Round-up of the weekly news and developments from the global insurance market with stories regarding talent shortages, Swiss Re, Flood Re and more.
Developments in technology could lead to talent shortages in the insurance industry
Technology has meant the insurance industry is changing like never before with insurers having to adapt to emerging technologies and risks to stay ahead. This, with an aging workforce, has resulted in younger more tech savvy employees. The challenges insurers are finding, as concluded by a panel of experts, were finding the right tech savvy junior employees with the skills needed to replace the senior members of staff who were retiring. An example of where technology is changing the face of insurance is in integrated apps for cars that provide real time information on a drivers driving style. By measuring a driver’s ability these apps can give insurers data that will allow them to accurately measure the risk of that individual. This kind of data is also changing the way insurers think about mature markets as well as emerging lines of business like cyber. Despite the range of opportunities on offer with this level of data, skill shortages restrict an insurer’s ability to maximise the value of data on offer. John Mulhall, managing director of Accenture Strategy said, "There is much more demand for analytics than there is talent right now." It was also highlighted that the reputation of the industry is putting off younger talent.
Swiss Re is establishing a regional legal entity in Singapore for its reinsurance business unit
Swiss Re’s new legal entity will also double up as the regional headquarters for its network of reinsurance operations in Asia. Swiss Re Asia is thought to be established next year while the office network will be realigned to the new structure in the next three years based on regulatory approval. The proposed new structure of the reinsurance business will have no impact on Swiss Re Corporate Solutions in Asia, confirmed Swiss Re. According to Swiss Re, its Asian operations will continue to be strongly capitalised in accordance with regulatory requirements. Besides, the financial resources provided to support its local business will remain intact. Swiss Re Asia, which will be wholly-owned by Swiss Re, will also share the latter’s group credit rating. The Zurich-based reinsurer says that its decision will align its legal entity structure across the Asia, Europe and Americas segments. Through its network of offices, Swiss Re Asia will continue to provide services to its partners and clients in Asia by replicating its current footprint in China, Australia, Hong Kong, Japan, India, Malaysia, Singapore and Korea. Swiss Re reinsurance Asia CEO Jayne Plunkett said, "This move demonstrates our commitment to Asia as we become even closer to the market. As one of Asia's largest reinsurers, we will continue to combine our global knowledge with even deeper insights into local and industry needs, to benefit our clients and partners." Swiss Re’s branch in Hong Kong will continue to serve as the Asian hub for the Life & Health business of the company whilst being retained as the base for various Property & Casualty teams.
Flood Re appoints Andy Bord as Chief Executive on permanent basis
Andy Bord, the current interim CEO at Flood Re, has been appointed to the position on a permanent basis, subject to regulatory approval. Bord is an experienced business leader with strong insurance and consumer expertise. Formerly CEO at Capita Insurance Services he has also worked for Staysure, BGL Group (owners of CompareTheMarket) and Vodafone. Mark Hoban, chairman of Flood Re said, “I am delighted that Andy will lead Flood Re into its second year and beyond. Andy has the decisive combination of experience operating at chief executive level coupled with a good knowledge of the insurance sector. His work in complex regulated environments along with his strong consumer insight is particularly relevant as we continue to ensure that as many people as possible benefit from the scheme. Andy is not only passionate about Flood Re’s mission, but also has the necessary leadership skills required to build on Flood Re’s foundations and take the organisation from strength to strength.” Bord said that it was a privilege to be staying with the re-insurance scheme which he said had already made a real difference to the lives of tens of thousands of people across the UK. “I am excited to be taking the scheme forward, working with policymakers across the UK, the insurance industry and local communities so we continue to ensure access to more affordable flood insurance.” Flood Re, a world first, was set up to help people living in areas at risk of flooding by giving them access to affordable flood insurance. New independent research, commissioned by Flood Re, shows that on its first anniversary people who were unable to get flood cover now have much more choice. Before the introduction of Flood Re, only 9% of householders who had made prior flood claims could get quotes from two or more insurers, with 0% being able to get quotes from five or more. In the scheme’s first month in operation, this number rose dramatically to 68% of these households being able to get quotes from five or more insurers.
Commercial costs could be cut by using technology
By gathering a number of carrier quotes for multi-line coverages a new technology app could cut frictional costs and change the commercial market for small businesses, according to Pat Ryan, CEO and chairman of Ryan Specialty. Looking at current statistics Ryan said that the current frictional costs for small commercial businesses were between 30 and 40 cents per dollar. Ryan predicts that if a solution was developed that reduces the number of touches in the process taken by brokers and agents and simplifies the information the figure could be reduced to between 10 and 15 cents in every dollar. Commenting on what the solution might look like he said, "We believe the solution is simple and complicated at the same time. But it is technology, and it works with the broker and agent and not around them."
Renewals in the Gulf of Mexico largely flat
Energy sources have confirmed that policies written for wind assets in the Gulf of Mexico are largely flat at renewals. This is down to underwriters standing their ground on any reductions as a tough market continues to affect the sector. 2016 witnessed double digit reductions in the UK and the US but both markets have said that anything in the $350mn-premium market will renew flat this year. Shelf and shallow water assets were highlighted as an area where no movement was likely. Deep water assets were able to negotiate reductions of between 5% and 7% due to the lack of storm damage these assets were subject to last year. The Gulf of Mexico renewals are a key date in the energy markets calendar with around $7bn worth of insurance being purchased.
FCA turns focus to market structures with market study
The Financial Conduct Authority (FCA) has confirmed it will focus more on market structures after it announced a market study on the wholesale insurance sector and a new review into the general insurance distribution chain. The study is being undertaken to ensure competition in wholesale insurance is effective. The study will look at how companies ensure their practises don’t rise to "market integrity and conduct risks" and then will decide if action is needed. The FCA said that "The findings will help us decide whether, and what, further action is required in this sector." The FCA has also raised concerns about companies IT systems and wants to understand how resilient they are. The FCA said, "The risk of compromise to the integrity of firms' systems, particularly where large volumes of personal and commercially sensitive data exist, is heightened by the increased likelihood of cyber-attack." The FCA confirmed its evaluation of the distribution chain would be complete in the first quarter of the regulatory year ending April 2019. The wholesale insurance market study will be complete at some point in the next year.
New A&H hires for Ark 3902
Martin Power and Eniola Bernar have been hired by Ark Underwriting's NOA 3902 Syndicate to expand the syndicate's exposure in accident and health (A&H) and marine liability. Power will be responsible for developing the syndicates A&H portfolio having previously worked at Beazley for the past 9 years. Bernard worked at Syndicate 1967 for the past three years and served as a marine liability underwriter at Aegis London 10 years prior to that. Both are expected to join towards the end of the year. NOA 3902 has only begun writing as a full syndicate since the start of the year and covers aviation, contingency, cargo and specie, energy, marine hull and liabilities, package programmes and property direct and facultative business.
Vibe Syndicate 5678 led market for premium growth last year
The top spot for premium growth in 2016 went to Vibe Syndicate 5678, as it made a number of hires during its second year of underwriting live business. The business increased its year on year gross written premium to £53.6mn, this is a trebling on its 2015 level. 4 teams that managed to help Vibe achieve such an increase were credit, surety, political risk and terror. For 2017 Vibe will operate with eight underwriting teams. Other syndicates to have done well over 2016 were Syndicate 3334 with a growth of 171.3% , R&Q Syndicate 1991 at 75.2% and Shelbourne Syndicate 2008 achieving 89.6% growth. Munich Re Syndicate 457, whose substantial marine, aviation and transport book accounts for 60% of the business, contracted by 18.3% to £356.2mn.