The Journal December - January 2019

thejournal.cii.co.uk December 2018 – January 2019

Flying high How the burgeoning drone industry will impact insurance

Home smart home Domestic automation is set to shake up household cover

Inside out Broker-turned-MP Craig Tracey talks to The Journal

HAPPY TALKING The moral and economic case for supporting staff wellbeing

01_Cover_Dec 2018 - Jan 2019_Cll The Journal 1

17/12/2018 10:41

THE FUTURE OF BROKING IS HERE! Join Konsileo and be the happiest, best rewarded and most professional broker you can be Real People Real people working in a virtualised but engaged organisation A community of self-organising individuals empowered & incentivised to collaborate and support each other and to achieve excellence in advising clients.

Powered by Tech Powered by the most advanced end-to-end commercial insurance broking platform in the world Processes and Konsileo’s own proprietary technology optimised to save time and improve accuracy and compliance in the broking process.

Driven by Data Driven by data that will put clients in control and enable insurers to offer the best terms Using data to provide a true risk advisory experience that enables clients to properly understand risk in their business & use insurance to mitigate in a transparent and efďŹ cient way.

We are hiring Commercial Client Directors across the UK - go to konsileo.com/join-us and apply today Konsileo is a registered trademark of Konsileo Ltd (9569872). All insurance and risk advice is undertaken by Konsileo (Trading) Limited (10100499), an independent broker authorised and regulated by the Financial Conduct Authority (FCA).

CII.12.2018.002.indd 2

14/12/2018 08:08

DECEMBER 2018 - JANUARY 2019

C O N T E N TS NEWS

FEATURES

5 President’s letter Jonathan Clark highlights the importance of the next wave of qualified professionals

22-24 Mental health Supporting wellbeing in the workplace 26-27 Fracking The impact on insurance as fracking in the UK resumes

6 -11 News UK and international news from the CII

16

12-13 Regional news News and events from the CII local institutes 49 Disciplinary matters

REGULARS

36-37 Drones Challenges and regulation around sky high risk

STUDY ROOM

14-15 The Interview – Craig Tracey We talk to the Warwickshire MP about strengthening the link between government and the insurance profession 16-18 Hot topic – Technology in the home Insuring the smart device revolution

34-35 M&A The growing market for merger and acquisition cover

40-41 Cyber safety Assessing cybercrime risk in the family home

34

14

31 Regulatory radar The latest legislation updates from the UK and Europe

44-46 SmartWater New forensic technology that could be a game-changer for property protection

3

47 Q&A The big 10 questions to test your knowledge 48 A-Z Reviewing the rise of cryptocurrencies

39 Legal Review Recent assessment of damages in professional negligence claims against insurance brokers

50 CII blog Anna Barnes’ final top tips for studying

36

44

CONTACT US

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

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.cii.co.uk/ journal (members and subscribers only) Should you wish to send your views, please email: michelle.worvell@cii.co.uk

Editor: Michelle Worvell (020) 7417 4763 michelle.worvell@cii.co.uk Deputy editor: Luke Holloway (020) 7417 4778 luke.holloway@cii.co.uk For sales and advertising please contact andy.penny@redactive.co.uk ISSN 0957 4883 © 2016 Chartered Insurance Institute.

Average total net circulation more than 82,000 Cover Photograph: Superstock /Istock

Publisher: Redactive Media Group Level 5, 78 Chamber Street London E1 8BL Tel: (020) 7880 6200 Senior designer: Yvey Bailey Picture editors: Claire Echavarry, Charlie Hedges Production: Jane Easterman Printing: GD Web Offset Recycle your magazine’s plastic wrap – check your local LDPE facilities to find out how

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

03_Contents_Dec 2018 - Jan 2019_Cll The Journal 3

17/12/2018 10:42

My CII

Access your exam results, permits and records of achievement online

CII.12.2018.004.indd 4

You can now access your exam permits, exam results and your records of achievement online at My CII. These documents will no longer be received by post as we are going paperless to give you better access at a time convenient for you, wherever you are.

My CII is a secure way to find all the information you need in one central place as well as being able to print copies whenever you need to. You will continue to receive your completion certificate by post.

We’d like to take this opportunity to wish you every success with your studies.

Visit My CII as soon as you’re ready. cii.co.uk

14/12/2018 11:26

PRESIDENT'S LETTER J O N AT H A N C L A R K

FINDING THE BALANCE Jonathan Clark on the importance of mixing technical knowledge and interpersonal skills that creates competent and confident insurance professionals

GETTING THE BADGE

E

ducation and development of knowledge remain at the heart of all we do at the CII. So, it was a great pleasure to be up in Manchester and to hear about the brilliant work going on there to help members looking to get qualified. Not only some excellent continuing professional development events but also a fast-track ACII course to help members pass their ACII in two years. To quote their website: “In a two-year period you will receive 15 full days of workshops, three for each subject. There will also be one-to-one sessions with tutors and mentors to give you support and help as required.

“With this programme, you will be able to cut down on the amount of study time needed to crack the coursework, while working with a group of people who are going through the same subjects, and at the end achieving your qualification.”

It is fantastic to see this idea being brought to action.

But the Manchester Institute is not alone in helping those looking to get qualified achieve their ambitions. In the London Institute a few years back, a mentoring programme was set up to help anyone taking their exams involving members who had recently qualified, as well as ‘sponsor mentors’, to provide the right mix of support and experience to help those individuals.

Sian Fisher reminds me that, while it can be initially scary to put your knowledge up for independent assessment externally and objectively, what a gain it is when you get the ‘badge’. And if you choose to go for the ACII, it is Level 6-recognised in the OfQual framework, which is no mean achievement in the world of other peers and friends’ qualifications.

But it does not stop with achieving the qualification – Cert, Dip or ACII – we must all recognise the need to continue learning and developing. If we remain curious about the world about us, we can continue to develop as individuals and as part of the wider profession.

5

DEVELOPING TALENT As I write this, I am heading out to take part in an event in Zurich, sharing knowledge about how global insurance programmes are developing. What is a great pleasure for me is that, in addition to offering some thoughts on claims handling in an international market, I have been asked to speak about the CII and the work we are doing to ensure we continue to develop the talent our profession needs.

For us all, there is a balance of technical knowledge, business knowledge and interpersonal skills that lead to being a competent and confident insurance professional. The CII is there to help all of us create our own opportunities by getting qualified and by being a member you gain access to information, support and a network to continue learning and developing.

Working together, we should not forget to train, teach, mentor, inform and educate our new talent.

In the process, we can maybe learn something new to help foster the trust in our profession that we all want to see. ●

WORKING TOGETHER, WE SHOULD NOT FORGET TO TRAIN, TEACH, MENTOR, INFORM AND EDUCATE OUR NEW TALENT

Jonathan Clark, president, CII

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

05_Presidents Le_Dec 2018 - Jan 2019_Cll The Journal 5

17/12/2018 10:42

NEWS

FROM THE CII TWITTERATI »

@MelissacCollett Do we have a regulator strong enough to police data ethics?

In @HouseofCommons today participating in All-Party Parliamentary Group on Data Analytics roundtable @CIIGroup @lawrencefinkle #dataethics

@ChadwicksMclean A huge congratulations to Laura, our Head Paraplanner, for achieving her Chartered Financial Planner status today! @CIIGroup

@OliviaVAPerry It was great to see the @CIIGroup highlighting the importance of looking after our mental health. #PowerofInclusion

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

CII LAUNCHES NEW CERT CII DESIGNATION The CII has launched a new Cert CII (Protection) designation for members holding the Certificate in Insurance, including the relevant Financial Protection and Customer Service in Insurance exam units.

The CII collaborated with the Women in Protection Group and the Protection Distributors Group to create an opportunity for those working in, or aspiring to work in, the sector to learn the fundamentals of insurance and protection and demonstrate their skills and knowledge with a recognised qualification.

The Level 3 Certificate in Insurance is a core qualification for insurance staff working across all sectors of the industry.

6

The certificate develops core knowledge and confidence in the key disciplines needed ahead of subsequent studies.

The Cert CII (Protection) designation is available to members who have successfully completed the Certificate in Insurance, including the R05 Financial Protection and IF9 Customer Service in Insurance exam units.

CII membership designations are recognised throughout the global insurance market as indicators of achievement, knowledge and professional aspiration. For many individuals, their CII designation is a prime motivator for membership of the CII. For more information, visit: www.cii.co.uk/learning/qualifications

UNIVERSAL CREDIT

A marked improvement on the arrangements for the outgoing working-age legacy benefits has been clarified by the Department for Work and Pensions (DWP).

The Building Resilient Households Group (BRHG) sought clarification from the DWP on how payouts from term life, critical illness and terminal illness insurance will be treated for means-tested benefits for working-age people.

The key change is that Universal Credit legislation makes it clear that if a person uses their capital to pay off or reduce a debt, including a mortgage, they will not be treated as depriving themselves of that capital.

This is a marked improvement on the arrangements for the outgoing workingage legacy benefits. It shows that the new

benefits system being rolled out will allow people to use insurance payouts to reduce or pay off their mortgage or any other debts.

Dr Matthew Connell, director of policy and public affairs at the CII, said: “The CII welcomes this useful clarification about Universal Credit. It is helpful for consumers to know that, under Universal Credit, they and their families will not be worse off if they take steps to protect themselves with term life, critical illness and terminal illness insurance by paying off mortgage debts, should they need to claim this state benefit.

“The CII supports the work the [BRHG] is doing to build trust in insurance, so that consumers can be confident that protection insurance will put them in a better position should the worst happen.”

ISTOCK

IMPACT OF INSURANCE PAYMENTS ON UNIVERSAL CREDIT

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

06-07_News_SM_Dec 2018 - Jan 2019_Cll The Journal 6

17/12/2018 10:42

NEWS @M ooney A l l a n Passed @CIIGroup IF7 this morning - absolutely delighted and relieved! Can now chill over Christmas before starting all over again in 2019

@Ta l en t Kee p e r s U K We are proud to be supporting the Insuring Women’s Future program lead by @CIIGroup which is aimed at improving women’s financial resilience to help secure a better future for all. #MomentsthatMatter #Insuringfutures

@JBarefoot_IFA Fellow colleagues at @NewellPalmer successfully passed their @CIIGroup exams too.

Today is our Christmas party.

Time to #celebrate a successful 2018

#CIIGroup Twitter

15,898 Followers and counting...

CHARTERED INSURANCE INSTITUTE APPRENTICESHIPS

CII RELAUNCHES WEBSITE

The CII has revamped its website to make it easier for members and wider stakeholders to find relevant content more quickly and easily.

Features of the new site include the introduction of more intuitive navigation; improved search functionality; a mobilefriendly responsive design; improved visual design reflecting the new CII brand identity;

and refined content focused on relevance and accessibility.

The site will be fully interactive, with the introduction of a ‘News and Insight’ section, for staying on top of changes in the profession; and a ‘Learning Content Hub’, for learning and professional development needs.

These sections will be updated regularly to ensure members receive the most up-to-date content and information.

Further development will take place across phase two of the project, including the development of member search, recognition of prior learning, ‘MyCII’ and events.

Visit the site at: www.cii.co.uk

CHARTERED

ROSSBOROUGH INSURANCE AWARDED CHARTERED STATUS Insurance broker Rossborough Insurance (IOM) has become the only company in the Isle of Man to achieve Chartered insurance broker status, awarded by the CII. The accolade, which fewer than 200 companies in the British Isles hold, is awarded in recognition of the company’s professionalism and high levels of customer service across its commercial, private client, personal and healthcare offerings.

It is an exclusive award for Rossborough, which is also a Gallagher company, making it part of one of the largest global insurance brokering and risk management organisations.

To be considered for the coveted

Chartered status, Rossborough had to meet rigorous criteria relating to its professionalism and capability. All Chartered Insurance Brokers commit to the CII’s code of ethics, reinforcing the highest standards of professional practice in their business dealings Rossborough has been operating in the Isle of Man since 2005 and is now the only Chartered insurance broker in both the Isle of Man and the Channel Islands.

NATIONAL APPRENTICESHIP WEEK 2019

7

The date for National Apprenticeship Week 2019 (#NAW2019) has been announced. It will take place on 4-8 March 2019.

This annual week-long celebration of apprenticeships will bring the whole apprenticeship community together to celebrate the impact of apprenticeships on individuals, employers and the wider economy.

The CII and Discover Risk are always heavily involved in the week and will announce details in the new year.

National Apprenticeship Week 2019, which also coincides with National Careers Week, will look to involve more individuals, employers, providers and partners in activities that highlight the benefits apprenticeships bring to employers and the opportunities that apprenticeships present to individuals.

You can follow @Apprenticeships and @DiscRisk on Twitter.

For more information please email: The.WEEK@education.gov.uk

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

06-07_News_SM_Dec 2018 - Jan 2019_Cll The Journal 7

17/12/2018 10:43

NEWS

8

APPOINTMENTS

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

CII BOOSTS GLOBAL TEAM WITH APPOINTMENT OF INTERNATIONAL DIRECTOR

CII OPENS NEW MEA OFFICE

The CII has boosted its global team with the appointment of David Thompson as international director. Mr Thompson will be based at the CII’s new Middle East and Africa headquarters in Dubai, but will also oversee operations from CII offices in Mumbai and Hong Kong.

Mr Thompson brings more than 34 years’ experience working in sales and business development in the financial services sector, gained both in the UK and globally. He joins the CII from Friends

Provident International, where he was most recently regional sales director for the Middle East and Africa. Before that, he worked for Schroders, American Express and Legal & General.

Mr Thompson also developed and launched management development company Globalwise, where he specialised in designing and delivering specialist coaching programmes to clients such as Lloyds TSB, PwC, Barclays and National Australia Bank.

Sian Fisher, chief executive officer of the CII, said: “We’re really pleased to appoint David to this new role of international director. He comes with an impressive background in financial services and will be an asset to our expanding global team.

With a growing appetite for qualified financial services experts across the world, David will play a crucial part in ensuring our international members receive access to the training and qualifications that they demand, as well as delivering the professional standards message to potential members globally.”

LEARNING AND DEVELOPMENT

ENGAGEMENT WORKSHOPS The PFS Power of Financial Planning group is hosting a series of client engagement workshops aimed at enhancing advisers’ communication skills and perfecting first meetings with clients.

Attendees will learn how to: present themselves and their firm before the first meeting; effectively communicate the value of what they do; avoid the ‘transaction trap’; use effective questioning techniques; and close a meeting and gain commitment from clients.

●

●

●

The workshops will be held at: LONDON Tuesday 12 February 2019 Seligman Theatre, The Royal College of Physicians SHEFFIELD Wednesday 13 February 2019 Hallam View, Sheffield Hallam University LOUGHBOROUGH Thursday 14 February 2019 The Turing Room, Holywell Park, Loughborough University

The CII is opening a new office to cover the Middle East and Africa (MEA).

This is in response to growing demand from the region for the raising of professional standards. The CII has appointed Gaenor Jones as regional director, MEA, for the CII and Personal Finance Society (PFS).

As insurance and financial services providers continue to grow and invest in MEA, there is increasing demand for the CII’s professional qualifications, training and continuing professional development in the region. The CII already has established links with the regulators and financial companies based in the United Arab Emirates (UAE), and this new hub will help serve the region more effectively. The new role of MEA regional director will be responsible for building on these relationships and developing the CII offering in the region.

Keith Richards, director of engagement at the CII, said: “It is fantastic to see how the financial services community is growing and developing in MEA and with it, an increased appetite for professional standards. As the international Chartered professional body for insurance and financial services, we are committed to an established and developing collaboration with the UAE authorities.

“We equally want to better support existing and new members in the region more effectively and this new hub will enable us to do this. Gaenor’s experience of working within the region will be invaluable in this new role and we are very pleased that she has joined us.”

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

08-09_News_Dec 2018 - Jan 2019_Cll The Journal 8

17/12/2018 10:43

KNOWLEDGE SERVICES

WORLDWIDE INSIGHT In this issue we will explore the insurance market regulatory information available in one of our specialist databases

SPECIALIST RESOURCES Knowledge Services subscribes to a number of specialist databases providing detailed data on the UK life and non-life insurance markets, insights into international markets, regulatory environments, and country-specific forecasts. Resources include the GlobalData Insurance Intelligence Center and Timetric Insight, Forecast and Regulatory Reports, and the i-law (insurance law) database.

Members can access most databases and reports directly on the CII website by emailing a data/research request to knowledge@cii.co.uk – or on the new laptop available in the CII London office Monday to Friday, 8am to 5pm.

To find more information on our database resources, visit: www.cii.co.uk/ knowledge-services

AXCO INSIGHT COMPLIANCE A compliance tool offering an overview of the key regulatory and tax compliance conditions applicable to conducting insurance in more than 170 markets, the AXCO database offers a comprehensive, customisable overview of multiple markets and line of business-specific regulation. Using a question and answer structure with topics compiled from clients’ most frequently asked compliance questions, it returns essential information that you can tailor to your individual regulatory requirements.

AXCO country snapshots produce concise and detailed reports on more than 170 territories. Areas covered include: economy, general information, life

and non-life insurance market, and politics.

Each country profile is researched, written and updated by experienced AXCO consultants who regularly visit local supervisors, insurance associations, insurers, reinsurers and brokers in each territory to secure vital information and provide market analysis.

Following recent country visits by AXCO, the following market profiles and reports have just been updated: Non-life insurance market reports: Barbados, Belize, Bermuda (domestic), Bulgaria, Denmark, Guatemala, Libya, Moldova, Senegal, Syria, Taiwan, Turks and Caicos.

CIMS market profiles: Algeria, Barbados, Belize, Bermuda (domestic), Bermuda (international), Bulgaria, Denmark, Germany, Guatemala, Libya, Moldova, Portugal, Senegal, Syria, Taiwan, Turks and Caicos.

Axco global statistics and the appendices of insurance market reports with new quarterly or annual data is now available for Belgium, Bosnia and Herzegovina, Brazil, Brunei, Bulgaria, Cayman Islands, China, Colombia, Costa Rica, Croatia, El Salvador, Finland, Germany, Honduras, India, Indonesia, Iraq, Kenya, Kosovo, Lithuania, Macao, Mexico, Montenegro, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Portugal, Romania, Russia, Senegal, Serbia, Singapore, Slovakia, South Africa, Togo, Trinidad and Tobago, Turkey, Ukraine, United Kingdom, Uruguay, and Zimbabwe.

To access Insight Compliance, visit: www.cii.co.uk/axco

9

Knowledge Services curates technical, professional, market and other specialist information on the members’ website, as well as the CII’s e-library and print collections – resources to support and inform CII members working in the industry and those undertaking professional qualifications. To contact Knowledge Services, please email knowledge@cii.co.uk or visit www.cii.co.uk/knowledge-services for more information.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

08-09_News_Dec 2018 - Jan 2019_Cll The Journal 9

17/12/2018 10:43

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

HONG KONG

FUTURE ADVISORY FORUM CII representative Alvin Lo and Helen Roberts promoted the CII at the event

The Chartered Insurance Institute Hong Kong (CIIHK) supported the International Adviser Future Advisory Forum at Hong Kong in November.

The event was attended by more than 150 international financial advisers and was a positive networking event for CIIHK to build brand awareness in the financial planning sector.

10

New logo launched CIIHK is going to have new CII logos to promote CII brand and products in its region.

The enhanced logo will have CII company names in the additional languages of traditional Chinese or simplified Chinese.

HONG KONG

CPD SEMINARS ORGANISED IN HONG KONG The Chartered Insurance Institute Hong Kong has partnered with The Hong Kong Confederation of Insurance Brokers to provide continuing professional development seminars in Hong Kong.

The most recent seminars, which took place in November, covered an array of topics – insurance broking practice, techniques for broking in a hardening market, and effective technical explanation of coverage terms to clients – and were presented to about 30 students each day.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

10-11_Letters_In_Dec 2018 - Jan 2019_Cll The Journal 10

17/12/2018 10:44

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

MONGOLIA

INTRODUCING CII QUALIFICATIONS IN MONGOLIA

A CII introduction event was organised at the business school of the National University of Mongolia on 28 November.

More than 30 university students and professionals working across the Mongolia insurance industry attended the event.

11 M A L AY S I A

THAILAND

NEW CII TRAINING PARTNERSHIPS

CII RENEW THAI TRAINING COLLABORATION (left to right): Helen Roberts, CII; Keith Richards, CII; Dr Sittiporn Intuwonges, ThaiRe; John Davidson, ThaiRe.

The CII has signed a collaboration agreement with Heron Talent Management (Heron), a training company in Malaysia.

Heron will collaborate with the CII to promote and distribute the CII professional development and qualification programmes in the Malaysian insurance industry.

The Chartered Insurance Institute Hong Kong Ltd (CIIHK) has recently renewed a collaboration agreement with Thai Re Services Company (Thai Re), a subsidiary of Thai Reinsurance Pcl (thre).

Thai Re will support CIIHK by providing face-to-face trainings on CII qualifications locally in Thailand.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

10-11_Letters_In_Dec 2018 - Jan 2019_Cll The Journal 11

17/12/2018 10:46

REGIONAL NEWS

8

JANUARY

IS CONTENT MARKETING THE BEST WAY TO ENGAGE CLIENTS? → 12:00 am – 1:30 pm The Insurance Institute of Liverpool www.cii.co.uk/liverpool

9

JANUARY

FUTURE BROKING MARKET → 12:30 am – 2:00 pm The Insurance Institute of Bournemouth www.cii.co.uk/bournemouth

14

JANUARY

LEADERSHIP PROGRAMME 2019 → Time TBC The Insurance Institute of Sussex www.cii.co.uk/sussex

IPSWICH AND KENT

CII CONFERENCES ANNOUNCED Following the success of Ipswich’s first full-day continuing professional development conference last year and its subsequent diversity symposium, the Institute is delighted to announce that its conference will be returning on 6 February at Wherstead Park, Ipswich.

Focusing on emerging risks, the institute will be welcoming Inga Beale DBE, CEO of Lloyd’s of London as keynote speaker. A variety of topics are on the agenda, including terrorism, regulation,

12

the Novichok poisoning, drones and cyber-enabled crime. → Book your place(s) now at: www.cii.co.uk/ipswich

R OYA L T U N B R I D G E W E L L S

DINNERS GALORE FOR RTW

The Kent Conference is also set to return on Thursday 7 March and will include an update from the Bank of England, the Kent Police Crime Commissioner and a Former Hostage Negotiator. → Book your place(s) now at: www.cii.co.uk/midkent

CARDIFF

YOUNG PROFESSIONALS CONTINUE TO THRIVE Novus, the young professionals’ group of the Insurance Institute of Cardiff, continues to go from strength to strength.

Started in 2015 by a group of likeminded young professionals looking to network with their peers, only one of the founding members remains – showing that the group has developed a successful, sustainable model that can be passed on to future members.

Today’s group is the most diverse ever, with eight current council members made up of: four male and four female; five from insurance and three from financial services; and hailing from a total of six companies, ranging from small local businesses to international corporations.

Novus supports the local young CII members by offering quarterly networking events. These events are held in the evenings at a range of bars and venues around the Cardiff city centre, to encourage a relaxed and welcoming atmosphere for CII members that are

Brian Bissell, president of the Royal Tunbridge Wells Institute, presents awards to Gemma Fitzjohn

typically newer to the industry and less experienced at such events.

Some events feature networking games, coaxing attendees out of the groups they came with and encouraging them to mingle with each other. One such event was reported in feedback as being “the best networking event they had ever attended”. → For more information visit: www.cii.co.uk/cardiff

The Royal Tunbridge Wells institute celebrated its second dinner of the year, having chosen to reset the annual date to October, at The Halt, High Rocks in Tunbridge Wells. Joined by CII president Jonathan Clark, the evening was considered a great success with valuable networking, socialising and dancing.

Congratulations must go to Gemma Fitzjohn, from Towergate Insurance Brokers, who was awarded Young Achiever of the Year by the institute, along with council member Fiona Wilson of AXA PPP healthcare as a worthy runner-up. → For more information visit: www.cii.co.uk/rtw

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

12-13_Regional N_Dec 2018 - Jan 2019_Cll The Journal 12

17/12/2018 10:46

REGIONAL NEWS

15

JANUARY

DEALING WITH COMPLAINTS → 12:15 am – 2:00 pm Nottingham Insurance Institute www.cii.co.uk/nottingham

6

FEBRUARY

MLS LECTURE → 12:15 pm – 1:00 pm The Insurance Institute of Manchester www.cii.co.uk/manchester

12

FEBRUARY

THE FUTURE OF COMMERCIAL INSURANCE BROKING → 12:00 am – 1:30 pm The Insurance Institute of Chelmsford and South Essex www.cii.co.uk/liverpool

LEEDS

LEEDS INSTITUTE LAUNCHES EMERGING PROFESSIONALS GROUP The Insurance Institute of Leeds is delighted to announce the launch of its new emerging professionals group. This newly formed group aims to connect, engage and empower the next generation of insurance professionals and leaders, targeting members of the industry aged 35 years and under.

Benefits of joining the group will allow

access to exclusive emerging professionals events, career development and networking opportunities, personal development and peer interaction.

The group met in October, with nearly 100 people signed up to the launch event designed to engage with people in the area. → For more information visit: www.cii.co.uk/leeds

B O LT O N

MANCHESTER

YOUNG MEMBERS BALL A SUCCESS

Returning for its second year, the Young Members Ball run by the Insurance Institute of Manchester saw more than 150 young professionals come together in September at Hotel Football. There, they met with the institute president, Suchit Desai MA ACII, to enjoy an evening of dinner and

entertainment – with the aim of encouraging networking with key figures in the profession.

Guests heard from speaker Jane Kielty, managing director at Aon, and helped raise money for local charity 42nd Street. → For more information visit: www.cii.co.uk/ manchester

A GLIMPSE INTO THE FUTURE In November, the local Vue Cinema welcomed the Insurance Institute of Bolton’s showcase learning and development session of the year, titled ‘A Glimpse into the future’, hosted by Martin Ashfield. Three leading industry speakers were invited to present on their respective areas of – electric cars, autonomous vehicles and connected homes – together demonstrating the cutting edge of technology in homes and cars, present and future.

Karen Ashton, three times national champion in the prestigious Vehicle Damage Assessor of the Year competition, and a trainer on hybrid and electric vehicles, began with a talk on fuels, power sources and hybrid vehicles. This was followed by David Williams, technical director for Axa Insurance, who shared some of his

13

experiences of autonomous vehicle strategy and consortium work with the Williams F1 team and Jaguar Land Rover. Finally, Chris Woodward of Clarke Infinity, turned matters to smart homes, home cinemas, automation and entertainment systems.

After the talks, panel discussion brought all three presenters together for questions and discussion about what the future of automation holds. → For more information visit: www.cii.co.uk/bolton

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

12-13_Regional N_Dec 2018 - Jan 2019_Cll The Journal 13

17/12/2018 10:46

THE INTERVIEW: CRAIG TRACEY

CRAIG

TRACEY

Background

International

Support

Craig Tracey was born in Durham and attended the city’s Framwellgate Moor Comprehensive School. His family come from a mining background in the northeast of England.

In January 2018, Craig was appointed as parliamentary private secretary to the Department for International Development and the Government Equality Office.

Craig has worked in parliament with charities Breast Cancer Now and Help for Heroes. He campaigns for improved road safety, protection of the green belt and support for businesses.

C

14

raig Tracey has the rare benefit of looking at the insurance profession from both sides. Now MP for north Warwickshire and Bedworth, Mr Tracey hails from an insurance background, having joined his father’s broking company after leaving school, before setting up his own broker and spending more than 20 years in the profession.

“One of the reasons I got into politics was regulation and the challenges and lack of understanding for small businesses. I loved the customer services side of insurance, dealing with people, managing risks, but 80% of my time was spent on compliance.

Eventually, wife said to me: ‘Either stop moaning or go and do something about it!’

“When I was first elected, there wasn’t enough conversation between government MPs and the insurance profession.

However, we’ve worked hard to improve that dialogue. Now I am an MP, I can understand the industry from both sides and I can help that process. It is my aim to get people engaged and help shape the future of regulation and of the insurance profession.”

RAISING THE PROFILE Mr Tracey is always ready to raise the importance of insurance as an industry and contest the issues that matter to the profession and the public. He cites the recent Budget, in which insurance premium tax was not raised, and feels the industry did a great job of lobbying for a positive outcome for its customers.

He has also been heavily involved with policymakers on the Civil Liability Bill, containing both whiplash reforms and the Ogden discount rate, which will mean the public will see direct benefits in their future premiums.

As we meet, Mr Tracey has just held a debate at Westminster Hall to discuss the impact of absence from work due to mental health problems on businesses.

“The findings are quite staggering, with the annual cost of poor mental health to employers in the UK as much as £44bn,” he says.

“The debate also highlighted insurance products available that can help form part of the solution. Businesses need to have processes in place to ensure staff are properly supported, but also that they have insurance in place that helps manage the situation.

“During the debate, I referred to the CII mental health report recently published in association with the mental health charity Mind. It is fantastic that the CII is involved so positively in this.

“I also recently read the Insuring Women’s Futures report on the pension deficit for women in the UK and I’ve actively used that report in parliament – it was incredibly useful and raised many important issues.

“Overall, it is excellent to see the insurance profession working closely with charities and researchers to become part of the solution.”

THE WESTMINSTER BUBBLE Expanding on his involvement with the CII, Mr Tracey is adamant that working with outside organisations helps him to do his job as an MP effectively.

“You hear the phrase ‘the Westminster bubble’ and it really does exist. If it wasn’t for organisations like the CII, ABI and BIBA, there is no way I could keep up with the advancements being made and the challenges that the profession is facing.

“The insurance bodies that I deal with have made huge progress in recent years, and do represent their members and the public extremely well.”

Mr Tracey also co-chairs the insurance and financial services All-Party Parliamentary Group (APPG), as well as the women and enterprise APPG, both of which are making huge strides going into 2019.

He explains: “In terms of the insurance and financial services APPG, we are putting forward our list of experts and speakers for 2019, as well as highlighting regulation that is coming into force and technological advancements across the sector.

“With technology moving at such a rapid pace, we need to understand it from the outset because at some point we are going to have to legislate on the laws that govern it or create a framework of regulation.”

The women and enterprise APPG continues to grow and is on the verge of publishing its first report, with Mr Tracey involved specifically from a female entrepreneurship perspective.

“On every single measure, gender-diverse boards are more successful,” he says, “so beyond the logical standpoint that 50% of the population is female and this should be realistically reflected on boards and in business, companies are far more profitable if you have a diverse board.

“It is so important to encourage bringing women into these top-level teams, [because] you bring in different angles and new viewpoints.”

FORWARD THINKING Mr Tracey also has significant involvement with the CII New Generation programme, with this year’s group contributing to the financial services APPG in January, as well as taking part in its annual parliamentary reception at the House of Commons.

“I am really excited about this,” he says. “It is a great opportunity to share some forward thinking and have the chance to engage with these younger voices at the start of very promising careers.

“Harnessing their skills and ideas can be really positive for the APPG and in return they will receive some unique insight into how parliament works and how you can effect positive change.

“Politics really does have an impact on every aspect of all of our lives and if you have the knowledge of how to engage with that, it can give you a huge advantage.”●

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

14-15_Interview_Dec 2018 - Jan 2019_Cll The Journal 14

17/12/2018 10:47

THE INSURANCE BODIES THAT I DEAL WITH HAVE MADE HUGE PROGRESS IN RECENT YEARS, AND DO REPRESENT THEIR MEMBERS AND THE PUBLIC EXTREMELY WELL

15

CLEARER VISION As a former broker and now MP for north Warwickshire and Bedworth, Craig Tracey has a rounded view of the insurance profession. He speaks to Luke Holloway... thejournal.cii.co.uk / The Journal / December 2018 - January 2019

14-15_Interview_Dec 2018 - Jan 2019_Cll The Journal 15

17/12/2018 13:23

H O T T O P I CH:OTTE TCOHPNI OC L–O GMYOITNO RT H E H O M E

HOT TOPIC

HOME IS WHERE THE SMART IS With some form of automation now in place in nearly three quarters of homes, Sam Barrett examines the challenges and opportunities for the insurance sector

16

GETTY

T

echnology has brought significant benefits to the way we run our homes, with smart devices giving us the power to remotely switch on the heating, dim the lights and check who is on our front doorstep. And while research by Policy Expert found that 40% of people purchase these devices to make their lives easier, this trend could also transform their home insurance. thejournal.cii.co.uk / The Journal / December 2018 - January 2019

16-18_Hot Topic_Dec 2018 - Jan 2019_Cll The Journal 16

17/12/2018 10:48

H O T T O P I CH:OTTE TCOHPNI OC L–O GMYOITNO RT H E H O M E

The benefits are significant according to Nigel Walsh, insurtech partner at Deloitte. “By gaining a more detailed understanding of the risk a home presents, an insurer can deliver improvements in pricing and risk management as well as helping to foster better customer relationships,” he explains. “There are challenges but there are also plenty of opportunities for insurers.”

SMART HOMES All manner of smart devices are being developed for the connected home.

Properties can be fitted out with

an electrical fire, while connected security systems can turn on your lights when someone rings the doorbell or send a notification to your phone, so you can speak to the caller.

Being able to keep tabs on a home in this way can reduce risk. As an example, Arslan Hannani, head of market management at Zurich Insurance, points to the use of this technology in a large municipal building. “Monitoring factors such as humidity, temperature and leaks enables us to help our clients respond better to their customers’ needs,” he explains. “As soon as something

Intelligence show that although home insurance costs have fallen marginally during the year to October 2018, with average premiums dropping by 0.4% to £137, claims costs from the increase in escape-of-water claims plus last winter’s storm and snow damage are set to fuel price hikes.

Connected homes also have the potential for fraud prevention. Mike Hallam, head of technical services at the British Insurance Brokers’ Association, explains: “As claims will be based on the data that these smart devices have collected, it will help to reduce fraud. In addition, it should also

MOST POPULAR SMART HOME TECHNOLOGY

54% SMART TV

26%

SMART METER

22% HOME HUB

11%

10%

HEATING

SPEAKER

9%

17

HEALTH & FITNESS DEVICES

Source: Policy Expert

7%

LIG LIGHTING

6% PLUGS

unusual is detected, such as damp in a tenant’s property, we could send a maintenance person to fix it.” sensors to detect smoke, airquality issues and leaks, and camera technology is also increasingly commonplace, helping to detect and deter intruders.

Connected home technology also includes a number of safety and security devices. Smart plugs can ensure that devices are switched off, helping to reduce the risk of

5%

HOME SURVEILLANCE CAMERA

PREVENTION IS BETTER THAN CURE Detecting issues at this early stage can help to control claims costs. Take escape of water as an example. With total claims costs rising sharply during the past few years, the Association of British Insurers labelled it a key priority back in November 2017. However, the latest figures from Consumer

4%

KITCHEN APPLIANCES

see the claims settlement process going up a gear.”

Mr Hannani agrees: “Insurers traditionally focus on what happens from the point of claim but, with a connected home, we can look before this point. It’s about selling a real prevention proposition.”

As examples, a plumber could be sent out to fix a leak before a customer is aware of a problem, or an insurer could provide security advice if it detected attempts to hack into the → smart devices.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

16-18_Hot Topic_Dec 2018 - Jan 2019_Cll The Journal 17

17/12/2018 10:48

H O T T O P I CH:OTTE TCOHPNI OC L–O GMYOITNO RT H E H O M E

NEW RISKS

18

While there are clearly benefits, there are also potential downsides to consider from a risk perspective.

In particular, using connected technology to control and monitor the home introduces cyber risk.

“What happens if the system goes down?” asks Mr Hallam. “If it runs your security, it could potentially leave your home unlocked and a potential target for burglars.”

As well as the risk of the technology failing, there are already examples of this type of security technology being targeted by criminals. Key-fob cloning is concerning the motor market, and lax security has enabled baby monitors to be hacked – with parents horrified to find strangers watching and talking to their children.

There are also issues around liability. With the technology provided by another company, if it inadvertently introduces malware that compromises a home’s security or turns off sensors, it could find itself liable for any claims that might occur as a result.

OVERCOMING OBSTACLES Policy Expert research shows that some form of home automation is now in place in nearly three quarters of homes, however, there are a number of obstacles that stand in the way of its adoption in the home insurance space.

Firstly, cost is prohibitive and during trials, the Hood Group looked at around 20 different devices that targeted escape of water. To achieve the best results, it found it was necessary to combine three of the technologies currently available: sonic, which listens to noise in the pipes; flow; and temperature. “If you combine these, you can tell whether you’re dealing with a drip, a leak or the additional water usage resulting from guests using the shower,” explains Gavin Dobson, head of marketing at Hood Group. “Unfortunately the cost of installing this technology isn’t commercially viable yet.”

Time will inevitably bring the cost down, but insurers face further

COST OF COVER Average annual premium – £137 By region Highest annual premium – £183 in London Lowest annual premium – £124 in Wales and the northeast By property age Highest annual premium – £162 for properties built before 1895 Lowest annual premium – £121 for properties built after 2000 Source: Consumer Intelligence

STEMMING THE FLOW £483m paid out in domestic escape-ofwater claims in the first nine months of 2017 24% increase in the total cost of these claims between 2014 and 2016 31% increase in the average cost of these claims between 2014 and 2017 Average claim is £2,638 Source: Association of British Insurers

SMART PREDICTIONS Nearly 1.5 million households plan to have their home fully controlled by smart devices by 2023 (Policy Expert) £10.8bn will be spent on smart home devices in 2019 (PwC) 40% of device owners are expecting to upgrade within two years (PwC)

obstacles. With so much of this technology monitoring the home, consumers may be reluctant to allow an insurer to have this insight. Adam Beckett, sales and marketing director at Aviva, says work is required around this. “There is some anxiety around having cameras in the home but, by creating the right propositions, we should be able to build consumer confidence.”

Similarly, insurers could run into issues around accessing the data, especially where they have

not installed the devices and the manufacturers own the relationship with the consumer. However, Mr Hannani believes the General Data Protection Regulation will help. “This makes it clear that individuals are the owners of their own data, and can control who has access to it,” he says.

“Most people are more than happy to share their data, providing they get value for it.”

SMARTER PROPOSITIONS The insurance sector is already looking at how it satisfies this consumer demand for value. While it’s still early days, Mr Walsh believes insurance will become a by-product of a more service-driven proposition.

“Insurers could offer a product that helps a consumer look after the things they love,” he explains. “This might be monitoring their home, a holiday cottage or even an elderly relative to make sure they’re safe. This could be underpinned by the insurance promise to put it right if something goes wrong.”

Further value could be delivered through greater personalisation of the cover. “We can move away from a one-size-fits-all product and make the relationship with the customer much more dynamic,” says Mr Beckett. “If someone’s going on holiday, we could increase the level of protection or add in new features. We’re exploring a number of different propositions but we do see a real future in this area.”

And while many expect it will be five years-plus before this type of proposition becomes more mainstream, the benefits it brings to consumers and insurers mean it is an area to watch closely. ●

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

16-18_Hot Topic_Dec 2018 - Jan 2019_Cll The Journal 18

17/12/2018 10:48

The Journal at your ďŹ ngertips For a variety of insurance related content including c-suite interviews, topical debates and in-depth articles.

thejournal.cii.co.uk 02_Website_AD__Cll The CII.12.2018.019.indd 19 Journal 2

22/02/2018 16:40 14/12/2018 11:28

MOTOR

TELEMATICS FOR THE PEOPLE Telematics insurance has helped cut car casualties among 17 to 19-year-olds by 35%, clearing the way for mass-market adoption of this groundbreaking technology

20

N

ew analysis of the latest UK road casualty statistics by LexisNexis Risk Solutions has begun to uncover compelling evidence that telematics insurance has played a role in cutting claims costs for insurers among the youngest, most vulnerable drivers, by helping to reduce casualties by more than a third since 2011.

Car casualty rates among 17 to 19-year-old drivers have fallen by 35%, compared to 16% for the driving population as a whole. The one major difference between young drivers and their older counterparts is telematics insurance, with four in five young drivers estimated to have a telematics policy today.

CUTTING ACCIDENT RISK This is the first time road casualty statistics have been analysed in direct relation to the exponential growth in telematics policies since 2011, with 975,000 live policies in 2017, suggesting telematics insurance has done more to cut accident risk than other road safety initiatives aimed at the young driver market.

The 35% reduction in road casualty rates in 17 to 19-year-olds is despite a 10% increase in the number of vehicles on the road (2011-2016) and a 7% increase in the number of driving licences held across all ages since 2012.

The analysis underlines the drive in the insurance sector to extend the benefits of telematics insurance into the mass consumer market with telematics policies and data-collection solutions for specific customer segments, each lowering in cost to the

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

20-21_Telematics_Dec 2018 - Jan 2019_Cll The Journal 20

17/12/2018 10:49

MOTOR

insurer as the driver risk lowers.

Graham Gordon, director, global telematics, LexisNexis Risk Solutions, says: “Our analysis and interpretation of the publicly available road casualty statistics, factors [in] key road safety advances such as improved roads, better junction design and new car safety technology – but the marked downward trend in the 17-19 age bracket points to an additional factor at play, the increasing availability and adoption of telematics insurance.

“This analysis is vitally important. It helps validate the sector’s significant investment in the proposition,

by providing firm evidence of the role of telematics in cutting claims losses while improving the market’s ability to offer insurance to the most risky drivers on our roads. But most importantly it reveals the mass-market potential for telematics, to help arrest the recent rise in road casualties in the wider motoring population and enable the market to truly realise its investment in telematics.

Mr Gordon continues: “With such a growing body of evidence showing that telematics is having a direct impact on cutting road accidents and thereby claims costs, combined with the fall in costs for the sector, the evolution of telematics insurance with products for each customer segment is already well underway.”

CII TRUST INDEX The CII’s own Public Trust in insurance research published this year recommended that insurance providers consider how to move from just the provision of insurance policy products to becoming partners in the shared endeavour of managing customers’ risk. Out of nine key themes or ‘building blocks of trust’ that emerged from the language the consumers used to describe trust in insurance in the study, the theme

THE COST OF OFFERING TELEMATICS HAS FALLEN DRAMATICALLY FOR THE INSURANCE SECTOR – WE ESTIMATE DATA ACQUISITION COSTS HAVE FALLEN BY AS MUCH AS 50% SINCE 2013 of ‘Relationship’ emerged as an area where insurance providers currently do not match customer expectations.

Genuine relationships are vital in building trust and there is a significant opportunity for insurers to demonstrate that they care about improving the lives of policyholders, rather than just the policy that is held as a commercial transaction. Product innovations such as telematics that provide instant feedback to improve driver behaviour, lower premiums and save lives helps combat the perception that insurers only act in self-interest.

Furthermore, it will offer the sector new ways to add value and become more important to customers, while also achieving the efficiency benefits of being better aligned around what customers really want. ●

21

KEY FACTS ● Road safety figures have generally plateaued since 2011/2012 ● Some 500 people are killed or seriously injured on UK roads every week ● In 2017, 1,793 people were killed on UK roads, an average of five people every day and just

under 25,000 people were seriously injured ● Some 73 people a day are either killed or seriously injured on UK roads; last year’s annual

total was the highest since 2011 ● There has been a 6% increase in the number of deaths on motorways ● Car accidents are the biggest killer of teenagers, according to the World Health

Organisation ● Drivers aged 17 to 24 currently make up only 7% of drivers, but they represent nearly 20%

of the people killed or seriously injured in car crashes ● The 18 to 25-year-old age group makes up close to 25% of all motor insurance claims ● In 2012, among 17 to 19-year-olds, for every 37 drivers there was a casualty. In 2017, this

increased to one in every 48 young drivers – a 29% improvement ● The government estimates that road traffic collisions cost the UK economy in excess of

£16.3bn a year.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

20-21_Telematics_Dec 2018 - Jan 2019_Cll The Journal 21

17/12/2018 10:49

M E N T A L H E A LT H

HOT TOPIC

22

LET’S TALK Lawrence Finkle examines the moral and economic case for supporting mental health at work

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

22-24_MIND_menta_Dec 2018 - Jan 2019_Cll The Journal 22

17/12/2018 10:50

M E N T A L H E A LT H

13%

OF ALL SICKNESS ABSENCE DAYS IN THE UK CAN BE ATTRIBUTED TO A MENTAL HEALTH CONDITION

A

t the start of December, the CII launched a guide for the insurance profession on managing mental health in the workplace, published in partnership with the mental health charity Mind.

Based on the landmark ‘Thriving at Work’ independent review of mental health at work commissioned by the Prime Minister back in January 2017, and led by Lord Dennis Stevenson alongside the chief executive of Mind, Paul Farmer, the guidance paper is intended to provide support for both organisations and colleagues as we

strive to break down the stigma of mental health. It contains tips for the insurance profession on putting the six mental health ‘core standards’ outlined in the review into practice, in addition to a series of more ambitious ‘enhanced’ standards for employers who are able to do more to lead the way.

The guide also contains other useful tools and resources to help organisations better support employees’ mental health.

ECONOMIC CASE The economic case for employers to look more closely at their role in supporting the wellbeing of their staff is irrefutable.

With mental health problems affecting one in six British workers each year, and with mental health considered to be the leading cause of sickness absence (nearly 13% of all sickness absence days in the UK can be attributed to a mental health condition), the annual cost of poor mental health to employers is estimated to be between £33bn and £44bn. Often this cost arises from presenteeism – where individuals are at

work but significantly less productive due to poor mental health – in addition to sickness absence and staff turnover.

Given the focus politically on measures to address the UK economy’s productivity puzzle despite record levels of employment, it is becoming increasingly evident that it is in the interest of both employers and the government to work together to prioritise and invest far more in improving mental health. This renewed attention on the importance of mental health was evidenced in a recent debate in Westminster on the ‘Financial effect of absence from work due to mental health problems’, called by the chair of the All Party Parliamentary Group on Insurance and Financial Services Craig Tracey, where the CII’s guide was raised as an example of an initiative at the forefront of better policy in this area. It was highlighted that with such significant economic ramifications, it stands to reason that the workplace should be focused on if the mental health of society is going to be improved. →

23

7 in 10

WORKERS HAVE HAD POOR MENTAL HEALTH AT SOME TIME IN THEIR LIVES

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

22-24_MIND_menta_Dec 2018 - Jan 2019_Cll The Journal 23

17/12/2018 10:50

M E N T A L H E A LT H

MORAL CASE Of course, there is also the moral case for helping organisations to prioritise mental wellbeing. The personal consequences for those concerned reach far beyond the workplace – as problems can affect an individual’s physical health, their relationships and their financial resilience. Mental health problems are also often linked to other illnesses and fluctuate significantly. Those suffering from mental ill health often find themselves needing to take a period away from work to recover, which may lead to a significant reduction in income.

In fact, some 300,000 people with a long-term mental health problem lose their jobs each year. That reduction often means that people fall behind on

24

their bills, rely increasingly on credit or savings, which in turn can create a self-perpetuating cycle of stress and pressure, prolonging illness further.

The CII is clear that insurance professionals have a duty do right by their colleagues and customers. As it is understood that one in four people will be affected by mental ill health of some kind in their lifetime, the insurance profession will not survive without being equipped to support one in four of its potential talent pool, or by failing to understand and meet the needs of a quarter of its customers.

For more information, visit: cii.co.uk/69898 ●

12%

OF EMPLOYEES SAID THEIR MENTAL HEALTH WAS POOR OR VERY POOR

Lawrence Finkle is public affairs executive at the CII

FIVE WAYS TO TACKLE STIGMA IN YOUR ORGANISATION Help people understand mental health Improving mental health awareness is the best way to beat stigma. Provide staff with reliable information – the CII website is a great place to start.

Talk about mental health Talk about mental health. It is easy to believe there is no right place to talk about mental health. But the more we talk about it, the more we start to feel comfortable.

Share your experience If you have lived experience of poor mental health and youare happy to share your story, you can help improve people’s understanding and change their attitudes.

People follow leaders’ behaviour, so lead by example.

Support co-workers and colleagues Put in place, and shape, mental health programmes and policies at work.

Recruit mental health champions Champions are self-appointed employees at any level within your organisation who help challenge stigma and change the way employees think and act about mental health by launching initiatives to improve wellbeing.

AT THE CII The CII have introduced a voluntary Mental Health Employee Champions course to support colleagues who have questions about mental health. The training is part of our overall wellbeing programme known as ‘feeling first class’, offering sessions on a range of activities including healthy eating for a healthy mind, sleep talk and mindfulness programmes.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

22-24_MIND_menta_Dec 2018 - Jan 2019_Cll The Journal 24

17/12/2018 10:50

Nurturing your talent

We work with employers to develop bespoke cost-effective training solutions, driven by your business needs.

cii.co.uk/training CII.12.2018.025.indd 25

14/12/2018 11:35

FRACKING

F

racking restarted in Lancashire in mid-October, but has since been halted three times because of earth tremors that exceeded government guidelines.

It was the first time fracking had been permitted in the UK since 2011, when a series of earthquakes were linked to the drilling at a site near Blackpool. The government has also proposed allowing "exploratory" shale gas drilling to go ahead without planning permission – a move opposed by a number of councils.

INSURANCE PERSPECTIVE

26

The row on whether or not fracking should continue rumbles on, but should insurers be worried?

From an insurance perspective, fracking is not an excluded peril as it is not actually an insured peril under standard insurance policies.

According to the Blackfriars group, any damage caused by fracking would almost certainly result in a claim under the earthquake, subsidence, ground heave or landslip cover under the policy.

The company says: “There is currently no general exclusion of fracking under any of these perils, nor any other, on any personal or commercial insurance product we are aware of. Such news would be of considerable interest in the insurance industry and the introduction of such an exclusion would certainly gain considerable publicity in both the insurance [press] and wider media.”

However, earlier this year The Yorkshire Post was among those reporting that thousands of homeowners could face higher insurance premiums thanks to fracking under their land. There are also growing concerns that property would be devalued because fracking was going on nearby.

Kevin Pratt, a consumer affairs expert at MoneySuperMarket, says: “One of the problems with fracking is that no one is able to say

how much damage it will cause to nearby properties, if any. Insurers will pay out for buildings damaged by earthquake or subsidence, so householders in fracking locations can cross that particular worry off their list, at least for the time being.

“Problems would eventually arise if a particular area became a claims hotspot because of fracking. Insurers set their prices with reference to the number, size and type of claim in any given postcode, so anyone with an address in an area recording a lot of claims would see their premiums increase.”

$3m AWARDED IN DAMAGES CAUSED BY FRACKING IN TEXAS, US He adds: “They might also face a higher policy excess – the amount they have to pay towards the cost of any claim they make. On top of this, if the number of claims in an area were to rise to a high level, insurers might change the definition ‘earthquake’ specifically to exclude events directly attributable to fracking.”

Meanwhile, Chris King, head of home insurance at Compare The Market, says: “It’s important to note that due to the significant costs of these claims, the excess is often much

WHAT IS FRACKING? “Hydraulic fracturing, also known as fracking, is a technique that can be used in the extraction of gas from shale rock. It is estimated that more than 2.5 million wells have been hydraulically fractured worldwide.

“Shale gas has the potential to provide the UK with greater energy security, economic growth and jobs and could be an important part of our transition to a low-carbon future.

“The UK has promising shale reserves: for example, the British Geological Survey estimates that the Bowland-Hodder shale in northern England contains 1,300 trillion cubic feet of gas.”

Source: UK government

higher. Insurers tend to use previous risk data to access the likelihood of a claim and so, as fracking has failed to really accelerate over the past couple of years, it’ll be a task for providers to calculate the effect this will have on premiums.

“It may take months – or even years – for insurers to collect the relevant information they need, but if an area becomes at high risk of subsidence as a result of fracking, it is likely that premiums will eventually increase.”

Despite the industry fears, the Association of British Insurers says that “there is, at present, little evidence to show a link between fracking and seismic activity that could cause damage to a wellmaintained property”, and adds that it is currently not aware of any claims where fracking has been blamed as a cause of property damage.

LIABILITY CONSIDERATIONS Law firm Clyde & Co has also been considering the liability for damage caused by fracking and the available insurance coverage.

It says: “Litigation in the US may help to shed some light on these issues. In Parr v Aruba Petroleum Inc, a jury awarded $3m in damages to the Parrs, who owned a 40-acre property in Texas.

“The Parrs claimed the emissions associated with fracking caused headaches, nausea, vomiting, open sores, dizziness and the death of their pets. The basis of the award was that defendants had ‘intentionally created a private nuisance’ in their operations.”

Clyde & Co explains that the Parrs’ alleged exposures to the consequences of the fracking included emissions from trucks and onsite equipment, particulate matter “stirred up” by drilling and trucking activities, evaporation of fracking fluid in pits releasing chemicals into the air, release of chemicals as a result of processing, flaring, “fugitive emissions” from wells, venting and finally fracking itself – the subsurface release of chemicals, contamination of ground water, unintended underground migration of gas/chemicals. ●

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

26-27_Fracking_Dec 2018 - Jan 2019_Cll The Journal 26

17/12/2018 10:50

FRACKING

SHATTERING THE PEACE

The government has once again allowed fracking to take place in the UK, causing an outcry among environmentalists. But what is the position for insurers?

27

USEFUL LINKS THE ROYAL SOCIETY – Shale gas extraction report: bit.ly/1oUt9Nm UK GOVERNMENT – Review of the potential public health impacts of exposures to chemical and radioactive pollutants: bit.ly/2CJ2ryd BRITISH GEOLOGICAL SURVEY – Shale gas environmental monitoring: bit.ly/2E0RZGH IKON: JOHN DEVOLLE

THE ENVIRONMENT AGENCY – Onshore oil and gas regulation information page: bit.ly/2E0nosO

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

26-27_Fracking_Dec 2018 - Jan 2019_Cll The Journal 27

17/12/2018 10:51

Reducing Risk:

Why Insurer Approved 3DQHOV RÈ´ HU (QKDQFHG Property Protection

7R DOORZ D PRUH DFFXUDWH ULVN DVVHVVPHQW RI VSHFLȷ F EXLOGLQJ FRQVWUXFWLRQV WKH LQVXUDQFH LQGXVWU\ KDV GHYHORSHG LWV RZQ VHW RI VWDQGDUGV DQG ODUJH VFDOH V\VWHP WHVWV ZKLFK DUH DUJXDEO\ PRUH DUGXRXV WKDQ EXLOGLQJ UHJXODWLRQ UHTXLUHPHQWV .LQJVSDQŬV LQGHSHQGHQWO\ DVVHVVHG ȷ UH FDVH VWXGLHV VKRZ WKH VWURQJ FRUUHODWLRQ EHWZHHQ ULJRURXV LQVXUDQFH LQGXVWU\ WHVWLQJ DQG UHDO OLIH SHUIRUPDQFH SURYLGLQJ HYLGHQFH WKDW WKHLU /3&% DQG )0 DSSURYHG SDQHOV SUHYHQW ȷ UH VSUHDG DQG Rȴ HU VXSHULRU OHYHOV RI ȷ UH UHVLVWDQFH IRU DVVHW SURWHFWLRQ

CII.12.2018.026-027.indd 26

14/12/2018 08:10

5HDO )LUH &DVH 6WXG\ Audi Dealership 7KH ȷUH ZKLFK ZDV D GHOLEHUDWH DFW RI DUVRQ RFFXUUHG LQ WKH H[WHUQDO FRPSRXQG RI D ODUJH $XGL GHDOHUVKLS LQ %HOJLXP 7KH EXLOGLQJ LV RI VWHHO IUDPH FRQVWUXFWLRQ FODG ZLWK P ZLGH E\ PP WKLFN .LQJVSDQ )0 /3&% FHUWLȷHG 3,5 FRUHG VDQGZLFK SDQHOV 7KH LQVLGH RI WKH ZRUNVKRS VKRZHG QR HYLGHQFH RI ȷUH SHQHWUDWLRQ LQ DQ DUHD DGMDFHQW WR WKH H[WHUQDO ȷUH DWWDFN DQG EXVLQHVV ZDV DEOH WR UHFRPPHQFH WKH QH[W GD\ ũ 7KH 3,5 FRUHG VDQGZLFK SDQHOV ZHUH VXEMHFW WR D ȷUH OLNHO\ WR KDYH ODVWHG DW OHDVW PLQXWHV IURP LJQLWLRQ ũ ,W LV OLNHO\ WKDW WKH FODGGLQJ ZLOO KDYH EHHQ VXEMHFWHG WR SHDN LQFLGHQW UDGLDWLYH KHDW ȸX[ RI DW OHDVW N: P2 IRU D SHULRG RI DW OHDVW PLQXWHV ũ 7KH VDQGZLFK SDQHOV H[SRVHG WR WKHVH FRQGLWLRQV VXVWDLQHG GDPDJH LQ WHUPV RI GHODPLQDWLRQ RI WKH H[SRVHG VWHHO VNLQ RI WKH SDQHOV DZD\ IURP WKH 3,5 FRUH UHPRYDO RI WKH SDLQW FRDWLQJ DQG S\URO\VLV RI WKH 3,5 FRUH PDWHULDO WR D GHSWK RI DSSUR[LPDWHO\ PP ũ 7KHUH ZDV QR HYLGHQFH RI ȷUH SURSDJDWLRQ ZLWKLQ WKH SDQHOV

,QWHUQDO YLHZ 1R HYLGHQFH RI È·UH SURSDJDWLRQ WR WKH LQWHULRU RI WKH ZRUNVKRS

$FFRUGLQJ WR PDQ\ JOREDO LQVXUDQFH FRPSDQLHV )0 /3&% DSSURYHG VDQGZLFK SDQHOV FDUU\ WKH VDPH OHYHO RI ULVN DV QRQ FRPEXVWLEOH SURGXFWV WKHUHE\ KHOSLQJ UHGXFH SUHPLXPV IRU EXLOGLQJ RZQHUV RFFXSLHUV NEW CPD 7R UHJLVWHU \RXU LQWHUHVW LQ DWWHQGLQJ DQ XSFRPLQJ &3' VHPLQDU HYHQW LQ /RQGRQ IRFXVLQJ RQ HQKDQFLQJ SURSHUW\ SURWHFWLRQ DQG UHGXFLQJ 3, FODLPV RU WR DUUDQJH D IDFH WR IDFH VHPLQDU DW \RXU SUHPLVHV SOHDVH HPDLO È·UHLQIR#NLQJVSDQSDQHOV FRP www.kingspanpanels.com

CII.12.2018.026-027.indd 27

14/12/2018 08:10

Aspire Apprenticeships

Aspire to grow your business?

Apprenticeships could be for you Unlock access to the brightest talent in the insurance sector with CII Aspire Apprenticeships.

We make offering apprenticeships easy, cost effective and convenient for your business with guidance and support throughout.

High-quality apprenticeship training brings new life to your business. And while apprentices learn and develop, your business is growing too.

Find out more at

cii.co.uk/apprenticeships

CII.12.2018.030.indd 30

14/12/2018 11:25

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

HOUSEHOLD INSURANCE STUDY PUBLISHED The UK Financial Conduct Authority (FCA) has published a supervisory study, titled – Pricing Practices in the Retail General Insurance Sector: Household Insurance. The regulator had committed to such a thematic review in its 2018/2019 Business Plan, but the timing of its publication should be considered in the context of the recently announced ‘super-complaint’ submitted by Citizens Advice to the Competition and Markets Authority (CMA) about the ‘loyalty penalty’ paid by loyal and disengaged consumers in five consumer markets – one of which is household insurance.

The thematic review can be accessed here: bit.ly/2Qoo1Ux

1

2

FCAA LAUNCHES GGENERAL ENERAL IN INSURANCE N SURANCE MARKET STUDY

The thematic review described opposite recommends a package of measures necessary following this initial work. These include addressing the potential non-compliance by some firms with rules on transparency at renewal, a wider discussion paper on fairness of pricing in financial services, and a more intensive market study of general insurance pricing practices for home and motor insurance.

It will focus on the following key issues: ● The consumer outcomes from pricing practices ● The fairness of outcomes from The CII takes a look at what’s pricing practices new on the policy and public ● The impact of pricing practices on competition affairs front this month ● Remedies to address any harm that the FCA finds.

The terms of reference for the market study can be viewed at: bit.ly/2QSGzvK

WHAT’S ON THE RADAR? FCA BOSS WARNS OF FAILURES, FAILUR DUAL PRICING AND RISK OF DISCRIMINATION

3

4

Andrew Bailey, chief executive of the FCA, has written to CEOs to clarify the FCA’s expectations in relation to the risks of “significant harm and poor outcomes for consumers” found in its investigation into household insurance pricing practices.

He said that firms should act now to address any issues from the findings in the report. In particular, he emphasised that firms need to be able to “demonstrate” how conclusions had been reached when checking whether customers are being treated fairly, and that they must be clear who in the business is responsible for pricing decisions and – by extension – responsible for customer outcomes.

The ‘Dear CEO’ letter can be viewed at: bit.ly/2JVRNJJ

31

NEW STUDY INTO PERSONALISED PRICING LAUNCHED BY THE GOVERNMENT AND CMA The UK government, led by the business secretary Greg Clark in partnership with the CMA, is to undertake new research into the practice of personalised pricing – where retailers target online shoppers and charge people different prices for the same items. It will explore how personalised pricing is applied through mediums such as search engines, apps or comparison tools and the extent to which this is preventing shoppers from getting the best deals.

For more information, please see: bit.ly/2DWZZJA

thejournal.cii.co.uk / The Journal / December 2018 018 - January 2019

31_Reg_Radar_Dec 2018 - Jan 2019_Cll The Journal 31

17/12/2018 10:51

Study with substance

Our insurance qualiďŹ cations identify universally as evidence of knowledge and professional competence.

cii.co.uk/qualiďŹ cations CII.12.2018.032.indd 32

14/12/2018 11:32

INSURANCE COSTS

THE COST OF RISK Insurance costs come under the microscope as increasing numbers of people struggle to find the money for premiums

W

hile the insurance profession may pride itself of providing a valuable and enabling service, the question of paying the premiums is far from straightforward.

The Financial Conduct Authority has been investigating the issue of consumer credit and has introduced new rules this year. As that happened, Jonathan Davidson, director of supervision – retail and authorisations, pointed out the consumer credit sector serves around 39 million people. Now, new research has revealed two million people borrow money from friends and family to help pay their insurance premiums.

Worse still, some 14% of people have had to cancel insurance policies and not replace them because they

could not afford to pay the premiums.

The findings are from premium finance company Premium Credit, which warns that the nation faces a growing crisis of people being underinsured or breaking the law by having no cover when legally they must, such as if they own a car.

Premium Credit’s research reveals that overall one in four (24%) people have cut back on the quality of their insurance cover in the past 12 months because they could not afford it and a further 18% are considering doing this in 2019. Some 14% of people now claim to be spending more than £1,000 a year on their insurance.

Of those people who have cut back on their insurance in the past 12 months, 35% have reduced their life cover, followed by 34% who have done this with their home insurance.

Two thirds of people (66%) claim

Type of insurance cover

KEY FINDINGS INCLUDE: ● 14% of people have had to cancel

policies because they cannot afford them ● 24% have cut back on the quality of the insurance and 18% are considering doing so in the year ahead ● 14% of people say they are spending more than £1,000 a year on insurance Source: Premium Credit

Life

their cost of insurance has increased in the past two years, compared to just 6% who say it has fallen and 15% say it has stayed the same. In this period, some 15% of people say the cost of their insurance has increased by more than 10% in the past 12 months; and one in four (24%) claim it has gone up by between 5% and 9%.

Adam Morghem, strategy and marketing director at Premium Credit, said: “Many types of insurance premium have been increasing and our research shows the impact this is having on millions of people as they struggle to pay for their cover. Many are turning to friends and family to help, but there may also be a growing number of people taking huge risks by having no insurance at all. In some cases, such as those with cars, they are breaking the law in not having any cover. ●

Percentage of those people who have cut back on this type of cover in the past 12 months

33

Overall percentage of the adult population who have cut back on this type of cover in the past 12 months

35%

9%

Home

34%

8%

Travel

29%

7%

Health

23%

6%

Car

23%

5%

Pet

18%

4%

Other

7%

2%

Source: Premium Credit

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

33_Cost of RIsk_Dec 2018 - Jan 2019_Cll The Journal 33

17/12/2018 11:11

MERGERS AND ACQUISITIONS

M

ergers and acquisitions (M&A) activity has enjoyed a boomtime around the world in recent years, with global deal values set to exceed $3trn during 2018 – the fifth successive year that milestone has been passed.

M&A deals are being driven by a number of factors, including pressure from investors and a search for innovation, while the amount of dry powder that global private equity (PE) funds have is another key metric.

Investors have flocked to PE funds as a result of the low yield on fixed income and other investment classes, as well as being attracted by the solid returns PE funds have generated during the past decade.

As the size and volume of deals rises, so the risks associated with them increases, while the sellers’ market means there is a certain pressure to execute transactions quickly, which can only add to those risks.

Consequently, those involved in M&A transactions are constantly looking for ways to smooth the deal process and alleviate the risks faced.

So, the demand for insurance coverage through warranty and indemnity (W&I) cover has grown in tandem with the increase in deal volumes.

“Today, global M&A activity is on the increase and the demand for insurance

34

coverage is also on the rise,” says Brian Benjamin, global head of M&A at XL Catlin.

“The value of M&A deals is expected to exceed $3trn in 2018. We also expect the expansion of the M&A transactional risk insurance market to continue. In this very competitive environment, deal professionals and their brokers across the world are looking for innovative solutions to support their acquisitions or sales.”

COVERING THE DEAL M&A insurance was originally invented for PE clients and at the moment it only services private M&A transactions.

It does not apply to on-market acquisitions or public M&A generally.

W&I insurance covers buyers – and sometimes sellers – for loss suffered by the buyer as a result of breach of the seller’s warranties.

It can cover the seller for the same loss but if the seller is insured, for there to be a claim under the policy, the seller would need the buyer to make a claim against them for breach of warranty. Then the seller would then seek indemnification from the insurer.

“The reason M&A insurance is such a compelling solution for M&A participants is because it does two things: transfers liability risks to the insurer, and gives a strategic benefit to M&A buyers and sellers, facilitating deals with less risk for the buyer and seller,” says Angus Marshall, head of M&A, UK and London market, AIG.

“M&A insurance covers risk and it provides a strategic benefit to the parties undertaking M&A,” he continues.

“Buyers demand a full set of warranties, usually indirectly or tacitly related to what they’re willing to pay. So, if there’s no warranty protection, there will be an implicit discount on the purchase price of the company.

EUROPEAN MARKET The European M&A insurance market consists of managing general agents (MGA) and company insurers. The available capacity in the London market can easily aggregate to $500m for a single policy, according to Mr Marshall, while the largest global M&A programme recently had aggregated capacity of $1.5bn.

The appetite of MGAs has traditionally been focused on small to mid-market PE transactions, with deal sizes anywhere between $100m and $500m. The largest transaction AIG has seen had an enterprise value in excess of €12bn.

$3trn ESTIMATED GLOBAL VALUE OF M&A INSURANCE FOR THE WHOLE OF 2018

OH COVER, WHERE ART THOU? GETTY

With global M&A booming, Tim Evershed explains why demand for deal insurance continues to grow thejournal.cii.co.uk / The Journal / December 2018 - January 2019

34-35_MandA Insura_Dec 2018 - Jan 2019_Cll The Journal 34

17/12/2018 13:24

MERGERS AND ACQUISITIONS

economic downturn, claims generally increase,” says Mr Marshall.

“During the current M&A boom, we have seen more and more capacity enter the M&A insurance market.

The commitment of that capacity to the market remains to be seen – an economic downturn may precipitate a significant withdrawal of capacity, which will have various effects, including increase in premium.

“The market has grown up and what we see is more expansive coverage from underwriters. We’re seeing lower retentions, reduced premiums and an increase in the volume of transactions.”

Mr Marshall concludes: “Concurrent with these market changes, there has been a significant expansion of coverage and, as a result, these factors are likely to result in increased claims activity. M&A insurance claims can be characterised as high severity but low frequency.”●

However, as the volume and size of deals and the associated coverage has grown, so have claims – both large and small – and they are likely to be a constant feature in M&A deals going forward.

A recent AIG report finds that almost one in five AIG W&I policies received a claim notification. The biggest deals have the both highest average claims frequency and the largest average claims.

“There’s going to be an evolving claims landscape. In our experience, when the M&A market contracts due to an

35

45%

24% 40%

21%

21%

20%

Policy Count Distribution

35% 30%

25%

43%

17%

17% 15%

25%

25% 20% 10% 15%

14%

10%

5%

5%

9%

8%

500M-1B

>1B

0%

0%

100M

100M250M

250M500M

Average Reported Claim Frequency per Policy

W&I REPORTED CLAIM FREQUENCY BY DEAL SIZE

Deal Size Range (USD) Average Distribution of Policy Count Average Reported Claim Frequency per Policy

Source: AIG

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

34-35_MandA Insura_Dec 2018 - Jan 2019_Cll The Journal 35

17/12/2018 13:24

DRONES

TAKING TO The Insurance Apprentice Network explores how the ever-growing drone industry will cross over into the world of insurance

36 3 6

I

PHOTOGRAPHY: PHOT PHO PPH HOT HHO OOTTOOG OGRA OGR GRA GGR RRAA PPH PHY HY:YY:: JASON HHY JJAS JA AASS OONN SSMITH, MITH MIT MMI IITTTHH , CCI CINECLOUD I NNE NECL ECL EEC CCLL OU OOUD UUDD

n an industry full of analytics – and a naturally risk-averse nature – it is no wonder the insurance profession is so often on the back foot when it comes to technology or keeping up with current trends.

A common thread is that a lack of knowledge surrounding evolutionary tech creates a real scepticism about its potential – we can overestimate the dangers and underestimate the transformational benefits.

While many organisations are working to create their own innovation factories, hubs and teams across the globe, there is still a long way to go on the journey towards a tech-filled utopia.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

36-37_Drones_Dec 2018 - Jan 2019_Cll The Journal 36

17/12/2018 11:20

DRONES

THE SKIES So, when someone talks about drones, what comes to mind? Maybe a Christmas present that was flown twice and crashed into a tree? Or something hovering over your head at a firework display or festival? Perhaps you think more of the near misses with planes and bad press coverage surrounding military use. While drones are flying high, we are still seemingly lacking in confidence about this amazing piece of technology.

Professional drone expert and pilot, Jason Smith, from Cinecloud, tells us: “Whether you are flying for fun in your local park or for a commercial (paid) job, you should be abiding to the Drone Code set out by the Civil Aviation Authority (CAA), which governs UK airspace.

“When using drones in the UK you are entering some of the busiest airspace in the world, hence so many reports on the news of near misses.

To become a commercial drone pilot, you must get what is known as a Permission for Commercial Operations from the CAA. To obtain this you must first sit a ground-school theory test, write an operations manual detailing all your operating procedures, which is typically in the 15,000-word range, and complete a practical flight flight examination. After this, providing you have the correct insurance, you can start earning money from fl flying ying your drone.

“When “Wh en loo lookin looking king g for f a drone operator to conduct work for you, checking that they hold a valid permission and up-to-date insurance should be the first things on your list; you can then be safe in the knowledge that the operator of the drone will be a professional who knows how to conduct a drone operation safely.”

INSURANCE APPLICATIONS While drones are an exciting and growing part of our future, what can this mean in practise for the insurance profession? We are seeing an increasing amount of work around automating processes and jobs through other forms of artificial intelligence (AI) and drones are quickly becoming a part of this ‘future-proofing’.

While other industries like agriculture and farming are using for these small flying devices to feed crops, our industry is capitalising on their application in areas such as surveying work.

Imagine the following – rather than sending risk engineers, loss assessors and surveyors into dangerous, time-consuming or inconvenient environments, insurers can send out a small flying piece of technology that not only ues its features to assess damage, distances and temperatures, but will also take full and comprehensive pictures of

all locations to then feed back into a detailed risk report. All of this, and in a fraction of the time and cost it currently takes to send in human capital to perform the same tasks.

Jon Mainwaring, from Qlaims an industry distruptor, says: “Modern buildings have been designed so that [they are] easy to access, however on older buildings the only solution to inspect any part of the building is either a camera on a pole (usually limited in height) or scaffolding, which is costly in both time and resources. Drones now offer a costeffective and safer solution. →

37

USING DRONE SAFE REGISTER IN INSURANCE IS LIKE CHOOSING A CHARTERED LOSS ADJUSTER – CLIENTS KNOW THEY WILL GET A PILOT WHO IS PROFESSIONAL, WITH ALL THE NECESSARY PERMISSIONS AND INSURANCE

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

36-37_Drones_Dec 2018 - Jan 2019_Cll The Journal 37

17/12/2018 11:20

DRONES

A drone is quick to organise and, once onsite, can be deployed within minutes. We took a call recently on a Thursday at 4pm, put the job up on DroneSafeRegister, and at 10am the next morning there was a qualified drone operator onsite ready to conduct a survey.”

Commenting on this, Mark Boyt, founder of Drone Safe Register recently seen on the BBC’s Dragon’s Den, explains: “Using the Drone Safe Register in insurance is like choosing a Chartered loss adjuster – clients know that they will get a pilot who is professional, with all the necessary permissions and insurance. It is crucial with new technology to have the support foundations in place to allow for best practice.”

SUSTAINABLE APPROACH

38

Drones are not only more efficient in delivery, they also work out to be a much more sustainable approach compared with how we are currently operating. In today’s climate, where everything from our carbon footprint to educating the next generation is

under scrutiny, each action we take to future-proof industries needs to reflect a wider responsibility to society. The use of drones does this in a few key ways: • It allows for a platform of professional application when teaching students about technology and opens doors to new job roles in the future working markets • It reduces our carbon footprint in multiple ways, from reduction in manufacturing requirements for current materials in use such as scaffolding, through to reduced time onsite and need to travel • It saves time, which equals money, and money saved can then be invested into wider sustainability.

What is next then for this sector? Here are our three key takeaways on why drones are opening more doors and are an essential next step:

400ft

IN JULY 2018 THE UK DRONE RULES CHANGED TO MAKE IT AGAINST THE LAW TO FLY ABOVE 400FT (120M) AND MADE IT ILLEGAL TO FLY A DRONE WITHINN 1KM OF AN AIRPORT

THE PEOPLE Technology may close doors to traditional labour market roles, but it also opens many doors to new opportunities and reforms the way we will work in the future world, as well as the here and now. Drones are going to support education of risk, as well as creating opportunities for new job roles in the sector.

THE PRODUCTS We have seen the heightened demand for new tech-related products like cyber and commercial drone use will expand into a large market for consumption. As this piece of technology grows, so will the demand for cover.

In addition, having the new products in the drones themselves opens a range of opportunities to enhance the insurance products we can and will be able to offer our clients, which will lead to better risk analysis, understanding and therefore loss prevention.

THE PURPOSE From improved safety to being more cost-effective, drones and commercial pilots will continue to prove the ‘why’ of insurance to the market, by enhancing reliability and creating a trust surrounding the benefits of the industries products.

Whether it be in light of a natural disaster, dangerous surroundings or just for timely efforts, the use of drones will revolutionise the way we operate and deliver to our customers and will positively impact our companies’ and the industry’s bottom line.

For more information of drones, visit: dronesafe.cuk/drone-code dronesaferegister.org.uk cinecloud.co.uk ● Samantha Eustace is chair of Asset – The Insurance Apprentice Network and Jason Smith is director of Cinecloud

thejournal.cii.co.uk / The Journal / D De December ecem ecem ce c emb em ber be er 2 er 20 2018 018 18 - Jan JJanuary anu aan nu n uary aarry y2 20 2019 0119 019 9

36-37_Drones_Dec 2018 - Jan 2019_Cll The Journal 38

17/12/2018 11:22

LEGAL REVIEW

ALL OR NOTHING, OR TAKE A CHANCE? Graham Bartlett assesses the implications for the insurance sector arising from the recent case of Dalamd Limited v Butterworth Spengler Commercial Limited

T

he assessment of damages in professional negligence claims against insurance brokers was considered recently by the High Court in the case of Dalamd Limited v Butterworth Spengler Commercial Limited [2018] EWHC 2558.

The claim arose out of a fire in October 2012. The insurers, who were not involved in the litigation, denied liability on the grounds that there had been non-disclosure of aspects of the insured’s financial history and that there was a breach of an external storage warranty (ESW) relating to storage of combustible material in close proximity to the buildings. The claim against the brokers was that they had failed to advise the insured about the need to give full disclosure and of the existence of the ESW. The court found that the brokers had been negligent in failing to advise the insured on the need for full financial disclosure, but that they had advised them about the existence of the ECW and the consequences of a breach.

In contract law, damages are measured as being the sum necessary to place the innocent party in the position they would have attained had the contract been performed without the breach. The burden of proof is on the innocent party to prove their loss to the civil standard of the balance of probabilities (more likely than not).

Where there is some uncertainty about the outcome had the contract been performed without a breach, the court can award damages for the loss of that chance. In Chaplin v Hicks [1911], an actor was awarded £100 damages after her agent breached their contract by failing to advise her of a forthcoming audition.

The damages reflected the one-in-four chance that she would have got the part had she attended the audition.

In accepting the brokers’ argument, the court followed the decision of the Court of Appeal in Fraser v Furman [1967], also an insurance broker professional negligence case, which upheld an award of damages because it was highly improbable that an insurance company of high reputation would conceivably take a wholly unmeritorious point to deny liability (the reverse of the position in Dalamd).

Although this is an interesting application of the law, the principle remains a little uncertain. In Dalamd and in Fraser v Furman, the outcome of the performance of the contract without the breach was abundantly clear. In Dalamd, there was clear photographic evidence of the proximity of the combustible material to the walls of the building and no conceivable reason why the insurers might have been persuaded or required to meet the claim. Even if the court had assessed damages on the loss of chance approach, the chance of the claim succeeding was negligible. Where there is any real doubt as to the outcome of the claim, then the insurers are likely to be joined to the proceedings. ●

THE BURDEN OF PROOF IS ON THE INNOCENT PARTY TO PROVE THEIR LOSS TO THE CIVIL STANDARD OF THE BALANCE OF PROBABILITIES

FACTS OF THE CASE In Dalamd, it was accepted that had the brokers advised on the need for full financial disclosure, insurance would have been obtained but still containing an ESW. The brokers’ argument was that it was more likely than not that those insurers would have denied liability for the fire claim because of the breach of the ESW and therefore the claim against them failed because the insured had not suffered a loss caused by their negligence.

The insured’s argument was that it was not certain that the insurers would have relied on the breach of the ESW and that they might ultimately have been persuaded or required to meet the claim.

The insured were therefore entitled to damages to reflect loss of the chance that the claim might have succeeded.

39

Graham Bartlett is a barrister at Trinity Chambers in Newcastle upon Tyne

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

39_Legal Review_Dec 2018 - Jan 2019_Cll The Journal 39

17/12/2018 11:32

PROTECTION FOR PARENTS

Raising children can be expensive, but the insurance profession is on hand to help lower the costs when things go wrong

40

BRINGING UP BABY

T

he overall cost of raising a child is £150,753 for a couple and £183,335 for a lone parent, according to the experts. That is a staggering enough figure, but factor in when something goes wrong and it can skyrocket. And often, the costs come from unexpected quarters.

Take the digital world, for example. Many of us rely on our teenagers to help when technology fails in the home and now children are learning to write code from a very young age, so are truly digital natives.

RISKY BEHAVIOUR However, that can come with risks which could cost the family dear. A new survey from Covéa reveals that they are exposing themselves to risks that leave them vulnerable to cybercrime and other online dangers, due to the following behaviours: • They are happy to ignore age restrictions on social media applications and on games in order to gain access • They know how important passwords are, yet will share passwords with friends, for example to keep a Snapchat streak going

• They will use unsecure public WiFi networks if it means it keeps them connected, such as to continue playing a game or engaging with friends • They know how to create a secure password but often do not because they are ‘hard to remember’ • Some have access to a parent’s Amazon account password for shopping and use universal ‘family’ passwords across different accounts • They know what hacking is and some have experienced it themselves, but they do not know that computers and bots are used to guess passwords, or how quick and easy it is to do • They know not to share personal information but will if they want to find out who else is at an event they are attending, for example on Snap Map • They would not tell a parent if they lost their phone and believe that the information on their phone is safe if it has a secure password • They know how to edit and readily share photos and videos, but are not all aware that once on social media, they have lost control of the image and it is effectively public property • They give parents their mobile phone access codes, but not their social media account passwords.

41% OF PARENTS HAVE TAKEN TIME OFF WORK IN THE PAST TWO YEARS TO LOOK AFTER CHILDREN INVOLVED IN ACCIDENTS OR ARE ILL

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

40-41_Child Focu_Dec 2018 - Jan 2019_Cll The Journal 40

17/12/2018 11:33

PROTECTION FOR PARENTS

COVERING THE RISK

THEY KNOW HOW IMPORTANT PASSWORDS ARE, YET WILL SHARE PASSWORDS WITH FRIENDS

Generally speaking, cyber policies have been aimed at businesses but increasing numbers of insurers are launching cyber cover for households.

There is clearly a need, with the average number of internet-connected devices per household now standing at more than eight, according to the Office of National Statistics.

Among the options now available, one new helpline offers: • Immediate steps to be taken in the event of a cyberattack • What to do to restore the device to the state it was in before the attack • What to do if subject to a ransomware attack • Advice on financial losses suffered as a result of a cyberattack. ●

WHAT IS A PERSONAL CYBER POLICY? What personal cyber insurance can cover includes: ● Hacker attack – Cover for repair and replacement of the policyholders’ computer hardware, software and retrieval of personal data. ● Cyber theft – Loss of personal funds, personal documents, title deeds, internet data and call charges incurred by the hacker. ● Phishing attack – For the theft of client funds transferred to a fraudulent account following a phishing attack. ● Cyber extortion – For a ransom being demanded following a cybercrime. ● Cyber liability – For financial loss as a result of a client’s personal accounts being hacked and them being found guilty of infringing intellectual property rights, transmitting a computer virus or making libellous/slanderous comments. ● Family cover – In many cases, the cover offered by a personal cybercrime insurance may include other members of the policyholder’s family living at the same address.

41

Source: Blackfriars Group

OFFLINE RISKS While providing cyber cover to protect the family might sound like a sexier topic, no one should forget the basics.

This is particularly relevant as new research from Metlife shows that more than two out five (41%) parents say they have had to take time off work in the past two years to look after children who have been involved in accidents or are ill; and for one in four (24%), that has involved an overnight stay in hospital or even longer.

The biggest impact is increased stress for parents – but the research found parents are also suffering financially and at work. Some 36% say they have had to take unpaid leave, while 44% have taken days off as holiday. More than one in five (22%) say it has meant increased costs and expenses. Self-employed parents suffer the most, with 33% saying it has cost them work.

Mothers are more likely to take unpaid leave to care for ill or injured children – 46% of women have taken time off work without pay, compared to 29% of men.

The survey found 39% of parents are concerned about the financial impact of taking time off to look after injured or ill children, and nearly a third (31%) of all working adults are worried about the potential costs of time off work to look after family members.

Richard Horner, head of individual protection, MetLife UK said: “Everyone needs to consider how they would cope if they have to take time off work, whether it is to look after children or other family members, as the financial impact can be substantial.

Strengthening the financial safety net in the event of illness or injury enables families and individuals to concentrate on recovery rather than worrying about money.”

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

40-41_Child Focu_Dec 2018 - Jan 2019_Cll The Journal 41

17/12/2018 11:33

CASE STUDY

EQUALITY STREET Richard and Clare Talbot-Jones explain how a focus on diversity and inclusion has benefited them and their family business

M 42

anaging Richard’s long-term chronic pain condition – after sustaining an injury while training at Royal Military Academy Sandhurst – was a major factor in us launching our own business in 2015. We noticed quickly the adaptations we had made through managing his disability had a hugely positive impact on our practices and have significantly influenced our company culture and brand.

Before launching our family business, our very polar dispositions and temperaments could sometimes result in frustration. However, as we watched each other perform our different work roles with success, we finally recognised the real value of our differences and the opportunities that our complementary skills offered to our clients.

Having recognised the real worth of diversity in our small business, we were keen to take the opportunity to complete the Equality Standard accreditation as we prepared to take on our first employee. As appointed

representatives, the entry-level role we were preparing offered little in terms of career progression. We were keen, therefore, to take the opportunity to offer short, fixed-term contracts to people who were enthusiastic workers, but had struggled to find paid employment perhaps due to disability, long-term caring responsibilities or geographical displacement.

The Equality Standard helped us to embed sound diversity practices at the core of our business, meet legal requirements and reflect our values. It was also very helpful preparation for our Corporate Chartered status application.

VALUABLE OPPORTUNITIES Completing the standard was also an excellent opportunity to network with other organisations with similar values and ethos. We met St Camillus Care Group, a business that supports people with autism looking to enter employment, and worked together to offer one of their trainees experience in office administration. We offered work trials as a practical alternative to a traditional interview and were then pleased to offer paid employment

to one of the applicants. Due to this process, we were awarded Disability Confident Committed status by the Department for Work and Pensions.

Most importantly, we expanded our business to include a team member who might not excel at a one-off interview, but who offers a truly useful skillset and positive attitude.

As we near the end of this employee’s fixed-term contract, we are pleased to see their improved confidence and developed skills – and we are beginning to think about recruiting again. We have learned the real value of diversity, not just in creating a positive and welcoming culture, but also as a commercial asset, bringing new perspectives, ideas and expertise, as well as opening up new markets and building relationships with new communities. Our focus on diversity and inclusion has helped us develop a stronger team with a wide skillset, while increasing profitability and productivity.

We were proud that this year Clare, our business development director, was shortlisted as a Diversity Champion in the HSBC Forward Ladies northern region awards and the company was a finalist in the North East Equality Awards. This double recognition of our efforts reflects the hard work we have put in at Talbot Jones Risk Solutions, as well as the various voluntary roles we are involved in, reflecting our passion and interest for promoting diversity and inclusion. They are a great accreditation and an authentication to other organisations, giving a clear testimony of our values and convictions and the strength this focus has brought to our business. ● Richard and Clare Talbot-Jones are co-founders of Talbot Jones Risk Solutions

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

42_DandI_Case Stud_Dec 2018 - Jan 2019_Cll The Journal 42

17/12/2018 12:10

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

T

-levels will sit alongside traditional apprenticeships as part of a reformed skills training system. The intention is to create a new ‘gold standard’ for technical education, developed in partnership with businesses and education professionals, to ensure students gain core skills for employment in a specific industry.

There are currently 25 T-level employer panels made up of representatives from employers, education providers and industry experts. Each panel is responsible for developing the T-level outline content in their respective pathway.

T-level panels exist across 11 routes, including: education and childcare; construction; digital; legal; and finance and accounting.

WHERE DO T-LEVELS SIT? Currently, at age 16, people can either undertake A-levels, a vocational college course, or an apprenticeship. The T-level is a new, classroombased option equivalent to three A-levels, studied for two years that will include a work placement of up to 60 days. The intention is to raise vocational training standards, upskill young people and achieve ‘parity of esteem’ with A-levels.

As with A-levels, on completion of a T-level, students will be able to

choose between moving into a skilled occupation, a higher- or degreelevel apprenticeship, or higher-level technical study including higher education.

Employers including Covéa Insurance are involved in designing the T-level outline content, but wider employer consultation will be essential to ensure the new qualification delivers the skills needed to meet our profession’s future requirements.

One aspect worth considering now for employers is the practicality of accommodating work placements for much larger student numbers. Although government funding is in place for the 2018/2019 academic year to ramp up capacity for work placements, with T-levels being phased in from 2020, companies need to start planning now for what’s around the corner. The first T-levels off the block in September 2020 will be: digital; education and childcare; and construction.

IS THERE AN INSURANCE T-LEVEL? There is no specific insurance T-level, but I am representing Covéa Insurance on the management and administration panel. I have also been asked to look at the legal, finance and accounting T-level, which could incorporate an insurance element.

There are several other panels relevant to our industry, such as digital skills, human resources and accountancy.

WHAT ARE THE OPPORTUNITIES FOR THE INSURANCE SECTOR? Getting involved in shaping T-levels is an opportunity for us to make sure we can recruit people with the core skills needed for a future career with us. It is also about ensuring we are recruiting from diverse backgrounds, which means opening up new routes into a insurance for young people who do not take the traditional academic route.

Also, collaboration with schools and colleges in the community to support delivery of the new T-levels creates the opportunity for us to increase public trust in insurance, by increasing understanding and awareness of what insurance contributes to society, as well as spreading the word about the extensive and diverse employment opportunities our industry offers.

For further information visit: bit.ly/2A4ktvE ●

43

NEW T-LEVELS ON THE HORIZON

Matthew Metcalfe of Covéa Insurance is helping to create the framework for the UK's new T-levels. He explains to The Journal the opportunity for the insurance profession thejournal.cii.co.uk / The Journal / December 2018 - January 2019

42_DandI_Case Stud_Dec 2018 - Jan 2019_Cll The Journal 43

17/12/2018 12:10

G O O D P R A CT I C E G U I D E – S M A RT WAT E R

STUDY ROOM

Faddy technology or a useful crime deterrent?

We look at the increasing uptake of SmartWater…

IMAGE: GETTY

44

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

44-46_Study Room_Dec 2018 - Jan 2019_Cll The Journal 44

17/12/2018 12:27

G O O D P R A CT I C E G U I D E – S M A RT WAT E R

A

s part of the CII's commitment to enhance the reputation and standing of the insurance and financial services sector, policy and public affairs produce materials covering a wide range of subjects including UK and European regulation, industry developments and legislation.

One key area of this is the CII Good Practice Guides, covering a broad range of topic areas as part of an effort to expand the knowledge of insurers as well as examining emerging trends.

Here we feature an extract from one such guide.

SMARTWATER SmartWater is a forensic traceable liquid that is used as a security device to mark valuable and/or easily removable items.

Each SmartWater solution has its own unique forensic signature, meaning that no two solutions are the same.

By having its own forensic code, anything marked with the SmartWater solution can be identified and traced back to its owner if stolen. The solution is invisible under natural light but glows under UV light. This means marked items can be identified by the police as well as linking criminals to a crime scene.

SmartWater ‘Dab-it-On’ traceable liquid can be used to invisibly tag valuable items, such as watches, jewellery, laptops and mobile phones.

It is also durable enough to be suitable for external metals used on roofs, as well as on property stored outdoors.

The solution is priced affordably, meaning that the cost will not be too burdensome on businesses and clients that wish to purchase it.

DETERRING THIEVES By advising their client to use SmartWater, brokers are promoting an innovative security device

that is both widely recognised in crimefighting as well as proven effective in prosecuting.

All registered users of SmartWater must actively display a SmartWater logo in visible areas as a warning to potential thieves (such as in windows, on highly prominent pieces of property, or on the front of buildings). As well as being a condition of complying with the policy terms of SmartWater, the signage is also found to be an effective deterrent.

Research has shown that properties displaying SmartWater window stickers or signage have been avoided by criminals.

SmartWater has also been effective in reducing the number of traders handling stolen goods. With its increasing reputation among law enforcers and criminals, SmartWater is becoming widely recognised as an effective deterrent.

use of SmartWater has had a 100% conviction rate in court and has been proven to reduce burglaries by 85%.” With a significant reduction in burglaries, and 300,000 SmartWaterregistered homes in London alone, insurers can be confident in recommending this device.

74%

OF 100 CRIMINALS USING SMARTWATER SAID THEY WOULD users of AVOID BREAKING INTO A Registered SmartWater should BUILDING DISPLAYING THE never share their solution with friends or SMARTWATER LOGO

INSURING THE RISK As one of the world’s most powerful crime deterrents, SmartWater is endorsed by many law enforcement departments, including the London Metropolitan Police. The Met has implemented a project called MetTrace, with the aim of reducing burglaries across London by promoting the use of SmartWater. This project aims to reach out to one in seven homes across London during a three-year period, to provide crime prevention advice and free SmartWater property marking kits.

This has raised the profile of SmartWater within domestic household users, while simultaneously training police officers to routinely search for property marked with SmartWater.

The Met reports: “To date, the

family. This is because the solution is registered to a specific address and user.

Any property marked with SmartWater that does not belong to the registered user or at the registered address will not be recognised and violates the terms of use.

Users should also not dilute the solution, as this will corrupt the marked solution and render the solution unidentifiable. It also violates the terms of use.

If a client sells or passes on a piece of property marked with SmartWater, they should inform the new owner and their insurer as this could complicate a future investigation if the item is later stolen and recovered. Buying used goods that have already been marked with SmartWater may also be a potential issue if the original owner has not disclosed that it is no longer in their possession or if a different SmartWater solution is applied on top of it.

45

WHAT ELSE CAN SMARTWATER DO? SmartWater not only helps to identify stolen property, but can also be employed as an anti-robbery and flytipping device.

SmartWater has further been developed as a forensic spray used to mark cash in transit or an offender, in a similar way to how forensic →

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

44-46_Study Room_Dec 2018 - Jan 2019_Cll The Journal 45

17/12/2018 12:27

ST U DY R O O M – R I OT C O M P E N S AT I O N A CT

solution marks property. The result of this is that the criminal and the stolen property can be connected back to the scene of the crime. Similarly, a SmartWater Fog Cannon can also tag a potential burglar as well as causing them to become disorientated and flee the scene. The solution lasts for years, meaning that a criminal will literally carry the evidence on them.

Aside from personal use, SmartWater can also be used to protect valuable property stored in warehouses, schools, churches, commercial units and business premises.

● Do not store the solution in extreme

hot or cold temperatures ● Do not apply it to working or moving parts (such as nuts, bolts, keys, switches) ● Do not share the solution with any unregistered users (such as a neighbour or friend).

THE USE OF SMARTWATER HAS HAD A 100% CONVICTION RATE IN COURT AND HAS BEEN PROVEN TO REDUCE BURGLARIES BY 85%

GOOD PRACTICE

46

Apply SmartWater effectively As the solution itself contains the forensic formula, only a small amount is needed per personal item. The solution is also waterproof and can be used on property stored outdoors (including property material).

To ensure SmartWater is being properly used by your client, advise them of the following: ● Do not apply solution to functional electronic parts (such as ports, displays, battery units, speaker grills) ● Do not apply to electronic devices while still plugged to the mains ● Do not write with the solution – the liquid itself is the marker ● Do not apply to a vehicle while the engine is running ● Do not dilute the solution ● Do not use solution that has expired

Cross-reference what has been marked When insuring your client’s belongings, check what has been genuinely had SmartWater solution applied to it.

Registered users do not need to declare to SmartWater the individual marked items. They only need to notify the police if a theft occurs. Marked items should not be missed when calculating coverage and nothing should be declared as marked that is not. You may wish to spot check items of very high value if doing an inspection of personal property, as well as ensuring that the solution is being applied appropriately.

A client may not use all the solution straight away. If any applications are made at a later date, this will need to be updated on their records and coverage

priced appropriately and accurately.

SmartWater has created an Asset Register so that your client can keep track of what has been marked, as well as if the property has been disposed of or moved location.

Q

Keep updated on recoveries If a client has an item stolen but it is later returned to them after a claim is paid, possession of the recovered property will have to be decided. The SmartWater database should keep you updated on any news regarding recoveries, however this could happen months or years after the actual theft.

The insurance company may wish to take possession of any recovered items or recoup any claims paid out (less any costs if the item is returned damaged).

While not declaring recovered items is considered an act of fraud, a positive aspect for a client is that the original claim should no longer factor into their insurance rate.

Spreading the word Now that SmartWater is becoming a widely recognised tool, not just in deterring crime but recovering stolen property, insurers should consider incorporating it into conversations with their clients on a regular basis. Those who have valuable personal property should be encouraged to consider using SmartWater. By using the statistics from SmartWater and the Metropolitan Police, clients should feel reassured that this is not a faddy piece of technology but a useful crime deterrent.

SmartWater does not just have to be for high-value personal items. If you have clients who wish to insure valuable building materials, cash in transit, commercial property or valuable religious artefacts, SmartWater can also cater to these needs too.

Now that SmartWater is becoming widely endorsed and recognised by the police and criminals alike, clients should be able to put their trust in you when recommending it as a credible security precaution.

To read the full guide, visit: sib.org.uk/learning-content-hub/ ● James Moorhouse is content manager at the CII

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

44-46_Study Room_Dec 2018 - Jan 2019_Cll The Journal 46

17/12/2018 12:28

Q&A STUDY ROOM

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

The answers are at the bottom...

QUESTION 1

QUESTION 4

QUESTION 7

In the context of insurance, which of these would be considered a financial risk?

A. Loss of earnings due to personal injury B. Moving house C. Smoke damage to a work of art D. No snow on a skiing holiday E. Damage caused by a storm

Why is risk aggregation important when pricing an insurance policy?

A Because a large number of losses to an individual risk could result in an outsized and unexpected loss for the insured b Because it has become a specific requirement for Solvency II compliance C Because it is a requirement for all reinsurance submissions D Because underwriters prefer to underwrite risks with the same profile to maximise their business

How many Principles for Businesses does the FCA promote?

A C, D and E b B, C and D c A, B and D d A, C and E

QUESTION 2 In respect of contract, consideration must be provided by which parties?

A Either party b Both parties c The purchaser d The seller

QUESTION 3 In general insurance accounting terms, what is the market risk?

A The risk of the insurer being unable to release funds at the right time to coincide with claims which are due to be paid b The risk of the premiums charged by the underwriter being insufficient to meet the claims incurred c The risk that the insurer's total income from premiums and investments will not meet the claims to be paid d The risk of the assets in which an insurer's technical reserves and shareholder's funds are held falling in value

QUESTION 5 Why is auditing conducted for insurance business?

A On behalf of the Prudential Regulation Authority (PRA) to investigate insurers practices in the adjustment of claims b To check that the insurer has sufficient financial funds to meet the requirements of the PRA c To ensure that the insurer is compliant with the standards set by the company and that it operates within the rules of regulators d To identify procedural failures in the insurer

QUESTION 6 On a group life policy, what is a ‘continuation option’?

A If the employee becomes seriously ill the cover will continue b The employee can carry on working beyond State Pension age c The employee can continue cover beyond age 75 d The employee can take out an individual policy on leaving

A 10 b 11 c6 d8

QUESTION 8 Which of these statements is true of relevant life policies?

A They can be put in trust at any time b They cannot be put in trust c They must be written in trust at the outset d They must be written in trust before the policy’s first anniversary

47

QUESTION 9 Maximum age on a group risk policy is usually up to which of these ages?

A 55 b 65 c 75 d 85

QUESTION 10 Who will usually handle administration on a group scheme?

A Each employee b The broker c The group secretary d The insurer

YOUR SCORE » 1–3 POOR 4–6 GOOD

7–8 VERY GOOD 9-10 EXCELLENT

ANSWERS 1D. A financial risk is measured in monetary terms, whilst moving home may carry some risks from an insurance perspective they can't be quantified financially.

2B. There must be consideration from both parties in order to turn and exchange promises into

a contract.

3D. ‘Market risk’ is the label given to the risks associated with holding assets in investment instruments.

4A. When considering individual or single risks for pricing, underwriters need to consider their exposure to

the aggregation of risks in the event of an event occurrence.

5C. An audit is a review of work, whether it is a unit or an individual, to ensure that it is compliant with the standards set by the company and within the rules of the relevant regulations.

6D. If a group life policy has a continuation option, if the employee leaves that employer, they have the right to take out an equivalent individual policy with no further underwriting.

7B. The FCA promotes 11 Principles for Businesses and the PRA

publishes 8 Fundamental Rules.

8C. Relevant life policies must be put in trust at outset.

9C. Maximum age is typically up to age 75, but may be lower.

10C. Administration on a group scheme is usually handled by the group secretary.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

44-46_Study Room_Dec 2018 - Jan 2019_Cll The Journal 47

17/12/2018 12:28

STUDY ROOM

A-Z OF…

THE GROWTH OF CRYPTOCURRENCY Nigel Green takes an alphabetised look at digital currencies…

I 48

t is becoming impossible to ignore the fact that cryptocurrencies are now part of mainstream finance.

This is evidenced by a rising number of global financial institutions, governments, major corporations and investors now working with cryptocurrencies and their underpinning technology, blockchain.

In addition, the Financial Stability Board has published a report that concluded Bitcoin and other digital currencies do not currently pose a risk to the global financial system.

This October saw the 10th anniversary of the world’s first cryptocurrency and largest by market capitalisation, Bitcoin, a cryptocurrency that forever altered the way the world handles money, conducts business, makes transactions and manages assets.

INCREASING INFLUENCE The level of influence and sovereignty Bitcoin has could radically change as its moves into its second decade, while the cryptocurrency sector and the broader crypto-asset and digital asset sector are likely to grow by at least 5000% in the next 10 years.

The cryptocurrency market is today worth just over $200bn, which means it could exceed, $10trn by 2028. It is important to note that cryptocurrency is a sub-segment of a broader asset class – ‘crypto-assets’, which itself is a segment of ‘digital assets’.

Crypto-assets generally refer to assets for which ownership is defined by holding a cryptographic private key, and transfer of the asset is done peer to peer by interacting with a distributed ledger – typically a public blockchain, the technology behind

KNOWING YOUR A-Z A algorithmic b Bitcoin c cryptocurrencies D diversification E exchanges f future g governments h heighten i interacting j just k key l ledger m money n next o organisations p portfolio q quite r retail s sovereignty t transactions u undoubtedly v volatility w world x eXceed y years z amaZingg

bitcoin. Technology now being applied more broadly in enterprise applications, trade and the tokenisation of traditional assets such as real estate and private placements, a market that exceeds $250trn globally.

One principle reason that Bitcoin could lose its amazing dominance of the sector in future is that an increasing number of crypto-assets will be introduced by both private and public sector organisations.

This will subsequently heighten competition for Bitcoin and affect its market share. It is highly probable that Bitcoin will be impacted by greater technology and superior characteristics provided by current and not-yet-released digital currencies in the future.

MOVE INTO THE MAINSTREAM There is a continual, global shift away from fiat money, the pace of which is forecast to accelerate within the coming decade.

Moreover, due to cryptocurrencies and crypto-assets becoming more mainstream, it is not just cryptocurrency exchanges that are generating interest.

Clients, valuing and appreciating their enormous potential, are now demanding actively managed cryptocurrency solutions whereby they can benefit from the potential associated benefits of exposure to the digital currency sector – typically including portfolio diversification and decent returns – but with diminished volatility, via algorithmic trading across different platforms, as well as arbitrage opportunities.

It is becoming increasingly evident that cryptocurrencies now quite rightfully hold their place in conventional finance and, as more major institutional and retail investors, in addition to financial institutions and regulators, acknowledge and understand that cryptocurrencies are the future of money, we will undoubtedly see fundamental change in the sector by the time Bitcoin reaches its 20th anniversary. ● Nigel Green is founder and CEO of deVere Group

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

48-49_A-Z_DM_Dec 2018 - Jan 2019_Cll The Journal 48

17/12/2018 12:39

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

BREACH OF EXAMINATION AND/OR ASSESSMENT REGULATIONS Stephen Huckle, Autonetic Insurance & Pensions Services, Mansfield, Notts.

The coursework assessment candidate was found to have plagiarised a M05 mixed assessment coursework assignment written by another candidate, in breach of the Mixed Assessment Candidate Guidelines. The CII case examiner, invited the respondent to approve and sign a consensual order (“Order”) under 9.1 of the CII Disciplinary Procedure Rules 2015, to which the respondent agreed, and which was signed on 4 September 2018. The sanctions issued were that the respondent: a) be reprimanded (DR 12.6a); b) have the M05 mixed assessment coursework assignment result disallowed (Reg 12.6); c) be excluded from CII examinations and assessments for 18 months (with effect from 1 July 2017) (Reg 12.6l); d) be excluded from applying for CII recognition of prior learning for 18 months (with effect from 1 July 2017) (Reg 12.6p); e) No examinations, assessments or qualifications obtained by the respondent during the period of the exclusion will be eligible for CII recognition of prior learning

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 with effect from the date of the Order (Reg 12.6p); and f) 1.2 Within 6 months of the order, take and complete the CII on line ethics course before attempting to book any further CII examinations, enrol on any CII assessments, apply for any CII recognition of prior learning or renewing your membership. (Reg 12.6d)

BREACH OF THE CII CODE OF ETHICS Ryan Caisley, Financial Solutions Wales Ltd., Llanelli, UK The respondent had failed to disclose that he was charged with actual bodily harm when applying for membership of the CII. The CII case examiner invited the respondent to approve and sign a consensual order under rule 9.1 of the CII Disciplinary Procedure Rules 2015, to which the respondent agreed, and which came into effect on 16 November 2018. The sanctions imposed were that the respondent: a) be reprimanded (DR 12.6a); b) Take and complete the CII on line ethics course before booking any further CII examinations, enrolling on any CII assessments or applying for any CII recognition of prior learning or within six months (if sooner). (DR 12.6d); c) Be

ineligible from applying for membership for a period of 18 months, after this period, the respondent can only join the CII subject to the approval of the CII’s Membership Application Sub-Committee (Reg 12.6p). d) Have a record of this matter be added to the CII’s disciplinary records (DR 12.6f).

49 “To date, the CII has dealt with five instances of non-members using CII designations for 2018. 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.

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

48-49_A-Z_DM_Dec 2018 - Jan 2019_Cll The Journal 49

17/12/2018 12:39

CII BLOG

ANNA BARNES

SPECIAL SOURCE In her last blog for The Journal, Anna Barnes examines the importance of proper referencing and further reading

I

50

t is the end of the road for me on The Journal, as this is my final blog. As I have spoken about tips and tricks throughout my blogs, which I hope you have found helpful, I thought it would be useful to also delve a little into plagiarism as it is an important topic to consider when writing assignments.

A lot of people believe that plagiarism is just copying someone else’s work, but it actually also includes copying someone else’s ideas and using those ideas without citing the source.

It can be quite overwhelming when trying to write an assignment in your own words, so I would firstly read the Coursework Assessment Guidelines and Instructions document, which is available with every exam you do on the CII website. It covers both plagiarism and referencing, by explaining in detail how to reference within the assignment or in your bibliography, as well as providing examples.

This is particularly important, as using a different style of referencing than requested could lose you marks. It also covers paraphrasing, collaboration and how referencing can make a difference in the marks awarded for your assignment.

FURTHER READING As discussed in the last blog, 10% of your final exam mark is allocated to evidence shown of further reading so, although it is important to cite sources, these sources must be reliable.

Each revision book has a reading list across one or two pages, which can assist you with your studies – from books and journals, to websites.

I must stress the importance of reading additional sources and not just the revision book you are given, because of both the percentage awarded for it and also the fact that additional reading can help you understand the question more.

In addition to this, I would also suggest having a look on the CII website under the knowledge tab, as this will provide you with a number of online resources such as the eLibrary, research databases, journals, magazines, reports and statistics.

As this is my last blog, I just wanted to say a huge thank you to all those who have been reading my missives. I hope that my blogs have been of value and entertainment, and that you have learned a little something – even if that means I have helped just one person. ● Anna Barnes is compliance & technical services assistant at Munich Re

◊ REFERENCE Read the Coursework Assessment Guidelines and Instructions

◊ SOURCE Use the online PDF format of the revision book to search for keywords

◊ KNOWLEDGE Use the CII eLibrary, research databases, journals and magazines

ILLUSTRATION: LUKE WALLER

THREE THINGS TO TAKE AWAY

thejournal.cii.co.uk / The Journal / December 2018 - January 2019

50_Blog_Dec 2018 - Jan 2019_Cll The Journal 50

17/12/2018 12:42

&OR DETAILS ON THE POSITIONS BELOW AND OTHERS

IN 'ENERAL &INANCIAL 3ERVICES )NSURANCE

ACCROSS THE 5+ ,ONDON AND )NTERNATIONALLY PLEASE VISIT

WWW IPSGROUP CO UK s $ELEGATED !UTHORITY !NALYST

s 5+ 0ROPERTY "USINESS $EVELOPMENT $IRECTOR "ROKER 3ALES

To ÂŁ50,000 + BeneďŹ ts – City of London Dynamic and credible syndicate are looking to strengthen their Delegated Underwriting team with an additional Analyst who can develop and grow in the position. Managing the on-boarding process and approval of coverholders, you will contribute to the Delegated Underwriting Committee, utilise effective relationships with Lloyd’s and partner with underwriters and coverholders throughout.

Contact: Alison. Taylor@ipsgroup.co.uk - London Ref:CII137877AT

s #ONDUCT #OMPLAINTS !NALYST To ÂŁ45,000 + BeneďŹ ts – City of London Reporting to the Head of Compliance this role is leading Product Governance, Complaints Management and Conduct Risk initiatives for one of the most proďŹ table Lloyd’s and London market businesses in the market. Partnering with the underwriting teams providing consultative advice. A good knowledge of “Treating Customers Fairlyâ€? and all aspects relating to the legislation surrounding this, you will investigate and resolve complaints and lead product governance initiatives.

Contact: Alison. Taylor@ipsgroup.co.uk - London Ref:CII137656AT

s 3ENIOR #ATASTROPHE !NALYST To ÂŁ60,000 Base Salary + Bonus & BeneďŹ ts – City of London A Lloyd’s Syndicate are looking for a Senior Catastrophe Analyst. They want a technically strong candidate who has over 3 years of experience working within Catastrophe Models.

Experience of using RMS or AIR is a requirement and a good working knowledge of VBA, SQL and GIS would be advantageous.

Contact: Gary.Ahern@ipsgroup.co.uk - London Ref:CII137847GA

s 5NDERWRITING !SSISTANT #OLLEGE ,EAVER ,LOYD S 3YNDICATE ÂŁ20,000 – BeneďŹ ts – City of London Lloyd’s Insurer looking for Underwriting Assistant to join their Marine team, entry-level role with full training, support and guidance whilst you provide technical and administration underwriting support. Looking for strong numerical skills, good interpersonal skills, preferably work experience within Insurance.

Contact: Clare.Aldrich@ipsgroup.co.uk - London Ref:CII137678CA

s -ANAGEMENT ,IABILITY 5NDERWRITER To ÂŁ75,000 + BeneďŹ ts – City of London Our client is looking for a development orientated Management Liability underwriter to write new and renewal International business. This is a growing portfolio where you will work across both the company and the syndicate platform for a broad mix of public and private companies on both a primary and excess basis. Previous experience of underwriting International management liability business in the London market is essential.

Contact: Dana.Hill@ipsgroup.co.uk - London Ref:CII137790DH

s 1UALIl ED -ANAGEMENT !CCOUNTANT ÂŁ55,000 - ÂŁ60,000 + BeneďŹ ts – City of London Lloyd’s Syndicate require a qualiďŹ ed Accountant to Produce and enhance MI reports that accurately communicate the performance of the business and meet the needs of management. You will play a leading role in the annual budget process and subsequent expense forecasting, as well as maintain and run the organisation’s recharge model and expense allocation process.

Contact: Mark.Brady@ipsgroup.co.uk - London Ref:CII137446MB

s 3ENIOR #OMPLIANCE -ANAGER To £90,000 + Package – City of London Working for this Global Insurer you will operate at a senior level within the business, actively contributing to the development of the business. You will need strong experience working in a Senior Compliance role for a UK based Insurer, be able to demonstrate track record of inuencing at a senior level and a good knowledge of FCA regulations.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII137516TS

s 7ORDINGS #OUNSEL To ÂŁ100,000 + Package – City of London Seeking a UK qualiďŹ ed Solicitor who can demonstrate strong exposure to the London Insurance Market, ideally including knowledge of Lloyd’s Minimum Standards, Conduct Risk and Consumer Products, Policy Wordings and Contracts review, Coverholders and Regulatory queries. This is an exciting time to join this well regarded Global Lloyd’s Syndicate and Insurer.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII137644TS

s #LAIMS -ANAGER )NTERNATIONAL #ASUALTY To ÂŁ96,000 + Bonus & BeneďŹ ts – City of London As Claims Manager for this high proďŹ le Global Insurer and Lloyd’s Syndicate, you will need to demonstrate a strong track record on International Casualty Claims, ability to lead a team and develop excellent relationships and credibility with stakeholders. Current experience working for a UK based Insurer or Lloyd’s Syndicate is essential.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII137948TS

s )NSURANCE !DVISER

CII.12.2018.051.indd 51

s 5NDERWRITING #ONTROLS !NALYST To ÂŁ40,000 + BeneďŹ ts – City of London Are you a compliance, risk or operations assistant who is looking for a challenging and interactive role? This role is both operational and strategic to ensure the underwriting teams of this global business have an effective controls framework in place and working with inuential stakeholders to develop, maintain, improve and report to senior management on underwriting systems and processes. This role will offer a great stepping stone to a managerial career in operations, risk or business conduct.

Contact: Alison. Taylor@ipsgroup.co.uk - London Ref:CII137789AT

s #OMMERCIAL 0ROPERTY ,OSS !DJUSTER ÂŁ45,000 + Car – North West You will manage and investigate a mixed caseload of commercial and domestic property losses from notiďŹ cation through to ďŹ nal settlement. To be considered you must have previous Property Loss Adjusting experience. You will be rewarded with a competitive salary and excellent beneďŹ ts including company car or car allowance.

Contact: Ashley.Blake@ipsgroup.co.uk - Manchester Ref:CII137390AB

s #LAIMS 4EAM -ANAGER ,IABILITY OR 0ROPERTY ÂŁ35,000 + BeneďŹ ts – Manchester You will be motivating and supporting the team to successfully deliver an outstanding level of service. You will oversee and be accountable for the operational control within your team. Ideally this person needs some experience in either Commercial Property or Liability Claims along with strong people management and communication skills.

Contact: Ashley.Blake@ipsgroup.co.uk - Manchester Ref:CII137075AB

s !CCOUNT (ANDLER #OMMERCIAL )NSURANCE Competitive Salary – Manchester We are working with a prestigious local broker based in Manchester who are looking for a commercial Account Handler to join their team. 3 to 5 years of experience in commercial account handling is required.

Contact: Richard.Jenkins@ipsgroup.co.uk - Manchester Ref:CII137139RJ

s &IELD "ASED 3UBSIDENCE !DJUSTER Up to ÂŁ50,000 + BeneďŹ ts An opportunity has arisen for an experienced Building Surveyor who has detailed knowledge of building construction to join a leading claims management ďŹ rm. Within this Role, you will travel between Reading, Watford, Oxford, London and down to the South Coast Contact: Blayne.Kelly@ipsgroup.co.uk - Birmingham Ref:CII137154BK

s 3ENIOR 0ROPERTY ,OSS !DJUSTER Up to ÂŁ85,000 + BeneďŹ ts – London ACILA QualiďŹ ed Loss Adjuster required to handle a mixed portfolio of major Loss and technical claims. The Adjuster will be part of the Major and Complex Loss Division and will report via the relevant senior Manager.

Contact: Blayne.Kelly@ipsgroup.co.uk - Birmingham Ref:CII136838BK

s )NSURANCE #ONSULTANT Up to ÂŁ50,000 + Company Car or Car Allowance – Midlands / London A leading Network of Insurance Brokers seeks to hire an experienced Compliance Consultant to provide a compliance auditing service across a network of branches covering the Midlands down to London in this ďŹ eld based position.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII137842RC

s -AJOR #OMPLEX ,OSS 3URVEYOR ÂŁ50,000 – ÂŁ70,000 + BeneďŹ ts – Birmingham Excellent opportunity to join the Major Loss Division of this leading name in surveying as a Major Loss Surveyor. You will investigate and provide factual reports to a range of clients in a timely manner in accordance with client requirements.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII137803RC

s ,ONDON -ARKET !CCOUNT (ANDLER

To ÂŁ55,000 + BeneďŹ ts – London An opportunity with a leading energy group. The appointee will assist in identifying insurable risks and manage them through different solutions - direct purchase, reinsurance arrangements and/or a captive program. The jobholder will routinely engage with the businesses in UK and overseas and provide insurance and risk management advise; as well as leading on speciďŹ c lines (including construction).

Contact: James.Dick@ipsgroup.co.uk - London Ref:CII137821JD ,ONDON London@ipsgroup.co.uk Tel: 020 7481 8111 3OUTHAMPTON soton@ipsgroup.co.uk Tel: 023 8048 8799

OTE £160,000 (basic to £80,000 + uncapped commission) – London This is a new opportunity to join a leading specialist insurer in a broker business development role. You will be responsible building relationships within the UK property insurance broking communities to sell a variety of niche insurance solutions including Title Insurance, Rights of Light, Warranty & Indemnity and Environmental. You will need to be experienced and highly successful niche insurance business development executive possessing good knowledge of the UK property insurance.

Contact: Christopher.Dickman@ipsgroup.co.uk - London Ref:CII137818CD

"IRMINGHAM birm@ipsgroup.co.uk Tel: 0121 616 6096 "RISTOL bristol@ipsgroup.co.uk Tel: 0117 370 2472

ÂŁ20,000 - ÂŁ27,000 + BeneďŹ ts Package – Birmingham An exciting opportunity with a top 10 global broker in Birmingham. You will deal with a range of specialist risks including Marine, Fine Art & Specie, Drone, Aerospace and Yacht.

Working closely with their London ofďŹ ce you’ll initially handle renewals and 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:CII134355MF

-ANCHESTER manchester@ipsgroup.co.uk Tel: 0161 233 8222

777 )03'2/50 #/ 5+

,EEDS leeds@ipsgroup.co.uk Tel: 0113 202 1577 3INGAPORE singapore@ipsgroup.co.uk Tel: +65 6223 1023

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

14/12/2018 08:15

Cats or dogs?

Tell us your preferences and receive communications relevant to you.

Our new Preference Centre gives you control over the communications you receive.

Manage your subscriptions today:

cii.co.uk/preferences

CII.12.2018.052.indd 52

14/12/2018 11:33