public interest and making sure that data use fits the performance of a contract in a reasonable way.

Now in its second year, the CII Trust Index continues to help the CII with our work – measuring overall levels of trust; keeping both the profession and its regulators honest about what works and what doesn’t when it comes to important conduct issues; and providing insights into consumers’ priorities around crucial emerging issues such as the use of personal data.

To read the full report, visit: cii.co.uk/83450 ●

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Dr Matthew Connell is director of policy and public affairs at the CII

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FRAUD

E

very year, insurance fraud is said to cost about £1bn in detected crimes and a further £2bn in those that go undetected. And one of the problems for the industry is the way in which criminals move with ease from one scam to another, leaving the sector lagging behind.

Keith McGill, head of identity and fraud at Equifax, is just one voice warning of the growing agility of fraudsters: “The latest Cifas figures show worrying trends as identity fraud rose by 10% in 2018, with those aged under 21 and over 60 being increasingly targeted by fraudsters.

There was also a 26% rise in cases of ‘money mule’ fraud, highlighting the agile nature of fraud and its constantly shifting battleground.

“An overall increase in identify fraud reinforces that this must remain a top priority for businesses. With more than 50% of account creations now coming from a desktop or mobile, understandably organisations are prioritising smooth payment journeys, but this shouldn’t come at the expense of robust controls to protect consumers.”

The Cifas Fraudscape Report for 2019 shows the number of insurance fraud

WINNING AGAINST THE

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FRAUDSTERS Fraud is said to cost the UK insurance industry some £3bn in total but the industry is fighting back, with new sector-wide initiatives combining with individual efforts to combat the criminals

FRAUDSCAPE REPORT Key findings in this year’s Fraudscape Report include: members recorded almost 324,000 cases in 2017 – a 6% increase compared with 2017. ● There was a steep rise in money mule activity, with a 26% increase on 2017. ● Identity fraud continues to rise in 2018, by 8%; those aged 21 or under and over 60 experienced the greatest rises.

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● Fraudulent conduct rose as Cifas

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FRAUD

cases reported to the National Fraud Database actually decreased by 14% in the past year, with a reduction in application fraud cases cited as the main reason.

Counterbalancing this, however, was the continued rise in identity fraud. Identity fraud against the insurance sector has increased substantially in the last three years and in 2018 grew by a further 15%.

The report reveals: ● Cases continue to be perpetrated by ‘ghost brokers’, who use the identities of innocent victims of impersonation to obtain insurance policies for their ‘clients’; and by those who wish to ensure that a vehicle is insured for the lowest possible cost by using the details of someone who is considered low risk. ● The number of false insurance claims grew in 2018, with the biggest increase being people inflating otherwise genuine claims. The number of these cases increased 56% to account for 27% of the false claims identified. ● People attempting to claim for events that did not take place also rose, albeit by less. These cases climbed 18% and accounted for 24% of false claims. The number of staged events actually decreased in 2018, by 12%.

IN COURT

WHAT MORE CAN BE DONE? It seems insurers are working hard on this. The Association of British Insurers claims insurers invest at least £200m each year to identify fraud.

And in June, the Insurance Fraud Bureau (IFB) said a key milestone had been reached in developing an industry-wide counterfraud intelligence-sharing platform, with 11 market-leading insurers gaining access to the Insurance Fraud Intelligence Hub (IFiHUB).

This will see insurers sharing intelligence in real time to help catch out fraudsters. Ageas, Allianz, Axa, ERS, Markerstudy, Mulsanne Insurance, QBE, RSA, and 1st Central are among the first to start using the system.

Ben Fletcher, director of the IFB, explains: “IFiHUB has been built by the industry, for the industry – to deliver a powerful counterfraud tool. It was recognised that fraud intelligence had historically been shared inconsistently and therefore inefficiently. By developing a single platform for insurers to share intelligence in real time, IFiHUB is a real game changer for our sector.”

Companies are also continuing to develop individual initiatives. For example, a fraud response initiative set up by Pen Underwriting, in conjunction with law firm Mills & Reeve, has helped recover £3.7m of

Public transport operator First Bus, working with law firm Horwich Farrelly, has successfully secured the conviction of a fraudster who claimed to have been severely injured when a bus collided with his car, despite not actually being in the vehicle at the time. Following a thorough investigation and committal proceedings, Zafar Iqbal was sentenced to six months imprisonment.

The initial claim was made in 2015, after a First Bus vehicle collided with Mr Iqbal’s stationary parked car, causing minor damage. Mr Iqbal claimed he was sitting in the vehicle at the time and, despite it only being a small collision, suffered severe pain to his shoulder, leg, back, ankle, upper leg and right side of chest.

Investigations found that Mr Iqbal was not seriously injured in the collision – in fact he wasn’t even in his vehicle at the time of the incident. CCTV footage showed him standing outside of his car and running after the bus, following the incident.

£6.7m lost to cyber conveyancing fraud since 2017.

Email modification fraud accounted for 80% of cybercrime incidents reported to the Solicitors Regulation Authority in the second quarter of 2018. However, of the 14 cases reported to Pen Underwriting to date, 55% of the lost money has been recovered. In three of the 14 cases the full amount was contained and recovered. In one instance, £1.13m was stolen in a cyberattack, of which £1.10m was recovered (98%) through the fraud response initiative. ●

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PAY M E N T P R OT E CT I O N I N S U R A N C E

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TIME TO FACE UP The PPI misselling scandal has been a costly episode for the ďŹ nancial services sector, both ďŹ nancially and reputationally.

With the end now in sight, Sam Barrett asks: what has the industry learnt?

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22/08/2019 11:06

PAY M E N T P R OT E CT I O N I N S U R A N C E

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ith the deadline passed on 29 August for UK consumers to make a complaint about a payment protection insurance (PPI) policy, it is time for the financial services and insurance industry to consider what it has learnt.

While changes to the regulatory landscape mean the chances of a repeat are slim, there is certainly no room for complacency.

Addressing PPI misselling has been a costly episode. The Financial Conduct Authority (FCA) estimates that as many as 64 million policies were sold before 2010, with many of these missold and eligible for a return of the premium paid plus interest. As a result, at the end of May 2019, a total of £35.7bn had been paid to customers who complained about the way they were sold PPI, or where the provider earned a high level of commission and did not inform the customer.

With about £350m being paid out per month, and a further seven to eight months of payments due, Brian Brown, head of insight (banking and general insurance) at Defaqto, says the final bill will be about £40bn – a significant increase from the early estimates of £4bn to £5bn when the then regulator, the Financial Services Authority (FSA), first started looking at the problem.

It is not just the financial costs that have hit the industry. Dan Preddy, partner at DAC Beachcroft, says that although the banks have been liable for most the financial costs, it is had implications for the broader industry.

“Consumer trust in financial services reduced as a result of PPI misselling,”

he explains. “It also made people much more aware that they can make a complaint and, if something isn’t right, they might even get compensation.”

LESSONS LEARNT Such a significant cost, both financially and reputationally, invariably leads to changes in behaviour. “Everyone’s trying to avoid another misselling scandal, so the industry is on a journey to become more customer-focused,” says Mohammad Khan, general insurance leader at PwC. “In the past it was the norm to cross-sell all sorts of additional products, but now these extras are only brought up if the customer asks for them.”

This makeover has included an overhaul of staff incentives.

Rather than a ‘sell more, earn more commission’ approach that helped to drive the bad sales practices surrounding PPI, staff are now being incentivised to do the right thing for customers.

These trends have also been driven by the regulator. Laith Khalaf, senior analyst at Hargreaves Lansdown, says financial regulation has changed significantly in the last decade, as a result of the PPI scandal but also the 2008 financial crisis. “There’s a much greater degree of regulator scrutiny now,” he explains. “It should always have been about the consumer but it’s much more explicit now.”

REGULATORY FORCE This shift in focus is driven in part by a change in the regulator’s remit. Mr Brown says that while just one of the FSA’s four corporate responsibilities was consumer protection, this is the FCA’s primary objective. “It’s a different beast, with a bigger stick,” he adds, pointing to the regulator’s much more interventionist approach.

“If it sees something it doesn’t like, it’s not scared to step in. It’s not going to wait for a super-complaint before it takes action.”

The FCA’s approach is strengthened by the Insurance Distribution Directive, which has a statutory objective to put the customer first, and the Senior Managers and Certification Regime, which encourages greater individual accountability.

Mr Brown also points to the ‘Dear CEO’ letter that the FCA sent out in April to outline its expectations of general insurance firms. This highlighted the fact that it had identified significant potential for harm and poor outcomes in the general insurance distribution chain; and set out its expectations of firms. “Insurers will need to consider the value that customers receive and have sufficient knowledge of the remuneration of everyone in the distribution chain,” he explains. “This is very different to the position with PPI, where responsibility lay with the distributor. This will drive cost out of product lines: it’s already attacked the add-on sale of guaranteed asset →

WHILE THE TOUGHER APPROACH BEING TAKEN BY THE REGULATOR AND THE OMBUDSMAN IS POSITIVE, NOT EVERYONE BELIEVES IT WILL BE SUFFICIENT TO PREVENT FURTHER MISSELLING ISSUES

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PAY M E N T P R OT E CT I O N I N S U R A N C E

protection insurance and I suspect other add-ons will come under greater scrutiny.”

Also helping to set the tone is the increase in the framework for the Financial Ombudsman. As well as increasing the maximum compensation from £150,000 to £350,000, it is also dealing with two new jurisdictions – small to medium-sized firms and financial providers; and claims management companies and their customers.

Mr Preddy says this will have repercussions for any organisation Source: FCA offering financial advice. “Firms can expect higher professional indemnity premiums as a result of the higher exposure,” he says. “It helps to reinforce expectations about how customers should be treated.”

Nick Baxter, partner at Baxters Business Consultants, says there are still far too many examples of bad practice. “You would have thought the PPI scandal would have been a big wake-up call to become completely customer-focused and get the right governance in place, but we’ve just seen the FCA fine Standard Life £30m for failing to put adequate controls in place around non-advised sales of annuities. How could this happen?”

Although disheartened by this, Mr Baxter does see some positives in the FCA’s response. “The 15,000 customers affected have received redress already,” he says. “The FCA has the tools to force redress programmes on people. This is an improvement from when the industry was dealing with PPI misselling.”

With the regulator issuing more and more rules and guidelines around how financial services and insurance firms operate, putting customers first can seem like an arduous task. But even though it may squeeze some profit out of a business model, it’s an approach that will win in the longer term, with customers valuing and trusting this professionalism. ●

£35.7bn

PAID TO CUSTOMERS WHO COMPLAINED ABOUT THE WAY THEY WERE SOLD PPI

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ROOM FOR IMPROVEMENT While the tougher approach being taken by the regulator and the Ombudsman is positive, not everyone believes it will be sufficient to prevent further misselling issues.

WHAT NEXT? Thanks to more consumer-focused regulation, another scandal on the scale of PPI misselling may be unlikely. But, with consumers more aware of their rights and an active claims management industry, further claims are inevitable.

Tracking claims management company activity gives an indication of what could potentially be next, says DAC Beachcroft partner Mr Preddy. “Pension transfers, SIPPs and interest-only mortgages are featuring heavily in their advertisements,” he explains. “The Ombudsman also reported an 86% increase in SIPP complaints in the 2018/2019 financial year.”

Also grabbing attention are stocks-and-shares ISAs, with claims management companies looking for consumers who were not made aware that the value of their investment might fall.

Although these areas need attention, the number of complaints remain small in comparison to PPI, which made up

46% of the 389,000 complaints the Financial Ombudsman dealt with in 2018/2019. Investments and pensions made up just 4%.

Liability insurers can also find themselves dealing with large volumes of claims and many will be watching this space closely after a Californian court ordered Monsanto to pay more than $2bn to a couple who developed cancer after using its weedkiller Roundup.

Occupational diseases can also cause huge spikes in claims.

But, while it would be wrong to rule out the possibility of this happening again, PwC general insurance leader Mr Khan says the workplace is a lot safer today. “Thanks to health and safety legislation, there’s much more protection for employees now: the risk of another asbestos is very remote,” he says. “Forty years ago, people were paid danger money; today that just doesn’t need to happen.”

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INSURTECH

TECHSPOTTING The CII’s Emma Ann Hughes talks to industry players about how to spot the insurtech giants of the future

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or today’s tech startup to become tomorrow’s tech giant, critical mass is key.

Take social media – for every Facebook, there are hundreds of rivals such as MySpace, BeBo and Friends Reunited that failed to reach the global penetration of Mark Zuckerberg’s multibillion-pound social media giant.

While the insurance profession is united in recognising that insurtech is set to transform the way policies are underwritten and how claims are paid, there is far less consensus on how to spot the startups that will rise to the top and those that will crash and burn.

Glynn Austen-Brown, global insurtech lead at PWC, says the insurance market offers some of the largest opportunities, with the potential for about £50bn of revenue to be created by insurtech.

A survey conducted by PWC found that more than 80% of insurance CEOs said artificial intelligence was already part of their business model or would be incorporated within three years.

Clearly, the opportunity for insurtech startups to become tech giants is huge.

Mr Austen-Brown says: “So-called insurtech firms are looking to capitalise on this by providing innovative plugand-play solutions to incumbents, therefore creating more tech-enabled and responsive solutions.”

SCALING UP Professional services firm PWC has created the Scale InsurTech programme, in a bid to spot insurtech startups with great potential and assist them with strategies to achieve critical mass.

PWC’s scale-up programme aims to deliver the tools, knowledge and networks to help these firms

scale successfully. As a result of this programme, eight businesses were identified by PWC in July as having great potential to scale within the insurance profession.

According to PWC, the insurtech firms to watch are: 1) Artesian Risk & Compliance Hub lets companies automate risk assessment to allow the automation of underwriting.

2) Artificial - helps insurers, brokers and MGAs with the distribution, pricing and negotiation of risk.

3) Atidot - a cloud-based platform giving life insurers data-driven insights to inform decision-making and develop new business strategies. The insurtech provider allows insurers to take control of existing data to improve understanding of customers’ behaviour.

4) Data-XL aims to help insurance companies manage their price variable through following the model of retail companies. It has developed two plugand-play solutions – price optimisation and supplier overcharge detection.

5) Innovative Applications produces AI software. It has developed machine-learning algorithms and built a protection platform consisting of three pillars specifically designed under the concept of human behaviour.

6) Phinsys - a platform of intelligent finance automation tools, to deliver systematic controls to optimise the financial close and reporting process.

7) The Reg Network addresses issues around legal and regulatory risk processes by automating the management of due diligence and compliance assessments.

8) Squirro - a self-learning AI platform keeping insurers in the know and recommending what is next. Readymade applications help deal with customer relationship management and more efficient underwriting.

Dr Andrew Johnston, global head of insurtech at Willis Re, says it is important to watch this part of the market, as the value created by some insurtechs in the years to come will be significant.

Dr Johnston’s view is one shared by Ben Nicholls, global leader of Willis Re’s alternative distribution operations.

Mr Nicholls says: “Only a few speciality insurers have begun to use technologically-sound systems extensively.

“The evolution is relatively slow, but we are now meeting a number of insurtech businesses that seem genuinely to have cracked it.” ●

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Emma Ann Hughes is communications director of the CII

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TA L K 2 T E N T H O U S A N D

#MakeEachMomentCount How you can help improve financial wellbeing in society

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omen and girls in the UK today have significantly lower financial security than men. This is largely as a result of historical and societal role stereotypes that affect career and study choices as well as caring responsibility. All this leads to men’s average lifetime earnings being around 80% higher than women.

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BUT YOU CAN HELP CHANGE THAT

TALK TO TEN

Insuring Women’s Futures has more than 1,000 ambassadors signed up to help raise awareness of women’s risks in life – and critically, how to avoid or mitigate them.

We are running a series of events and webinars to give insurance professionals and ambassadors the tools and guidance they need to talk to their friends, families and even colleagues about the moments that matter in women’s lives, as well as helpful checklists for what anyone can do to #MakeEachMomentCount

If each of our 1,000 ambassadors talk to just ten people each, we can empower 10,000 women and girls to become more engaged in their financial futures. And if they talk to a further 10 each… that’s just the start.

And it is not just about women and girls. We also need to inform and inspire men and boys to understand how together we can improve all of our financial lives.

This initiative is all part of the launch of our Insuring Women’s Futures manifesto proposals in November. Coinciding with Talk Money week – a nationwide initiative led by the Money and Pensions Service to raise financial awareness and engagement – we want to create a real buzz around financial wellbeing.

Join us to find out how you can be a part of Talk 2 10K. Go to insuringwomensfutures.co.uk/events to find out about upcoming events and links to the webinar.

Once the events are sold out, the webinar will be published so members can watch and listen on demand. ● Ian Simons is marketing director at the CII

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22/08/2019 13:03

VISIBILITY To build a successful career you need to be able see ahead and be seen to be ahead.

The CII’s network of 56 local Institutes helps you plan your career and gets you noticed.

cii.co.uk/fivebigwords Local institutes are a constant source of support, inspiration and new possibilities

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AND SKILL

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Emma Ann Hughes reports on a recent debate where senior insurance figures discussed how the sector can avoid suffering the same fate as Blockbuster video by attracting new skillsets

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A recent debate featuring senior insurance experts noted that as well as embracing technology it was vital to upskill staff, attract new skillsets to the profession and change the perception of those working in insurance as dinosaurs, if the sector is to avoid extinction and thrive in the modern world.

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iscussions about the future of the insurance profession often fixate on how technology could cause fewer humans to be employed by the sector in the future.

But for insurers and brokers to avoid becoming the next Blockbuster – the video rental store that was wiped off the nation’s high streets after it failed to leap at the opportunity to buy the streaming service that later became Netflix – they must do more than just get to grips with technology.

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TECHNOLOGY

Huw Evans, director general of the Association of British Insurers, said many insurers are already making sure the existing talent they have is trained and continually retrained as their roles evolve as a result of technology and changing consumer needs.

To bring fresh talent and skills to the insurance profession, Mr Evans said it was important for those already working in the sector to change perceptions about what being employed by an insurer or broker involves and delivers for society.

Mr Evans said: “The potential is there to become an employer of choice for a range of talent that we do not currently attract.”

Insurers and brokers gathered at the debate, which was organised by Insurance Times, were told by Mr Evans that they need to talk more about what the profession does for society – such as the key role it has in managing climate change and helping people obtain the social care they need.

He said: “The more we talk about the social good we do, the more attractive we become as a profession.

Let’s talk more about how we help the world go around.”

offers flexibility and therefore appeals and competes with the working practices of other professions.

Carol Geldard, personal lines director of Covéa Insurance, said this is why technology is an opportunity for insurers and brokers, as it can be used to free up staff and allow them to increase engagement with consumers.

She said she struggles to find a role in the insurance industry that will not change in the future because of technology.

Ms Geldard said: “For the employee, when you look at why people are engaged and choose to do things, it is where people get to bring their brains to work.

“I think technology is something that will make life much more interesting for people at work and it is important we take our people on a journey, so they see technology as an opportunity for their role rather than a threat.

“We find the biggest thing at Covéa that people like is flexible time and flexible working across every generation. It is becoming the new norm and if people can’t adapt the way their business works, then that is a bigger problem (for the future of the profession) than technology.

“That is one of the biggest challenges for our industry as other industries are way ahead of ours.”

THE POTENTIAL IS THERE TO BECOME AN EMPLOYER OF CHOICE FOR A RANGE OF TALENT THAT WE DO NOT CURRENTLY ATTRACT

DEVELOPING PASSION But Sam White, chief executive of Pukka Insure, said there is no point attracting fresh talent to the profession if they then found themselves in a business that shoves them in a booth and fails to engage their brains and develop a passion for what they do.

She said insurers and brokers must also create a working environment that encourages creativity,

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CHANGING MINDSETS Keith Richards, managing director of engagement for the CII, agreed that bosses at insurers and brokers need to recognize that “change inevitably creates concern over what we currently do” and also change mindsets to embrace the opportunities created by new technology.

He said: “Job roles will change. We’ve got to, as a sector, start to think of the way we portray ourselves. We focus on the challenge too often rather than the opportunities.”

Covea Insurance’s Ms Geldard agreed that for the insurance profession to attract and retain the talent needed to thrive in the future, the profession needs to refer to itself in the way it wants to be seen to attract the right people.

She said: “Insurance is such a mix of roles or opportunities. Ask people what they like doing and are good at – maths, talking to people, etc – and then talk about the roles in insurance that may fit them.” ● Emma Ann Hughes is communications director at the CII

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CLASS ACTIONS

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CLUBBING TOGETHER Is Europe one step closer to following the US with class actions and a more litigious approach? We look at some of the changing rules

numerous claims against aircraft manufacturer Boeing, following two fatal crashes, are considered a sign of things to come.

One thing is for sure, however – the insurance industry cannot afford to be complacent.

There has always been a fear that Europe might follow the US with its litigious approach but historically there has been little in the way of legal mechanisms to support such moves.

Now, however, the European Union has started to take an interest. Much of this follows the 2015 Volkswagen emissions scandal, the 2017 Ryanair flight cancellations case and the 2018 Maximilian Schrems privacy cases.

As a result, as one expert puts it: “The EU recognised that the lack of a unified and effective collective action scheme across the EU was depriving EU consumers of adequate redress.”

Last year, it published a report reviewing 12 collective action schemes in the EU and recommended that member states be required to implement a collective redress scheme covering both consumer and human rights, before launching a new Directive. In March 2019, the European parliament approved that Directive.

In the light of that development, we look at four European countries and their systems.

IKON

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s the spectre of payment protection insurance claims finally fades, the UK insurance industry has been hoping that nothing of its like will follow.

However, the risk of large-scale claims remains. Some have suggested that the General Data Protection Regulation, for example, might be the next thing to spark a new wave of claims.

Others have pointed to the dual-pricing issue, while others are pointing to the talcum powder lawsuits and the Roundup cases in the US – both products allegedly resulting in cancer for sufferers. Even the

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CLASS ACTIONS

ITALY

FRANCE

In April this year, the Italian parliament introduced a comprehensive reform of the rules governing class actions, which will: • Significantly widen the scope of application of the current rules • Provide specific incentives for claimants to bring class actions • Introduce substantive changes to the court competence and procedural rules applicable to class actions • Encourage settlement agreements.

The reform will become effective on 19 April 2020 and will exclusively apply to unlawful conducts carried out after the effective date.

There is concern that the new rules could lead to potential distortions of the system by encouraging opportunistic behaviours and complicating the management of cases.

Not only will claimants be more likely to bring class actions against companies and public service providers, but their ability to join a class action after a favourable decision on the merits represents a serious threat to defendants.

Specifically, defendants could be prevented until the end of the proceedings from knowing the actual perimeter of the class and hence the potential liabilities deriving from the relevant action. As such, the reform introduces an element of material uncertainty for defendants that is likely to impact their defence strategy, as well as their accounting and risk assessment abilities.

After a lukewarm start since their introduction in 2014, class actions in France have gradually seen their field broaden. Still, while the regime of class action is already quite comprehensive in France compared to other EU member states, it has not yet gained significant traction in the French litigation landscape.

While some procedural aspects of class actions in France might be expanded in light of the EU proposal, a French MP has already suggested passing a law opening up class actions to large groups of consumers without the need for them to use one of the French-certified associations to bring legal proceedings.

So far, there have been about 17 class actions, most of which revolved around consumer law, the latest being related to the dispute between French telephone operator Free and its customers (March 2019).

Source: Latham & Watkins

Source: Jones Day

UK In the UK, Section 47B of the Competition Act 1998 (as amended by Schedule 8, Paragraph 5 of the Consumer Rights Act 2015) came into force on 1 October 2015 and enables consumers and businesses to bring a private action for damages for losses suffered as a result of an infringement of EU or UK competition law on an opt-out basis, ie on behalf of an entire class of claimants (other than those who have expressly opted out of the action), without the need to identify every individual claimant.

The introduction of an opt-out regime was controversial and, during the consultation process, many expressed fears that it would result in a US-style class action culture. However, protective measures have meant that, so far no actions have been brought. Those measures include the retention of the ‘loser pays’ costs regime and a strict certification process requiring a collective proceedings order before a collective action can proceed.

The use of damages-based agreements (contingency fee retainers) is also prohibited in opt-out collective proceedings.

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Source: Ashurst

SWITZERLAND The Swiss system of civil procedure does not provide for a class action per se. However, on 2 March 2018, the Swiss Federal Council published a project for a revision of the Swiss Civil Procedure Code that also contains some steps towards collective redress.

The proposals include: (1) The extension of standing to claim monetary damages to representative associations on the basis of an opt-in (2) The introduction of a group settlement mechanism, the resulting settlement to become binding on the entire class, subject, however, to individual opt-out.

Both proposals were subject to a formal consultation process, which was open for comments by interested parties until 11 June 2018, and received disparate opinions. The views ranged from endorsement and suggestions for improvement, to questioning the very necessity to introduce such means of collective redress. Currently, the opinions are being evaluated before the Federal Council (government) submits the bill to the Federal Assembly (parliament).

Source: Lenz & Staehelin

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CONSTRUCTION

BUILDING With the UK construction market slowly returning to form, the opportunities for insurers abound.

However, there are concerns about the levels of claims and the cost of insurance is reported to be rising…

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he Office of National Statistics recently reported that the construction industry in the UK had seen new work grow by a tiny 0.1% in recent times. But is this the whole story?

Tyrone Courtman, managing director in Duff & Phelps’ restructuring advisory practice, says: “The 0.1% growth in new construction work has been largely driven by government-funded projects, with rises in output of infrastructure and public housing, and with a significant 2.2% fall in private commercial work.

“The construction sector has seen significant turbulence in recent years, with the liquidation of Carillion last year still having potential knock-on effects into this year.”

However, the need for new homes and new buildings grows unabated, according to the Association of British Insurers (ABI).

“With government committing to building more than 300,000 homes a year by the mid-2020s, completing an in-depth review of building regulations and encouraging innovation through modern methods of construction, it is integral that the UK property insurance market articulates what good looks like,” the association says.

The ABI also suggests that the way consumers behave and engage with insurance is changing, driven by digitalisation and consumer demands and needs. “With an evolving regulatory landscape, fast-paced technological change and innovation, insurers must continue to adapt to meet customers’ demands,” it notes.

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CONSTRUCTION

CONSTRUCTION INSURANCE BY TYPE 1. Public liability insurance Public liability (PL) insurance is a common type of business insurance that protects against liabilities for injury to third parties (non-employees) or their property. If someone works near other people and/or their property, which is basically anyone in construction, they should consider having PL insurance. This will ensure they are covered against any potential claims for damage to the person and/or their property.

2. Product liability Insurance Product liability insurance protects against liability for injury to people or property arising from the products supplied, manufactured or even imported. If someone supplies, manufactures, adapts or imports any products used by other people, then they should consider this cover.

3. Employer liability insurance Employer liability (EL) insurance protects against liabilities to employers for injuries or illness. If someone is an employer, EL insurance is compulsory. People may also want to look into EL insurance if they are building their own home. Injury to volunteers or subcontractors could spark a claim as an ‘employer’.

4. Contractors all-risk insurance Contractors all-risk (CAR) insurance protects against physical

damage to works and site materials that someone was contracted to undertake. These types of losses are normally excluded under a regular public liability policy, although they may be sold together. If a contractor causes damage to a part of the property they were contracted to work on, standard PL insurance may not provide full coverage. However, a CAR policy would provide full coverage of the costs associated with rectifying the damage. All employers and contractors working on construction projects need this cover.

5. Professional indemnity insurance Professional indemnity (PI) insurance protects against claims for loss or damages arising from professional negligence or negligent advice. If someone provides advice or holds design responsibility for a site, then they should consider PI insurance.

6. Structural warranty A structural warranty provides building owners with 10 years of protection from ‘latent defects’ to the structure of a building. These are defects that occur during the build period but are not discovered until after completion. Structural warranties are usually bought by the builder or developer, but the warranty itself will provide cover for the person who purchases the completed building.

Source: www.labcwarranty.co.uk

POOR RETURNS However, the insurance market is reacting warily. Back in April, Mactavish reported that it expected premium costs for construction insurance to increase by 50%100% across the board, with some firms facing a cost increase of three to five times later this year.

Rob Smart, technical director at Mactavish, says poor returns on construction PI mean some providers are pulling out. “This has supercharged the effects on pricing and capacity for those that remain,” he adds.

Mactavish says it expects the hardest hit to be medium-sized main contractors and firms working on particularly complex jobs.

Broker JLT agrees, saying: “Costs are escalating due to ongoing volatility in

the construction all-risks insurance market, making insurance harder (and more expensive) to place. As a consequence, claims are more likely to be disputed and, potentially, rejected.

Tougher risk management measures could also be stipulated by insurers.”

According to JLT, some $1bn of construction premium was placed globally in 2017. However, claims are an issue. In the UK, theft and vandalism on construction sites costs more than £1m a day, it says. Fire, of which 40% of incidents are deliberate, costs £400m and water damage upwards of £483m.

As JLT notes: “It’s the eye-wateringly expensive restitution bill no contractor or developer wants on their books.” ●

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WORK-RELATED ACCIDENTS • Across the world, 2.3 million people die due to work-related accidents or diseases every year • About 64% of all on-the-job fatalities in construction are due to the ‘Fatal Four’ hazards: falls, electrocution, being struck by an object, or being crushed • Falls account for 39% of all construction deaths • An estimated 651,279 deaths per year are reported globally from diseases related to hazardous materials in construction.

Source: www.bigrentz.com

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RISK COALITION

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RAISING STANDARDS The Risk Coalition is a network of not-for-profit professional bodies and membership organisations committed to raising standards of risk governance and risk management.

In 2018, it launched the Risk Guidance Initiative to raise the bar through developing principles-based guidance for risk

RAISING THE BAR IN RISK OVERSIGHT Hanif Barma explains how the Risk Coalition can help firms improve practices and avoid falling foul of the regulators committees and risk functions in financial services.

After 18 months’ work and extensive outreach involving firms from different parts of the insurance sector, the Risk Coalition has just launched its consultation for the guidance. The CII is a valued supporter of the initiative and risk director, Becky Merritt, says: “The draft guidance is very good, easy to read and use. I can see this being very helpful for risk committees.”

The guidance, designed for proportionate application, is in two parts. The first part identifies a number of key principles relating to board risk committees. The guidance helps such committees navigate thorny issues, such as clarifying the respective responsibilities of the board and the risk committee for risk oversight. It helps the risk committee understand its relationship with the two other key committees – audit and remuneration.

It sets out important expectations of the risk committee for ensuring risk strategy is aligned to the organisation’s purpose, values, corporate strategy and

THE GUIDANCE SHOULD CHALLENGE FIRMS’ THINKING ABOUT THEIR CURRENT RISK PRACTICES AND OFFER A REAL OPPORTUNITY TO DRIVE IMPROVEMENT

strategic objectives.

It also makes clear the risk committee’s responsibility for principal risks – both current and emerging risks – and for overseeing the organisation’s risk culture.

Importantly, it also sets out the risk committee’s responsibility to safeguard the independence and oversee the performance of the chief risk officer and the second-line risk function. The second part of the guidance sets out principles and guidance for risk functions.

The guidance aims to raise the bar in financial services firms’ risk oversight activities. Some firms may find some proposals challenging and may need time to fully apply the principles, depending on the maturity of their risk function and risk framework. But at the very least, the guidance should challenge firms’ thinking about their current risk practices and offer a real opportunity to drive improvement.

The consultation period runs until 20 September and final guidance is anticipated at the end of 2019. The Risk Coalition welcomes views from a wide range of stakeholders that have an interest in improving risk practices.

To read the guidance and for more information, visit: riskcoalition.org.uk/consultation ● Hanif Barma is co-founder of the Risk Coalition and a director at Board Alchemy

ALAMY

T

he UK Financial Conduct Authority (FCA) recently fined Standard Life Assurance £30m for annuity failures.

This was on top of the £25m it paid in customer redress.

Unfair treatment of customers, financial stress, IT failures, security breaches, the list of potential risks for firms is a long one.

New risks also continue to emerge (particularly relating to cyber, digital data and other technologyrelated risks) and macro risks (such as sociopolitical risks and climate change risks) are taking on greater proportions, particularly impacting insurance businesses.

At the heart of these issues has been inadequate risk management and oversight. The big challenge for those responsible for risk oversight is the lack of clarity as to ‘what good looks like’. Unlike for audit committees and internal audit functions, for example, there is currently no principlesbased guidance for board risk committees or for the second line risk function.

Risk committees and risk functions can have very differing remits and capabilities across regulated firms.

To address this gap, the Risk Coalition was formed.

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22/08/2019 11:20

SPACE

GIANT LEAPS IN SPACE TRAVEL

ni surance

As the 50th anniversary of the moon landings is marked, we look at how that pioneering mission was insured 41

W

e recently celebrated the 50th anniversary of the Apollo 11 moon landing, remembering the first man to set foot on the moon. That man, Neil Armstrong, once estimated the Apollo 11 mission only had a 50% chance of a successful landing.

As the Saturn V rocket left Kennedy Space Center with thousands of litres of kerosene and more than a million litres of liquid oxygen on board, unsurprisingly, according to David Todd, head of space content at Seradata, the space industry’s leading launch satellite database, only a few life insurers were willing to offer competitive or affordable cover to the first astronauts to set off to the moon.

Mr Todd, who is assisting with the creation of an insurance museum in London, says some insurance companies wanted to offer the Apollo 11 crew life insurance virtually for free, in exchange for the extensive

WORLDWIDE COVER IS EASY TO ACHIEVE. PROVIDING COVER FOR A LUNAR VOYAGE MAY BE MORE DIFFICULT

publicity they would gain regardless of the outcome of the mission, but their offers were declined.

Instead, Apollo 11’s crew devised an ingenious solution for the long-term financial security of their families should the worst happen, by autographing countless postal covers, which were stamped at the local post office during each day of the mission.

These would become increasingly valuable over time and could be realised for the benefit of their loved ones.

This pseudo-insurance system continued until Apollo 16, the penultimate of the moon missions, according to Mr Todd.

TO BOLDLY GO But how will civilians with enough cash to boldly go into space, insure themselves in the future?

According to Mr Todd, currently it is believed that space travel businesses set

to offer trips to civilians will arrange personal accident insurance for their passengers via the established market, but participants will have to pay the premiums themselves.

Under such schemes, Mr Todd notes that the passengers are not ‘passengers’ in the legal sense. Having signed away any liability as part of the deal with the operator, they become ‘participants’ in the flight.

Kevin Hancock, chairman of the Society of Insurance Broking, says: “Insurance brokers would welcome the challenge of providing cover for all travellers, whether they are journeying to the moon or to more earthly destinations.

“Worldwide cover is easy to achieve.

Providing cover for a lunar voyage may be more difficult.”

To enable us to share more stories of the heritage and future of insurance, please pledge your support at: www.insurancemuseum.uk ● Dr Matthew Connell is director of policy and public affairs at the CII

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22/08/2019 11:21

LOCAL INSTITUTES

OUT OF OFFICE We find out how becoming more actively engaged with your local institute can boost your career and your confidence INCREASED EXPOSURE

SHARING EXPERIENCES

42

Y

our talent deserves a wider audience.

However openplan your office is, it is good to get out and move among the wider insurance and professional community. You will learn quicker and advance faster, as two young insurance professionals discovered.

“Getting on the Marsh scheme is really competitive and you’re expected to progress fast,” reveals graduate entrant Elizabeth Gallagher.

“You immediately join the CII Diploma scheme with a target of achieving ACII within two years [which is a lot to take on so quickly].”

That target is tougher if you are on your own, as Juliusz Baranski was, although also working for NFU Mutual. “When I took the certificate course,” he recalls, “it was largely managed in-house with NFU, but the diploma and ACII were much more unsupported self-study. It’s a lot of work anyway, but more so when English is your second language.”

For such hard-studying professionals, it can seem an intense and lonely road, giving even more reason to look up from the coursebooks occasionally and engage with your local institute.

Through Marsh, Ms Gallagher was introduced to the Insurance and Actuarial Society of Glasgow mentoring programme.

“You learn more about the industry from experienced members of the profession,” she says. “You also meet other learners and share your experiences. Studying for the exams isn’t easy and you can vent about it, which helps as they know what you’re going through.”

The Glasgow programme is quarterly and about 50 people attend its interactive events. There is a mix of mentors and mentored insurance recruits like Ms Gallagher. “A large part of the scheme focuses on soft business skills,” she says, “but they are vital – particularly for graduates, who often experience a kind of culture shock on finding themselves at work.”

Local institute networking helps you meet professionals from other parts of the business. “In my case,” Ms Gallagher says, “it’s underwriters; it’s good to meet those people informally, where you can learn about them and their roles to help you understand how to do better business”.

Such visibility cannot be bought – it is a substantial career benefit you get from engaging with the local insurance community.

Further south in Bristol, another prominent insurance city, Mr Baranski believes in the value of being seen.

“For all the benefits of taking the qualifications, it is really about how well you’re known,” he says, “and networking can really help you to meet people in the profession beyond your normal work colleagues.”

Mr Baranski also considers exposure to professionals beyond insurance a distinct benefit. “Once you become a professional [by completing the ACII], you get a lot more knowledge of course, but more importantly you become part of a group,” he explains.

“It shows in the wider market that you are committed to the group and to wider ethical standards.”

He continues: “I think the networking and membership of the local institutes is a great platform for advancing your knowledge and for gaining recognition of your professional credentials, and that can only help [in the] long term as you look to develop your career.”

Whatever stage you are at in your career, getting out from behind the desk and meeting more people through your local institute creates opportunities. The visibility is good for learning as well as for developing business relationships, and it’s a massive boost to your confidence – which definitely leads to faster career progression.

For more information, visit: cii.co.uk/fivebigwords ●

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22/08/2019 11:15

T H E I N S U R A N C E C U LT U R A L A W A R E N E S S N E T W O R K

IF ANYONE CAN, iCAN Tali Shlomo explains how you can join the conversation on diversity and inclusion and create an impact

T

he CII has partnered with the Insurance Cultural Awareness Network (iCAN) to produce a celebratory role-model book.

The diversity of our colleagues is vital, not just to create diversity of thought but also in order to ensure we are able to reflect and represent diversity in wider society. Diversity and inclusion are now on most senior management teams’ agendas and are a priority for the profession as a whole to attract and retain the talent we need for the future.

It is perhaps unsurprising that we still lack diversity in our ethnicity, that men dominate senior management positions and women are more prevalent in claims and operations. The Post Insurance Census 2018 revealed that the insurance profession is 89.4% white, against 86% of the UK population.

BAME students are more likely to reach further education than white students. If we are to access the best young talent, we need to reach out to our multicultural society. We are not doing as well as other sectors at attracting BAME representation in senior management: 6.7% of all senior positions in UK are BAME, but in insurance it is only 3.6%.

Following the recent announcement of a consultation on the ethnicity pay gap, what better time to start taking action and putting in place initiatives to support our multicultural colleagues and attract and retain talent to our profession?

WHAT IS ICAN? iCAN is an independent network created to promote and support multicultural inclusion across the insurance and personal advice profession. With more than 700 members, iCAN now has support from industry leaders including Allianz Global Corporate & Specialty (AGCS), Chubb, PremFina, Zurich Insurance and the CII. The group has quickly become one of the most

recognised networks in the UK as a facilitator of positive change. In 2019, the ‘Year of Impact’, the iCAN committee has already celebrated its two-year anniversary and is now highlighting its collaboration with the CII for the Role Models in Insurance book launch at Zurich Insurance. iCAN is also an official Partner Network – an initiative created by Inclusion@Lloyds connecting the cross-industry networks, such as their fellow networks LGBT in Insurance, the Gender Inclusion Network and the Insurance Families Network.

43

CULTURE MATTERS In order for an organisation to be successful, diversity and inclusion initiatives should be a part of every company’s corporate strategy and vision for the future. Culture cannot be forced on a company. However, a company’s success is determined by the people in it and without a group of diverse employees working together in an inclusive environment, an organisation will be left behind.

WHY SHOULD YOU JOIN? A diverse team is integral to the success of an organisation By joining iCAN, members have the opportunity to be a part of the conversation; the team is and is capable of promoting passionate about driving change and would increased collaboration, love to hear from you. innovation and increasing The team includes co-chairs Ajay Mistry overall bottom line.

(Brokerbility) and Kishan Mangat (DWF), as For more information, well as committee members Maxine Goddard visit: www.i-can.me or get in (Zurich), Elisha St Hilaire (Aon), Gareth Mutema (Churchill Insurance Consultants), touch via: contact@i-can.me Natalia Zurowski (Synechron), Heather Armond You can also follow (AGCS), Nick Borzenko (Markel) and Glody iCAN at www.linkedin.

Makiese (Lloyd’s). com/company/i-can and For more information, visit: www.i-can.me use by using the hashtag or get in touch via: contact@i-can.me #icanimpact ● You can also follow iCAN at www.linkedin. com/company/i-can and use by using the hashtag #icanimpact Tali Shlomo is people engagement director at the CII

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22/08/2019 11:22

STUDY ROOM: PRICING

STUDY ROOM

LEVELLING THE PLAYING FIELD 44

A super-complaint from Citizens Advice on the socalled loyalty penalty has not only sparked a fierce debate on the best way forward, but launched major investigations from government and regulators alike

DUAL PRICING EXPLAINED Dual pricing has been interpreted in two ways: ● Firstly, insurers have agreed with the Financial

Conduct Authority to always let consumers know the price they paid for the policy last year and the new price at renewal ● Secondly, the so-called loyalty penalty in which

insurers charge renewing customers higher premiums than those they offer to potential new customers.

Source: Association of British Insurers

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22/08/2019 11:23

STUDY ROOM: PRICING

I

nsurers have been under some pressure in recent months to step up and ensure customers are treated fairly, particularly in light of the so-called loyalty penalty.

However, the industry is fighting back and would argue that it has been trying hard to make its systems fairer. For example, the Association of British Insurers (ABI) said it talked to the regulator last year and, as a result, all insurers now display the previous year’s premium price alongside the charges on renewal, giving consumers the opportunity to see how the premium has moved – up or down.

Last year also saw a supercomplaint to the Competition and Markets Authority (CMA) from Citizens Advice, alleging that consumers who routinely renew their contracts for a range of services, including insurance, are often losing out. It claimed there is an average

7% ‘loyalty penalty’ for those customers, who could be paying as much as £1,000 a year more than necessary.

Since then there has been a raft of consultations and, in some sectors such as telecoms, changes to market practice.

An ABI spokesman said the insurance industry is waiting on a report from the Financial Conduct Authority (FCA), due out at some point this summer, and that the industry will react once it sees those findings.

NEW POWERS However, ahead of that report, UK business secretary Greg Clark has already announced that firms which overcharge or mislead their customers could be hit with direct fines, without the need to go through a court.

In June, the government confirmed it will

consult on giving the CMA new powers to decide itself whether consumer law has been broken, without having to go through the courts as is currently the case.

New powers would enable the CMA to intervene earlier and more quickly to tackle these failings; and would include being able to directly impose fines on firms for poor business behaviour.

Alongside that, the Financial Services Consumer Panel (FSCP) has asked the FCA to consider introducing an automatic-upgrade rule to tackle dual pricing.

The organisation stated that the plan would either require a firm to automatically upgrade its customers onto its →

45

£4bn THE ESTIMATED CUMULATIVE COST OF THE LOYAL PENALTY PER YEAR IN THE UK OR £877 PER HOUSEHOLD

PAUL REID / IKON IMAGES

Source: CMA

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22/08/2019 14:49

STUDY ROOM: PRICING

of reference for assessing whether not in the consumer’s best interest best available product or offer them business practices are harmful.” and more fundamentally, it reduces a choice of better quality.

Those theories include: trust in businesses and markets as But the ABI has criticised the ● All nudging should be a whole.” proposal, stating that The CMA has provided six key it carries the risk that transparent and never principles for the industry: customers will be misleading ● It should be as easy as 1. Auto-renewal must be explicitly moved onto policies agreed to by the consumer when that are unsuitable. possible to opt out of the signing up, not applied on a default Hugh Savill, ABI nudge, preferably with as basis, and consumers should be able director of regulation, little as one mouse click ● There should be good to take the contract without says: “Pricing auto-renewal; practices which reason to believe that Source: Citizen's advice 2. Consumers should be properly can unintentionally the behaviour being notified before any renewal – in good penalise loyal encouraged will improve time for them to take action; customers deserve a well-considered the welfare of those being nudged.

3. Changes to price, the product solution.

However, the CMA warns: “Six or other important terms must have “The proposal put forward by months on from our report, the the consumer’s express agreement; the FSCP to automatically move loyalty penalty continues to be an it should be as easy as possible to customers onto other products issue of great concern and we remain opt out; overlooks the practicalities of committed to working with regulators 4. It should be at least as easy to underwriting and product choice.” and government in tackling this exit a contract as it was to sign up, Price caps have been suggested exploitative problem.” including being able to easily stop by the CMA but this was met with The CMA believes: “Healthy the renewal at any time and have a criticism, with credit ratings agency competition is where firms are cancellation right after renewal that is Fitch Ratings warning that it could competing to provide the best service, easy to exercise; depress profits across the industry, at the lowest prices to consumers. But 5. Minimum terms should be while destabilising the market. that assumes that people are informed restrained and no longer than in making their decisions, and are free KEY CONSIDERATIONS justified; and beyond that, refunds are to act on those decisions.

So what should insurers be given if consumers cancel early; “With unhealthy competition, firms considering ahead of firm conclusions 6. There should be no auto-renewal are effectively acting to disempower from the regulators? onto a fresh fixed term, unless it is the consumer, reducing transparency The CMA has set out a number clearly in consumers’ interests and (through hidden price rises) or making of principles to stop unacceptable exit fees should not be used after any it harder for them to switch (lock-ins business practices relating to initial minimum term. ● or keeping them waiting too long on unfair renewals. the phone).

It explains: “We consider that the “While the loyalty penalty may be a ‘effective nudge’ theories developed profitable model for firms, it is clearly

by Professor Richard Thaler, a renowned behavioural economist, COMPARETHEMARKET provide a useful high-level frame

39%

OF CONSUMERS ARE UNAWARE OF THE LOYALTY PENALTY IN ESSENTIAL MARKETS

46

Meanwhile, the CMA has also been investigating clauses used by the comparison site ComparetheMarket in its contracts, which stop home insurers from quoting lower prices on rival sites and other channels.

After reviewing the evidence, the CMA has provisionally found that these so-called “most-favoured nation” clauses could be causing customers to miss out on better home insurance deals.

This is because the clauses prevent rival comparison sites and other channels from trying to win home insurance customers by offering cheaper prices than ComparetheMarket.

As a result, people buying home insurance could be missing out on cheaper premiums.

The CMA has issued ComparetheMarket with a “statement of objections”, which sets out its provisional view that the contracts break competition law. The company will now have an opportunity to respond in detail.

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22/08/2019 13:56

Some things are just not you.

Tell us what information you want to receive and enjoy just the things that interest you.

cii.co.uk/preferences

CII.08.2019.047.indd 47

21/08/2019 11:58

D I S C I P L I N A RY M AT T E R S

BREACH OF EXAMINATION AND/OR ASSESSMENT REGULATIONS

48

Jitanshu Sahni of XChanging C/O Unitech Infospace, IT-ITES SEZ, 6th Fl Tower 3, Netaji Subhash Marg, Sector 48, Gurgaon Haryana 122019, India The coursework assessment candidate was found to have collaborated with another candidate when completing his M92 Assignment, in breach of the CII Mixed Assessment Candidate Guidelines. The CII case examiner invited the respondent to approve and sign a consensual order under 9.1 of the CII Disciplinary Procedure Rules 2015, to which the respondent agreed, and which was signed on 28 February 2019. The sanctions issued were that the respondent: a) be reprimanded (DR12.6a); b) take and complete the CII online ethics course before booking any further CII examinations, enroll on any CII assessments or applying for any CII recognition of prior learning. To be completed within six months of the date of the order (reg 12.6d); c) have a record of this matter be added to the CII’s disciplinary records (DR 12.6f) d) have the M92 assignment result disallowed; e) be excluded from CII examinations and assessments for 18 months from the examinations or assessments held by the CII (with effect from 14 January 2018) (reg 12.6l); f) be excluded for a period of 18 months from applying for CII recognition of prior learning (with effect from 14 January 2018) (reg 12.6p); and g) no examinations, assessments or qualifications obtained by the respondent during the period of the exclusion will be eligible for CII recognition of prior learning with effect from the date of the order (reg 12.6p).

Sugam Khanna of GENPACT, C/O Unitech Infospace, IT-ITES SEZ, 6th Fl Tower 3, Netaji Subhash Marg, Sector 48, Gurgaon Haryana 122019, India The coursework assessment candidate was found to have collaborated with another candidate when completing his M92 assignment, in breach of the CII Mixed

The CII w to make c ishes unless the lear that, ca indicates se reported allegation otherwise, against m s and findings implicate embers do not those m employers embers’ in any way Assessment Candidate Guidelines. The CII case examiner invited the respondent to approve and sign a Consensual Order under 9.1 of the CII Disciplinary Procedure Rules 2015, to which the respondent agreed, and which was signed on 28 February 2019. The sanctions issued were that the respondent: a) be reprimanded (DR12.6a); b) take and complete the CII online ethics course before booking any further CII examinations, enroll on any CII assessments or applying for any CII recognition of prior learning. To be completed within six months of the date of the order (reg 12.6d); c) have a record of this matter be added to the CII’s disciplinary records (DR 12.6f) d) have the M92 assignment result disallowed; e) be excluded from CII examinations and assessments for 18 months from the examinations or assessments held by the CII (with effect from 14 January 2018) (reg 12.6l); f) be excluded for a period of 18 months from applying for CII recognition of prior learning (with effect from 14 January 2018) (reg 12.6p); and g) no examinations, assessments or qualifications obtained by the respondent during the period of the exclusion will be eligible for CII recognition of prior learning with effect from the date of the order (reg 12.6p).

Nisha Reeba Thomas, Vadavathoor, Kottayam, Kerala, India The coursework assessment candidate was found to have plagiarised the M92 assignment written by another candidate, in breach of the CII Mixed Assessment Candidate Guidelines.

The CII case examiner invited the respondent to approve and sign a consensual order under 9.1 of the CII Disciplinary Procedure Rules 2015, to which the respondent agreed, and which was signed on 20 February 2019. The sanctions issued were that the respondent: a) be reprimanded (DR12.6a); b) take and complete the CII online ethics course before booking

any further CII examinations, enrol on any CII assessments or applying for any CII recognition of prior learning. To be completed within six months of the date of the order (reg 12.6d); c) Have a record of this matter be added to the CII’s disciplinary records (DR 12.6f) d) have the M92 assignment result disallowed; e) be excluded from CII examinations and assessments for 24 months from the examinations or assessments held by the CII (with effect from 1 Oct. 2017) (reg 12.6l); f) be excluded for a period of 24 months from applying for CII recognition of prior learning (with effect from 1 Oct. 2017) (reg 12.6p); and g) no examinations, assessments or qualifications obtained by the respondent during the period of the exclusion will be eligible for CII recognition of prior learning with effect from the date of the order (reg 12.6p).

“To date, the CII have dealt with eight instances of non-members using CII designations for 2019. As this is an infringement of CII’s trademarks, where people persist in misusing CII designations, legal action will be taken against them”.

TAKE NOTE Where the disciplinary panel or case examiner has decided to publish details of a disciplinary case ascribed (ie where an individual has been named), every care has been taken to identify members correctly.

Please contact the CII if there is any doubt about the identity of a member who may have been the subject of disciplinary proceedings and in relation to whom a report has been published.

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22/08/2019 11:23

Q&A STUDY ROOM

This set of questions, courtesy of online CII training package Insurance Assess, will test your knowledge of topics.

Answers are at the bottom

QUESTION 1

QUESTION 4

QUESTION 8

The Motor Insurance Anti-Fraud and Theft Register is a database used by insurers for which types of motor losses?

A Multiple collisions b All motor accidents c Motor accidents involving injuries d Thefts and total losses

The definition of cybercrime includes the funding of what type of criminal offence?

Choose all that apply.

A Blackmail b Money laundering C Drug trafficking D Fraud

Which of these is the usual basis of rating for an employers' liability policy?

A Turnover b Gross profit c Net profit d Payroll

QUESTION 2

QUESTION 5

QUESTION 9

Why was the Fraud Act 2006 important to the insurance industry?

A Prior to the Fraud Act, there was no single offence of fraud b Prior to the Fraud Act, there was no definition of insurance fraud c There are now eight different areas in which to prosecute for fraud d The Fraud Act classes fraud as theft

QUESTION 3 Which one of these statements describes the term 'immaterial fraud'?

A Claimant submits a forged receipt for a genuine loss to the correct value of the lost item b Claimant submits a forged receipt for a fictitious loss to the correct value of the lost item c Claimant submits a genuine receipt for a fictitious loss to the correct value of the lost item d Claimant submits a forged receipt for a genuine loss to the incorrect value of the lost item

Which of these liabilities do products liability policies usually cover?

A Only liability arising out of products produced during the period of insurance b Only liability arising out of claims made during the period of insurance c Only liability arising out of products recalled during the period of insurance d Only liability arising out of events happening during the period of insurance

Which of these statements best describes the role of loss adjusters?

A Independent organisations to whom claims investigation is often outsourced by insurers b Part of the insurance company that investigates the claims it receives c Representatives and advocates of the policyholder in the event of a claim d The means by which insurers are able to ensure that they are able to minimise their claims outlay

QUESTION 6

QUESTION 10

Which of these losses would fall under the future loss head of claim?

A Care costs from the date of accident to date of settlement b Loss of earnings after the date of settlement c Awards for pain, suffering and loss of amenity d Initial adaptation of house

Is it possible to cover business property on a business travel policy?

A No, the risk of the business property is viewed as a commercial risk b No, this would have to be insured on a material damage policy c Yes, providing the value is less than £500 d Yes, this can be a separate item or part of the property section

QUESTION 7 Which of these items might be considered ‘target goods’ by insurers?

A Books b General foodstuffs c Mobile telephones d Standard building materials

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YOUR SCORE » 1–3 POOR 4–6 GOOD

7–8 VERY GOOD 9-10 EXCELLENT

ANSWERS 1D. The Motor Insurance Anti-Fraud and Theft Register is a database used by insurers for theft and total loss claims.

2A. Prior to the Fraud Act 2006, there was no single offence of fraud. Fraud is now a criminal offence.

3A. The term 'immaterial fraud' relates to the situation where the claimant submits a forged receipt for a genuine loss to the correct value of the lost item.

4A, B, C, D. All of these are cyber crimes if they are committed using a computer, computer network or

the internet. 5D. Products liability policies cover injury or damage that happens during the period of insurance. 6B. Losses that are likely to continue after the date of settlement are called future losses.

7C. Insurers associate a higher risk of theft with goods that tend to hold a relatively high value, are small, light and portable and can be easily resold by a thief.

8D. It is usual for employers' liability insurers to use the payroll of a company as the basis of their

rating. 9A. Insurers will use the services of loss adjusters to investigate larger or more complex claims on their behalf.

10D. Business policies will include business property either as a separate item or as part of the property section.

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22/08/2019 11:24

CII BLOG

ALEX DOOLER

TAKING THE INITIATIVE Alex Dooler reflects on lessons he learnt during his first two years of working in the City of London…

I

have recently moved on to the next chapter of my professional career. As I journey from the City of London’s insurance district to financial journalism, I would like to consider some of the things I have learnt.

and after seeing one of my posts, he offered me the chance to be mentored by a professional leadership consultancy.

For the 18 months that followed, my mentor initiated a broader conversation with me – what is it that drives me, what did I really want to do and what am I going to do to get there?

Having an external and unbiased mentor has encouraged me to dream big and not to be ashamed to do so.

THE WORTH OF NETWORKING

50

At school, English language was my weakest subject and teachers believed me to be dyslexic. This stuck with me and, feeling that words were a weakness in my skillset, I turned to numbers.

And that is where I ended up – the world of credit risk. Balance sheets, profit margins and cashflow statements became my friends.

But much later, driven by nothing more than curiosity, I went to meet the communications team at my company looking to understand the bigger picture of the firm. From this, I began writing for the company’s internal intranet and rediscovered my love of writing. This realisation led to articles in such titles as The Washington Post and the Financial Times.

The lesson: go out and network for no other reason than curiosity. Not just with people in your sector, but with those from wider society. It will help you understand the bigger picture, tap into new ways of thinking and maybe help to highlight skills and interests you never knew you had.

TAKE THE INITIATIVE Office jobs can be synonymous with routine and comfort, but it is when you challenge yourself to think differently within those parameters that you begin to tap into some of your most engaging and educational experiences.

After a very complex risk landed on my desk and, as I got to grips with it, I saw that the numbers seemed good but the company’s stock price was nosediving. A research report also sat beside me with the telephone number of a banker in its byline.

There and then, I decided to take the initiative and call him up. I wanted to understand how he viewed the risk as well as which tools and models he would use to make a judgement.

He was impressed that I wanted to get a view of the risk beyond the four walls of my company, so impressed in fact that he offered me an interview for a position at his bank.

Think creatively about how you can take the initiative to add value in your current role. Go beyond what is asked of you and think about new ways of doing things. ●

HAVING AN EXTERNAL AND UNBIASED MENTOR HAS ENCOURAGED ME TO DREAM BIG

GET A MENTOR After being at my company for less than 12 months, I received an email from an executive at stating he had “an opportunity” and asking if I would be interested.

It turns out that executives do read the internal intranet

Alex Dooler is a financial journalist at Debtwire

◊ NETWORK Let curiosity drive you to meet new people from different backgrounds

◊ MENTOR The influence of a mentor can be a positive and rewarding experience

◊ CHALLENGE YOURSELF Take the initiative even if it means moving outside of your comfort zone

ILLUSTRATION: LUKE WALLER

THREE THINGS TO TAKE AWAY

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22/08/2019 11:24

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Up to ÂŁ45,000 + Bonus & BeneďŹ ts – Kent Our client is seeking a Motor Trade Underwriter to join their team. You will be an experienced Motor Underwriter with the ability to develop and maintain stakeholder relationships, underwrite new and existing risks and actively manage a portfolio. CII qualiďŹ cations are preferred but not essential.

Contact: Bow.Fanso@ipsgroup.co.uk - London Ref:CII139600BF

s /PERATIONS !NALYST !CCOUNT -ANAGEMENT To ÂŁ45,000 + BeneďŹ ts – City of London A fast paced business, that is centralising global operations in London, seeks an individual to take operational ownership of an overseas business unit with a strong focus on Reinsurance.

Whilst delivering risk processing, aged debt, unallocated cash analysis, reconciliations and month end reports, you will sit on key internal senior stakeholders committee’s and lead projects around the innovation of operations and advanced data management. Unique forward thinking business!!

Contact: Alison.Taylor@ipsgroup.co.uk - London Ref:CII139409AT

s #ONDUCT 2ISK $ATA !NALYST To ÂŁ40,000 + BeneďŹ ts – City of London Challenging role for a Maths or IT graduate who wants to get end to end exposure across the business collating vital MI to evidence the business processes, systems and data meet the regulatory requirements as well as the needs of the business for performance and strategy purposes. Strong Excel to VBA level would be ideal, but equally important is the ability to engage with stakeholders, analyse information and draw conclusions. Career step to lots of different opportunities longterm.

Contact: Alison.Taylor@ipsgroup.co.uk - London Ref:CII139807AT

s .ON ,IFE !NALYST n ),3 Up to £60,000 Base Salary + Bonus – City of London A rare opportunity has arisen with one of the leading Investment Managers who purely focus on ILS. They are currently searching for an Individual with at least 1 year’s experience in catastrophe reinsurance this can be within a Broker or Lloyd’s Syndicate. The ideal candidate should have experience of using either R, Python or SQL. Contact: Gary.Ahern@ipsgroup.co.uk - London Ref:CII139850GA

s 4ECHNICAL 5NDERWRITER Up to £75,000 Base Salary + Bonus – City of London Are you an Actuary or Catastrophe Modeller who would be open to moving into an Underwriting position? If you are, I have an exciting opportunity with a Global Insurer who are searching for an individual to help grow and develop their Parametric Portfolio. They are ideally looking for an individual with an analytical background.

Contact: Gary.Ahern@ipsgroup.co.uk - London Ref:CII139757GA

s #ONDUCT 2ISK -ANAGER To ÂŁ75,000 + BeneďŹ ts – City of London Exciting opportunity with a Global Insurer that has created a new role to lead on Conduct Risk as ďŹ rst a line of defence function, within a broader Underwriting Governance function.

Seeking an individual with experience on Delegated Authority and high conduct risk business, dealing with FCA, implementing controls, reporting and MI, and track record inuencing a range of stakeholders.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII139897TS

s 2EINSURANCE !NALYST To ÂŁ55,000 + Bonus & BeneďŹ ts – City of London This role will be part of an outwards reinsurance team focused on improving processes, analytics and use of data. Working for this high proďŹ le Lloyd’s Syndicate you will need experience working in Reinsurance for a UK based Insurance ďŹ rm, along with demonstrable skills on working with and improving Data and Analytics.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII139766TS To ÂŁ80,000 + Excellent BeneďŹ ts – City of London Seeking an individual who is currently handling Reinsurance claims in the London Insurance Market. In this role for a high proďŹ le Lloyd’s Syndicate you will be responsible for a broad portfolio of Reinsurance Claims, working closely with a number of senior stakeholders in the Group.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII139651TS

s 5NDERWRITING /PERATIONS !SSISTANT £35,000 – London We are seeking a forward thinking London Market Underwriting Assistant or Assistant Underwriter to ensure, through data management, that the Underwriting and Aggregation data is uploaded in a timely and accurate fashion. You will also be required to assist the Operations Manager with assessing current practices and seeing where change can be implemented to improve processes in the UK and with their offshore outsource provider.

Contact: Carl.CrossďŹ eld@ipsgroup.co.uk - London Ref:CII138465CC

CII.08.2019.051.indd 51

"IRMINGHAM birm@ipsgroup.co.uk Tel: 0121 616 6096

s )NTERIM (EAD OF 3YNDICATE &INANCE n -ONTH &4# ÂŁ120,000 – City of London Leading Lloyd’s market insurance business currently require a qualiďŹ ed accountant to act as deputy to the head of syndicate ďŹ nance and support the CFO, overseeing Lloyd’s Reg returns, SII returns on a quarterly/annual basis, UK and International.

Contact: Mark.Brady@ipsgroup.co.uk - London Ref:CII139944MB

s )NTELLECTUAL 0ROPERTY 5NDERWRITER ÂŁ50,000 – ÂŁ75,000 + BeneďŹ ts – City of London Leading global insurer, with ability to write on both syndicate and company stamp are seeking a Intellectual Property Underwriter This is a global account (including US) where you will underwrite risks that are designed to protect companies from ďŹ nancial risks relating from Intellectual Property disputes, this includes; infringement liability, breaches of warranties, business interruption and much more. Our client is open to candidates from a general casualty underwriting background.

Contact: Dana.Hill@ipsgroup.co.uk - London Ref:CII139914DH

s 2ISK !NALYST ÂŁ45,000 + BeneďŹ ts – City of London An excellent opportunity exists for an experienced candidate to join the Risk Management team within a highly regarded Lloyd’s Syndicate. The successful candidate will work directly with the Chief Risk OfďŹ cer to assist with the development, implementation and management of the risk management framework within the business.

Contact: James.Dick@ipsgroup.co.uk - London Ref:CII139420JD

s 3ENIOR $OWNSTREAM %NERGY "ROKER ,EADING "ROKERAGE Six ďŹ gures Basic + Attractive Reward Structure – London Exciting opportunity for a Senior Broker experienced in Oil & Gas to join a growing Lloyd’s brokerage. Working closely with the MD for Energy, the successful candidate will be required to enhance and build an international downstream capability, with some focus on Emerging Markets.

Contact: Eshani.Reddy@ipsgroup.co.uk - London Ref:CII139774ER

s #ASUALTY ,OSS !DJUSTER ÂŁ40,000 + Car & BeneďŹ ts – Homebased covering East Mids/ South Yorks Specialist Loss Adjuster with ofďŹ ces across the UK is seeking an experienced Casualty Loss Adjuster to manage a caseload of EL/PL and Product Liability claims covering the East Midlands and South Yorkshire. You will generally work from home 2 days a week, spend 2 days in the ďŹ eld and 1 day in the ofďŹ ce which is based in North Nottingham Flexibility around this will also be considered.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII139594RC

s $EVELOPMENT 5NDERWRITER -ARINE FOCUSED ÂŁ45,000 +Car & BeneďŹ ts – Manchester Well regarded Insurer has an opportunity for a Development Underwriter to assist with expanding their business through a positive period of development and growth for the business. This role is a home based position combined with time spent visiting brokers’ across the North and occasional time in the Manchester OfďŹ ce.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII139963RC

s -ID #ORPORATE !CCOUNT (ANDLER

s 3ENIOR 2EINSURANCE #LAIMS !DJUSTER

,ONDON London@ipsgroup.co.uk Tel: 020 7481 8111 -ANCHESTER manchester@ipsgroup.co.uk Tel: 0161 233 8222

Excellent Packages + Bonuses – City of London This highly successful Independent Lloyd’s Broker is appointing an ambitious and motivated international and US casualty broker to lead a newly formed team. You will be a selfmotivated and talented London Market Broker/Producer possessing a strong track record of new client acquisition and long-term client development.

Contact: Christopher.Dickman@ipsgroup.co.uk - London Ref:CII139356CD

ÂŁ30,000 – ÂŁ40,000 + BeneďŹ ts Package – Birmingham An excellent opportunity has arisen with a Leading global insurance broker. You will deal with a range of risks including D&O, Property, Construction, Liability, Cyber and IT handling MTA’s, renewals and new business. To apply you will have gained experience in a similar role either within commercial broking and will have dealt with premiums up to ÂŁ100k.

Contact: Mark.Fancourt@ipsgroup.co.uk - Birmingham Ref:CII139270MF

s 3PECIALIST 2ISKS !CCOUNT (ANDLER X ÂŁ20,000 – ÂŁ25,000 + BeneďŹ ts Package – Birmingham An IPS Exclusive - exciting opportunity with a major insurance broker in Birmingham. You will deal with a range of specialist London Market risks working closely with their London ofďŹ ce handling renewals you will also have regular visits to London. To apply you will have gained experience in a similar role within commercial broking.

Contact: Mark.Fancourt@ipsgroup.co.uk - Birmingham Ref:CII139270MF

777 )03'2/50 #/ 5+

,EEDS leeds@ipsgroup.co.uk Tel: 0113 202 1577

(ONG +ONG asia@ipsgroup.co.uk Tel: +852 3469 5339 3HANGHAI shanghai@ipsgroup.co.uk Tel: +86 21 2206 2882

21/08/2019 11:47

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