Motor Insurers' Excuses for Poor Results Rejected

www.broking.co.uk AOP Digital Business Publisher of the Year 2010 September 2010

Serving the broker community for over 30 years Motor insurers’ excuses forpoorresultsrejected a $365m (£236m) charge in costs as a key reason for the By Louise Meeson FY10, mainly related to claims worsening results, its claims reserve strengthening, due to a experience over the past 18 nsurer claims that increases “significantdeteriorationinUK months had not included any Iin bodily injury costs are to claim experience”, in particular unusual trends in bodily injury blame for poor performance in bodily injury claims (www.bro- or damage claims. the private motor market may king.co.uk/1652038). It said that claims frequency be misleading, according to in- The report said the Work- had continued on a long-term dustry experts. ing Group of the Institute of downward trend so although David Vine, business develop- Actuaries warned other insur- bodily injury was relatively flat, ment manager at Allianz Legal ers “may still face pain similar it now constituted a larger pro- Protection, said it was “dis- to Equity Red Star”. portion of the total. appointing” to see that some Royal Bank of Scotland On the market in general, motor insurers were “blam- Insurance (RBSI) chief exec- Mr Vine said: “Some insurers ing their poor half-year results utive, Paul Geddes, said its need to take responsibility and largely on the increase in bodily results were heavily impacted account for their own inad- injury claims” and the “pariah by the need to boost its reserves equate pricing and reserving of the industry” claims man- for bodily injury claims after mechanisms, and the inability agement companies (CMCs), reporting a £253m operating of some players in the motor adding that the problem lay in loss for H1 2010 (H1 2009: market to move away from the the market’s desire to write for £217m profit). vanity of growth, rather than growth rather than profit. A spokeswoman for RBSI the sanity of profit. His comments follow explained that the company “This is not to defend the the publication of a report had recognised the need to claims management industry. by financial services firm JP change its business to meet However, it is disappoint- Morgan, which has slammed the changing industry and was ing that they appear to be Insurance Australia Group’s progressing well with its plans. a convenient excuse for poor (IAG) UK business, Equity However, in its 2010 financial performance. Until Red Star, for under-reserving H1 results (www.broking. motor insurers price their busi- (see p3). As reported on Insur- co.uk/1729561), Admiral ness to account for all relevant ance Age’s website Broking. said while a number of insur- factors, including damage co.uk, IAG announced earlier ers had cited an unexpected and claims inflation, they will this year that it anticipated surge in bodily injury claims remain unprofitable.”

Tony Cornell discusses activity in Expo introduces clinics theretailbrokingsectorandasksif consolidation will pick up again he Broker Expo has ex- latory risks, hone their web Tpanded its workshop pro- offering and how to get the Agenda p24 gramme for 2010. Building on best out of social media. the practical aspect of the suc- Brokers who secure a spot cessful workshop programme, will be given an exclusive 20 Thismonth’sdebateheldin new focused broker clinics have minute slot to discuss their par- Newcastle discusses the level of been developed to give brokers ticular business needs. talentintheindustry the opportunity to delve deep- Steve White, head of compli- er into the issues that matter ance and training at the British Power hour p28 most to their businesses. Insurance Brokers’ Association, Liability The clinics, which are avail- will be giving straightforward able by appointment only, and confidential advice on all This month’s Reportage Liz McMahon reports on how will allow brokers one-to-one regulatory matters whether asks whether Quinn’s insurers are increasingly getting contact with industry experts they are wider general issues theirriskpricingonthenose who will offer confidential and or whether it is a business spe- exit from the solicitors’ PI market will have long- Risk pricing p41 impartial advice on how to cific▲ query. start a business, mitigate regu- Story continues on p6 term effects on the sector How about Guaranteed ethical practices

Ai enforces a ‘claims footprint’ across all its services, Ai resolves claims and settles payments swiftly. effectively stamping down on unethical practices By actively managing the claims process, our aim throughout the industry. We target areas where is to get your clients back on the road as quickly as costs can escalate unnecessarily and also focus on possible. No fuss and minimal cost. avoiding common causes of extended hire periods.

Any questions?

Ethical claims solutions for brokers 01253 441413 [email protected] News

Insurance Age

Editor Martin Friel Equity Red Star slammed for 020 7316 9732 [email protected] News editor Louise Meeson being too slow to adjust reserves 020 7316 9867 [email protected] Senior reporter Liz McMahon an earlier version issued to the market, to profitability despite proposed rate 020 7316 9115 By Martin Friel suggest action could have and should increases of 10-20%. [email protected] have been taken earlier. “The key in restoring adequate prof- Group editor-in-chief Anthony Gould quity Red Star should have taken “In 2009, we believe there were itability in Equity Red Star will be 020 7316 9374 [email protected] Equicker and more decisive action enough warning signs that should have whether large rate rises can be pushed Production editor Ruth Ganthony in reserving for increasing bodily injury prompted earlier action on reserves, through. While we believe rate rises 020 7316 9717 claims according to a report produced and ultimately on premium rates and are coming through in the UK, his- [email protected] by JP Morgan. claims management options by IAG/ tory suggests that this market has been Online sub editor, insurance Tracey Jones The damning review of the UK arm Equity Red Star,” the report stated. excessively competitive and as such it 020 7316 9795 [email protected] of Insurance Australia Group (IAG), It continued: “Equity Red Star has paid to be cautious.” Sales manager James Murray which is under investigation by the appears to have been slower than some However, the authors make clear they 020 7316 9296 Financial Services Authority, said there peers in recognising the trends.” believe IAG has taken appropriate action [email protected] were enough warning signs for the The report suggested that the insur- with the company taking a conservative Sales executive Chris Finnegan 020 7316 9632 insurer to act earlier and to reserve ance margin – the contribution to stance with a reserves to earned premi- [email protected] adequately for deteriorating claims, a profit from underwriting and invest- ums ratio of 87.6%, a full 12% higher Commercial director Phil Davison trend that was noted and acted upon ment income – which had been than the authors thought adequate. 020 7316 9215 by others in the market. estimated at approximately 10% was, Equity Red Star referred all queries [email protected] IAG has recently pumped $365m in light of the reserving shortfall, more relating to the report to IAG Group Head of key accounts Sajeeda Merali 020 7316 9765 (£237m) into the company to shore likely to be closer to 1%. In addition, Corporate Affairs in Australia. No one [email protected] up its position but the authors of the the report predicted it will take Equity was available for comment at the time Group production manager Lorna Graham revised JP Morgan report, replacing Red Star some 18 months to return of going to press. 020 7316 9707 Digital production manager Rebecca Yegliss 020 7316 9228 [email protected] Potential Aviva sale to shape outlook for composites Art director Nicky Brown Head of events Simone Broadhurst he future of the composite model Aviva’s returns on equity had been 020 7316 9055 remains uncertain as the industry behind those of certain other UK [email protected] T Audience development manager Sarah Smith waits to see if another insurance giant will insurers in the past three years and that 020 7968 4648 swoop on Aviva’s general insurance arm. under Solvency I there was no capital [email protected] RSA said it remained “open to dis- advantage for writing general and life Principal, Insurance 360 Peter Joy cussions” after Aviva rejected its £5bn insurance together and under Solvency 020 7316 9814 offer for its general insurance busi- II it was too early to determine the net [email protected] Research assistant, Insurance 360 Chris Wade nesses in the UK, Ireland and Canada, benefits which regulators may allow for 020 7316 9106 excluding RAC and health. Axa has composite insurers. [email protected] also reportedly expressed an interest in In response, Aviva issued a statement Publisher Alex Broad Aviva’s UK general insurance business. arguing that the general insurance mar- 020 7316 9382 The RSA bid was made on the 28 ket was presently at a cyclical low and [email protected] Director of content, PSD Lem Bingley July via a letter from chairman John therefore the offer did not reflect the Group publishing director Derek Peck Napier. Aviva took 10 days to respond the rejection had occurred “without insurer’s full earnings potential. Managing director Graham Harman and Lord Sharman, chairman of Aviva, any discussion taking place”. “The combination of the life and

For subscription enquiries, contact: Incisive Media said the board’s decision was unani- It added that its business was the non-life businesses allows Aviva to (c/o CDS Global),Tower House, Sovereign Park, Market mous and focused on “maximising “optimal model” for writing general operate with substantially less capital Harborough, Leicestershire, LE16 9EF Tel: 01858 438 421 Email: [email protected] value for Aviva shareholders”. insurance, and that no other major pri- than the two businesses would do on a Annual subscription: £150 In a statement RSA said it had mary UK insurer continues to pursue stand-alone basis, which is likely to be For reprints & e-prints enquiries, contact Richard Coury, The Reprint & Licensing Centre. 4 Ingate Place, London, considered buying Aviva’s general the composite model. further reinforced under the Solvency SW8 3NS.Tel: 020 7501 1086 Email: [email protected] insurance arm for some time and that In the statement, RSA argued that II proposals,” it concluded. Insurance Age is published monthly by Incisive Financial Publishing Limited, 32-34 Broadwick Street, London W1A 2HG, UK. Tel: 020 7484 9700 Fax: 020 7316 9313 Printer: Headley Brothers, Ashford, Kent Adrian Flux confirms plan to grow workforce All rights reserved: no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electrical, mechanical, orwich-based Adrian Flux has an- sonal lines brokers that are becoming broker segment. The remaining 2,500 photocopying, recording or otherwise, without the prior written permission of the publisher. © Incisive Media Nnounced it is to create 150 jobs increasingly web savvy and experienc- brokers, he reports, are bit players, Investments Limited ISSN 0142-6265 as it gears up for further expansion. ing strong growth levels. This year’s handling £1.4bn. Member of the Audit Bureau of Circulations. Average net circulation for the period 1 July 2009 to The broker, which appears in this year’s listing has witnessed the appearance The consolidators are still strong in 30 June 2010: 16,660 Top 50 Brokers in Personal Lines sup- of several online brokers that control this sector but there are independents plement, already employs 480 staff at significant levels of premium. that have identified a niche and are its offices in King’s Lynn and reports a According to Tony Cornell’s analysis, becoming expert at exploiting it. What turnover of more than £100m. overall, the top 50 collectively control the Top 50 listing tells us above all else The broker, which lists some of its £5.6bn in premiums, which equates to is that personal lines is still a very prof- products on aggregator sites, reflects about 28% of the total motor/house- itable area for brokers but increasingly a growing trend in the top 50 per- hold market and some 80% of the the market is becoming polarised. www.broking.co.uk September 2010 Insurance Age 3 News

NEWS IN BRIEF Opportunity for brokers to The Financial Services Authority (FSA) has fined the UK branch of Zurich slash their FSCS contribution Insurance £2,275,000 for failing to have adequate systems and controls in in the future. Once this is received place to prevent the loss of customers’ By Martin Friel it will be reviewed and considered in confidential information. The fine is accordance with our rules,” the spokes- the highest levied to date on a single rokers labouring under the de- woman added. firm for data security failings. The fail- Bmands of this year’s Financial Serv- Steve White, head of compliance and ings came to light following the loss ices Compensation Scheme levy may be training at the British Insurance Bro- of 46,000 customers’ personal details, given the chance to resubmit their data kers’ Association, said that it should not including identity details and, in some and dramatically cut their contribution. be too difficult for brokers to do so. cases, bank account and credit card Insurance Age has been made aware of “Up to now, there has been no finan- information, details about insured at least two brokers that have resubmit- cial incentive for brokers to separate the assets and security. ted their income for business relevant business that does and does not qualify to the compensation scheme to the for the scheme. But insurers don’t make The Capita Group has acquired the Financial Services Authority (FSA) and it easy for brokers to do this,” he said. National Dental Plan (NDP) group of have secured either a reduced bill or Steve White: “It’s not difficult for firms He pointed out that financially it was companies for a cash consideration of a refund, as appropriate. One of the to resubmit figures to the regulator” now worthwhile for brokers to make £30m on a cash-free, debt-free basis. brokers secured a refund of tens of the effort and played down fears that Capita said NDP provided corporate thousands of pounds. have to have a compelling excuse as to approaching the FSA with revised fig- dental plans and operated some of “If a firm believes that it overstated why it had not submitted the correct ures would draw unnecessary attention the biggest dental insurance schemes its annual income relating to its rel- information in the first place, as per the to a broker’s business. in the country, designing, distribut- evant business, it should get in touch FSA rulebook. However, he added that it was ing, arranging underwriting for and with the FSA via the fees helpline,” said “The firm would need to provide evi- essential that the way the levy was administering dental insurance policies a spokeswoman for the regulator. dence that is has misreported data, an administered on brokers had to be to more than 300 clients, representing However, there was a warning that explanation of how this occurred and a changed: “Separation [from the bank- 120,000 underlying insured members. a broker choosing to re-submit its guarantee that procedures are now in ing pot] is fundamental and the FSA is Customers include Lloyds Banking information relevant to the levy would place to ensure it will report correctly sympathetic towards the problem.” Group, HSBC and BT. NDP made a consolidated operating profit for its financial year to 31 March 2010 of InksealsWestinsureGroupdealformysteryfigure £4.1m on turnover of £13.4m. iles-owned Ink Underwriting taking the final consideration to just understood that it was Towergate that The top five stories on Insurance GAgencies has completed the ac- over £5m. The deal excludes the ultimately backed away from the deal. Age’s website www.broking.co.uk for quisition of the Westinsure Group for Westinsure-owned brokerage Brunson On the completion of the deal, 1 – 24 August 2010 were: an undisclosed sum. Westinsure based in Swindon. Mike Smith, managing director of 1. FSA dishes out £150,000 fine as it A statement from Ink said the Westin- The takeover came as something of a Ink, commented: “Ink’s acquisition of bans five for insurance fraud sure brand would remain unchanged surprise to the market but it is not the Westinsure allows us and its members www.broking.co.uk/1728274 and that the acquisition would allow first time Westinsure has drawn admir- to bring together our capabilities to 2. Aviva shares climb following reports both parties to “work together to ing glances. In 2007, the network held provide insurance solutions like no of audacious RSA approach provide a competitive trading environ- discussions with Cobra with a view other in the market. Whether under- www.broking.co.uk/1727856 ment through additional schemes and to completing a deal rumoured to be written or wholesale, we will be able 3. Broker jailed for £1m fraud trading methods, while enabling an worth £6m but the talks floundered. to deliver a solution for the majority www.broking.co.uk/1726417 increase in market presence”. More recently, Towergate looked of Westinsure member needs. We look 4. RSA warned to raise Aviva offer to Although Ink refused to reveal at the network shortly after it had forward to working with the members £8bn the value of the deal, Insurance Age completed the purchase of Broker Net- as we develop our respective brands.” www.broking.co.uk/1728742 understands that the offer made to work. At the time, a valuation of £10m Ink will join the panel of insurers 5. MP banned after driving without shareholders was around £15 a share for Westinsure was bandied about. It is with immediate effect. insurance www.broking.co.uk/1728937 NTR pilot to ease complex business underwriting This month’s prize on the Insurance Age website broking.co.uk is a bot- roker Network is piloting a net- The pilot commenced at the start of three to nine and continue to grow the tle of Veuve Clicquot champagne. To Bwork trading room (NTR) envi- August with 50 brokers but NTR man- underwriting panel. make sure you are in with a chance of ronment that aims to allow members ager Rhiannon Bates said it had been “We will be able to turn around winning log on to to place complex commercial risks. so well received that there were now complex quotes in three to five days www.broking.co.uk/competition and Brokers submit quote requests via plans to extend it to a handful more but brokers have said that turn around answer this simple question: what is telephone directly to the admin team brokers each month until the pilot time isn’t even the most pressing issue. the renewal date for solicitors’ profes- that then distribute it to each of the six ended in December. The NTR will At the moment, on the open market, sional indemnity insurance? Entries in-house NTR insurers. be rolled out gradually to all members they simply don’t hear anything back much reach us no later than 27 Sep- Insurers currently on the NTR panel from the start of 2011. from 80% of their requests. When they tember 2010. Ian Ward of THB won include Aviva, Zurich, Axa, Broker Net- Ms Bates said that she hoped to add contact insurers, they claim they need a Vivtar X225 digital camera in last work Underwriters, Equity and NIG 20-30 brokers per month, planned to more information or that they didn’t month’s competition. with Fortis set to join mid October. triple the size of the NTR team from receive the request,” she said.

4 Insurance Age September 2010 www.broking.co.uk

News

NEWS IN BRIEF FurtherchangesatBritas Insurance Age’s sister magazine PB will be hosting the PB Manage- distribution boss bids farewell ment Event for broker managers on Wednesday 6 October 2010 at the now a lot more established out there Marriott Grosvenor Square, London. By Liz McMahon but you are always thinking about how This one-day conference includes to improve delivery.” keynote speakers, interactive voting, rit Insurance’s head of distribu- He said his number one ambition practical workshops and networking Btion Tim Grant is leaving to join was to achieve upper quartile under- opportunities over lunch and during Dual Corporate Risks, Insurance Age writing performance, adding “if we the post-event drinks reception. Brokers can reveal. deliver this I am confident that we will can register or find more information at A spokeswoman for Brit confirmed grow profitably”. www.pb-managementevent.co.uk. Mr Grant’s departure but said it was Commenting on when the general too early to reveal who would take market might harden, Mr Cox said, Bolton South-east MP Yasmin over his high-profile role. However, a while he was reluctant to make a pre- Qureshi has been banned from driv- source close to the situation said the diction, “in the not too distant future ing for six months after being caught current distribution leader for small there is going to be this irresistible using her mobile phone while driving business and personal lines, Vivek overwhelming need to start moving without insurance. Her solicitor told Banga, was in line to take up Mr rates beyond inflation”. Bolton Magistrates’ Court on 18 August Grant’s vacated role. Mr Grant’s defection and Mr Cox’s that the MP believed her insurance had His departure comes as Ray Cox suc- TimGrant:JoiningDualCorporateRisks promotion come as uncertainty sur- been automatically renewed whereas ceeds Peter Burrows as chief executive rounds Brit’s future following US in fact it had lapsed on 9 April. Ms of Brit’s UK strategic business unit. “I have known Peter for a long while. private equity house Apollo’s attempted Qureshi already had nine points on her Mr Burrows announced his inten- The luxury for me is to have him in the buyout. licence and has now been fined £1,250 tion to retire in late 2009 and it background to seek a second opinion Apollo made an indicative proposal plus costs and banned from driving for is understood he will continue to in the early days. I am not expecting a of £10.75 per share at the end of July six months. The MP said: “A genuine work closely with Mr Cox until his lot of things to go in his direction and I and was consequently granted a period mistake has been made. I believed I retirement in December. During the am sure he isn’t either,” he continued. of due diligence, expected to take “a was covered and I am continuing to handover period, Mr Cox said that he On the insurer’s regional strategy, Mr number of weeks”. speak to my insurance company about expected Mr Burrows to take “very Cox said: “Four years ago we were a At the time of going to press, Apollo this matter.” much a background role”. relatively new kid on the block. We are was yet to confirm its offer. One-to-one advice from experts

Offering brokers advice on how to get involved with and exploit the often confusing world of social media will be Mike Berry, a digital marketing expert and, finally, Tom Wood, managing partner at Foolproof, will explain how you can really make your website work for your business. These new clinics will provide bro- kers with unprecedented access to industry experts and as places are limited, demand will be high. Book- ings for the clinics can be made at www.brokerexpo.co.uk under the ‘event programme’ tab. The Broker Expo, in its sixth year, promises to be the biggest and best yet. Last year, when there were over 85 exhibitors, over 550 brokers were in Working for you Continued from front page attendance and with nearly 100 exhibi- Clare and Mark Ryder will be host- tors this year and with an enhanced ing the business start-up clinic and will event programme, the event promises Being respected, and delivering our commitments, talk brokers through the process of to draw more brokers than ever to has shaped Arista and how we work with our brokers. starting a business from the very begin- take advantage of the unparalleled net- Arista Insurance has created a suite of insurance ning and the necessary preparations to working opportunities and get their products for businesses that means we can provide get to that first day of trading. businesses in shape for the future. cover for your commercial clients. To register for the Broker Expo go to www.arista-insurance.com www.brokerexpo.co.uk

6 Insurance Age September 2010 www.broking.co.uk Not all legal expenses policies offer the same protection

Legal expenses If you’re concerned about the insurance policies may legal protection your clients aren’t getting from your seem like current provider, talk to DAS: they offer similar levels of cover, but some could 08456 665 463 leave your clients [email protected] rather exposed. www.das.co.uk

DAS Legal Expenses Insurance Company Limited is authorised and regulated by the Financial Services Authority. News

NEWS IN BRIEF Powerhourdebateappealsfor APC said it had responded to broker demand by launching an execution ‘remote’CIItogivehelpinghand policy for contractors cover. The prod- uct has been designed to cater for the employers were responsible for attract- standard requirements of medium By Louise Meeson ing talent, they could do with a helping and large-sized contractors as well as hand from the professional body. providing a wide range of optional he Chartered Insurance Institute However, David Ross, head of public extensions. APC said this would enable T(CII) has been accused of being relations at the CII, said: “We’re not clients to choose the level of cover “London-centric” and remote at an London-centric, we simply don’t do this they required for key elements such Insurance Age roundtable event in to that extent because we have finite lev- as employers’ and public liability while Newcastle (see p28). els of resource. We are a relatively small they could select specific elements Speaking at the event, Janet Moody, operation and we are limited in terms such as cover for own and hired-in commercial manager at Wilby, said of money and people. The ability to be plant if required. that although the CII was doing a lot able to go out is something we would to encourage people into the insurance love to do more of but this is restricted 1 Answer Insurance has appointed industry, that it was “still perceived to by the budget and resource.” Jamie Turner as operations manager. be fairly remote”. Mr Ross pointed out that there was Managing director, Paul Muir said: Michael Farrell, partner at Lockton, MichaelFarrell:“Wouldbegoodtoget a network of local institutes across the “As operations manager Jamie will be said: “We were visited [by someone the CII working more closely with us” country that supported its members instrumental in helping to develop from the CII] and he said this was the and offered a range of activities. the business further and in the deliv- first time he’s been up to Newcastle. I working a bit more closely with us.” There are currently 60 local insti- ery of the specialised services for think they have received criticism that Gordon Vater, director of Resources tutes across the UK, seven associated our clients. In a market as competi- they had been a bit London-centric in Insurance Group, agreed that the institutes in the Republic of Ireland tive as the insurance broking market and were not really doing as much as CII was doing a lot but said that it and 70 affiliated institutes across the today, it is important to focus on your they could in the regions. needed to take more of a role pulling globe, which offer additional support strengths and to take time to develop “Maybe in the past we didn’t need the companies together and that while to CII members. your business around them. Likewise, help from the CII as there were so maintaining the quality of our service many insurers on our doorstep but For the latest regional news is paramount, as is employing the right now that they are not there it would be www.broking.co.uk/tag/regional people to do the job.” good to get the CII back and get them

kdibonline.co.uk FurthercutsatTescoCompare the Tesco Compare business and have recently invested in a new platform static & and website infrastructure to deliver touring further improvements to the benefit caravans of our customers. complete “In line with the rest of the business, we constantly review our operations. If online we were to make any changes to the solutions business, it would be right to consult cats & dogs our staff, however we do not comment forbrokers... on speculation.” The latest developments come after it was revealed that Tesco Compare Former CEO Debra Williams left Tesco refused to confirm whether or not it uk & eu CompareinJunethisyear holiday was going to replace departed chief homes executive Debra Williams (www.brok- he majority of staff at Tesco Com- ing.co.uk/1720640). pare’s Redhill base have been put At the time it was revealed that the ...fromthe T on redundancy notice raising questions marketing function for the aggregator leisure insurance pleasure over the aggregator’s future. had been moved to Edinburgh under a heavyweights craft Insurance Age understands that the shared service model with Tesco Bank marine IT, finance and administration teams, and that at least two redundancies had around 20 individuals, have been put been made from that division. on 30 days’ notice leaving only a According to Hitwise, Tesco Com- 08454565758 skeletal staff made up mainly of ‘rela- pare trails the leading aggregators with [email protected] park tionship managers’. a market share of just over 1.5%. How- home Refusing to comment specifically ever, the company insists that it is on the situation, a spokeswoman for targeting only Tesco customers despite Authorised and regulated by the Financial Services Authority Tesco Compare said: “We are com- earlier public ambitions to lead the mitted to developing and growing wider market.

8 Insurance Age September 2010 www.broking.co.uk News

Record FSA fine prompts call NEWS IN BRIEF Quinn Insurance has confirmed that forbrokerstohelptacklefraud it will not be re-entering the solicitors’ professional indemnity (PI) insurance on in the local market and should be market in England and Wales this By Liz McMahon helping,” he said. year. In a statement, the insurer said it In addition to Mr Jeffrey’s punish- “believes it is in the best interest of its rokers have been called on to do ment, the FSA banned Barrie Duncan policyholders to advise them at this Bmore to support the Financial Serv- Aspden of Orion Direct and Peppercom, point that it will not be in a position ices Authority’s (FSA) crackdown on his wife Melanie Aspden and his sister- to participate in solicitors’ PI insurance fraudulent behaviour after the regulator in-law Gaenor Clayton. In addition, market for the upcoming 2010-2011 imposed one of the largest ever fines on director and non-executive director of renewal period.”As reported in Insur- an individual. Orion and Peppercom respectively, Paul ance Age (August 2010, p6), Quinn The FSA recently banned five individ- Mr Jeffrey claimed lightning Willment, was fined £50,000. covered 2,911 firms. destroyed customer records uals for failings in relation to insurance The watchdog said Mr Aspden know- fraud, imposing one of its biggest ever ingly used approximately £300,000 of London & European (L&E) has fines of £150,000 for the offence on one after lightning hit his French office on Orion client money to set up Pep- launched a new professional indem- of the individuals, Andrew Jeffery, direc- two occasions. percom. The FSA said as Mr Apsden nity (PI) proposition designed to help tor of Jeffery Flanders (Consulting). Robin Belsom, director at Ryan was unable to gain regulatory approval solicitors find the best cover to suit The regulator said that Mr Jeffery Insurance Group, said the case not only after he was declared bankrupt, he put their needs. Group sales manager, “recklessly failed to put in place insur- highlighted the regulator’s willingness in place three directors who “lacked the Parveen Kumari, said: “The demise of ance policies appropriately or in some to issue fines, it also highlighted the competence and skills to perform their Quinn has led to much speculation as cases at all despite collecting payment increasing reliance on local broker roles”, enabling him to control the to the difficulty some firms may face from customers”. knowledge to pinpoint fraudsters. business without the relevant regula- when it comes to renewing their PI The watchdog added that the case “We have an obligation to report tory permission. cover this year. The subsequent with- was particularly serious as many of his such situations to the FSA. We know Referring to the FSA’s tough stance, drawal of Hiscox among others has clients were elderly or vulnerable. when something is amiss locally but Mr Belsom said: “Fines like this make added to the growing concern that Although he was registered in Bill- we don’t always act upon it. I have headlines, but will they get paid? We many firms will simply not be able to inghurst, Sussex, Mr Jeffrey operated sympathy for the FSA as it is hard to need to get to the point where regula- find cover at all and be forced to enter mainly in France, insuring ex-pats. He police 8,000 firms across the country tion stops people attempting to commit the Assigned Risk Pool, which doubled claimed that he lost customer records from London. We know what is going fraud in the first place.” in size last year.” Control at your fingertips Charities Quote and Buy

To celebrate the launch of our new online charities quote facility, Maven Underwriters are giving you the chance to win an Apple iPad. For every quote generated through our online facility between 1st September and 30th November 2010 we will enter you into the prize draw, so the more quotes, the more chance you have of winning.

Maven Underwriters are putting brokers in control of the service that they provide their clients by launching a quick and easy online solution for small to medium charities with turnover up to £1 million, quoting two types of cover:

Charities Liability Policy For charities with turnover up to £1 million Provides both EL & PL cover Corporate Manslaughter Includes Authorised Volunteers

Charities Package Policy For charities with turnover up to £1 million All Risks on Buildings, Contents and Stock Includes Property, EL & PL, BI, Liabilities, Money and PA For your Charity Trustee Indemnity chance to win visit our website now visit www.mavenunderwriters.co.uk and click on or call 01737 783 740 the iPad Maven Underwriters - The Broker's Choice Maven Underwriters is part of AUM Europe. AUM Europe is a trading name of AON Limited which is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only. For full prize draw terms and conditions visit www.mavenunderwriters.co.uk WinaniPad FP6212/0710/v1 www.broking.co.uk September 2010 Insurance Age 9 A PARTNER YOU CAN TRUST

Whatever the industry, we’ve got a solution that fits Trust us to provide your clients with Abbey Legal Protection comprehensive commercial insurance solutions, Legal Protection for Businesses specialist schemes for trade sectors and affinity clients, as well as facilities for property owners, schools, care homes, professionals and the construction industry.

Contact us on 0845 373 0422 for more information about our products and services.

t: 0845 373 0422 e: [email protected] w: www.abbeylegal.com BA News

Confidence grows as broker NEWS IN BRIEF Insurance buyers across Europe, recruitment activity picks up the Middle East and Africa (EMEA) are benefiting from increased competi- there has definitely been a boost but we tion among insurers and the added By Liz McMahon are still a long way off from the volume capacity generated by new entrants to levels we have enjoyed in the past.” the market, according to a report by roker recruitment activity has in- Mr Patterson claimed new business Marsh. Competition Nets Rewards, EMEA Bcreased by between 50% and 60% development was the area which the Insurance Market January-June 2010, this year, according to financial recruit- majority of brokers were focusing on. found that many organisations across ing company Joslin Rowe. “Brokers are looking for candidates EMEA were able to secure premium rate Mark Patterson, senior consultant, who can pay for themselves from day reductions for their property and casu- insurance, at the Randstad-linked one. Some smaller brokers will only alty insurance in the first half of 2010. agency, said that while 2009 was quiet look at people who can bring a whole This was despite insurers striving for for even the largest brokers, this year’s book of business with them. However rate increases, particularly on renewals. recruitment levels had risen across the certain brokers have had their fingers board, with global broker Aon recruit- burnt by new business producers who There was a 128% leap in the ing particularly heavily. promised the earth and then walked number of staff resigning from the “There is a growing optimism. In the Mark Patterson: “Growing optimism” away,” he explained. Financial Services Authority (FSA) recession the main players – Aon, Wil- Mr Charles agreed with Mr Patter- in just one year as the Government lis and Marsh – froze any recruitment bold enough to report a 60% boost in son: “Brokers are constantly looking proposed to abolish the regulator, and saw it as a good time to shed dead recruitment but admitted there had for individuals and teams that can according to law firm Reynolds Porter wood. They took it as an opportunity been a rise. introduce new business. Some will Chamberlain (RPC). Data released to to restructure, which brokers of that He said: “Generally speaking there only consider those who can introduce RPC following a Freedom of Information size should be doing every year any- has been a lot more activity this year a new risk to the company. That said, Act request revealed that 121 FSA staff way,” Mr Patterson said. than last. We haven’t seen so much in brokers have become more guarded resigned in the Q2 2010 (Q2 2009: 53 Director at recruitment firm Thomas relation to the larger brokers but we are and seek cast iron guarantees that staff). RPC said this raised concerns Kennard, Rob Charles, said he was not a smaller organisation. Interest wise, business is going to move.” regarding regulatory approval time and the quality of decision making. Claims farming clampdown needed to cut motor costs Chubb has become the first insurer to be awarded chartered insurer sta- he insurance industry must tackle said: “One of the reasons why this hap- eradicated, the industry needed to col- tus in the UK. The title was awarded Tthe ongoing rise in claims farming pens, from an insurer point of view, is lectively make changes in relation to to Chubb’s underwriting and service in order to reduce overall motor claims that the service provided is probably third parties, such as the removal of centre in Manchester, which provides costs, according to a recent report is- better than their own claims service. If referral fees as soon as possible. technical underwriting support for sued by Defaqto. this scenario is occurring across most He said: “Another action is regula- the insurer’s existing commercial and At a crossroads, motor insurance non-fault claims, controlling claims tion to set agreed cost levels. Although financial lines businesses in the UK report August 2010 said that there was costs is a real problem for third-party most reputable accident management and Ireland. In addition, Towergate a major issue with insurers controlling insurers. Although many are becom- companies abide by the General Terms Underwriting Group has become one their claims costs, pointing out that ing more proactive at contacting the of Agreement issued by the Association of the first underwriters to achieve both intermediaries and insurers were claimant to provide their own services, of British Insurers, unless there is some chartered status. Clive Nathan, chief passing non-fault claims to accident it would appear that they cannot match form of agreed costs levels, there will executive of Towergate Underwriting, management companies. the same type of service given by an continue to be accident management said: “Gaining chartered status is clear Report author Mike Powell, insight accident management company.” companies that seek to charge insurers evidence of our commitment to pro- analyst, general insurance, at Defaqto, He said for claims farming to be whatever they can get away with.” vide brokers with the very best advice and service.” Birmingham exposed as worst ‘crash for cash’ area Aviva has highlighted the dangers of failing to properly calculate business irmingham has topped the Insur- formation in July 2006, the IFB has innocent members of the public to interruption (BI) cover after revealing Bance Fraud Bureau’s (IFB) top 20 been instrumental in helping the police crash into them. 41% of cases it investigated last year league table of crash for cash hotspots make in excess of 415 arrests of people “Claims are made to the innocent required adjustment. Aviva Risk Man- in Q2 2010. who were trying to defraud insurers, motorist’s insurer, often including sev- agement Solutions found that 32% Liverpool came second in the table, resulting in more than 89 convictions, eral accounts of fictitious injuries from have required an adjustment so far which draws on two years of insurance for finalised criminal prosecutions.” members of the criminal gang. There in 2010. Dave Cowsill, BI risk adviser claims and policy data, followed by He explained that in typical ‘crash for is growing evidence to show that the at Aviva, said: “So far this year, almost Blackburn, Manchester and Leeds. cash’ scams, fraudsters would drive to proceeds from this type of fraud are a third of the businesses we have Glen Marr, director of the IFB, said: busy road junctions and then perform used to fund other forms of serious reviewed have needed corrections to “The IFB currently has 24 active joint unexpected, unnecessary and danger- crime including drug trafficking and their BI sum insured. Clearly businesses police operations, with a combined ous emergency stops designed to cause gun running,” he added. are not prioritising their BI sum insured value of approximately £41m, spread figure, which is very worrying.”He across 15 police forces. Each operation For the latest fraud news warned that if the underinsurance was represents an average value of £1.7m particularly serious the policy could www.broking.co.uk/tag/fraud and on average 253 claims. Since its ultimately be voided. www.broking.co.uk September 2010 Insurance Age 11 News

NEWS IN BRIEF HMRC stipulates VAT exemption Fortis Insurance UK has reported profit before tax of £8.4m for Q2 2010, conditions for online intermediaries an improvement on the £3.2m loss made in Q1, but still behind last year’s to be VAT exempt, four conditions H1 profit of £26m. Non-life gross writ- By Louise Meeson must be met. ten premiums increased by 16.6% to Firstly, the services must be provided £468.4m (H1 2009: 401.6m) while non- nline insurance intermediaries by someone engaged in the business of life combined ratio stood at 106.5% Omust look closely at their busi- putting insurance companies in touch (H1 2009: 104.4%). Mr Smith said: “Fol- ness models in order to qualify for VAT with potential clients, although this may lowing a challenging first quarter for exemption following a briefing by HM not necessarily be their principal busi- the whole industry, we are now seeing Revenue and Customs (HMRC). ness activity. improvements in our profit and ratio The statement was issued at the start Secondly, the business must provide performance and expect to see further of last month after the Court of Appeal the means, by way of an internet ‘click improvement during the remainder of found against HMRC in the joint through’ or some other form of intro- the year.” appeals of Insurancewide and Trader duction, to introduce a person seeking Media in April, upholding an earlier insurance to an insurance provider or Admiral’s group profit before tax High Court decision that certain insur- Shimon Shaw: “Have to do more than other intermediary in a chain leading to has soared to £126.9m for H1 2010, ance introductory services provided via just offer a click through service” an insurance provider. a 21% increase on the same period the internet were exempt from VAT. In addition, the introduction must last year (H1 2009: £105.3m). Group In its briefing, HMRC said it would ple that are in similar industries such as take place at the time a customer is seek- turnover grew by 33% to £720.5m (H1 “now accept that insurance introduc- comparison websites and those offering ing to enter into an insurance contract 2009: £540.1m) while the number of tory services will be exempt from VAT intermediary services online are going and finally, the introducer must also play customers the group had increased by when a provider is doing much more to have to look really carefully at their a proactive part in putting in place the 23% to 2.37 million from 1.92 million than acting as a ‘mere conduit’ through business model. arrangements under the introduction. at 30 June 2009. Henry Engelhardt, which a potential customer is passed to “You have got to do more than just HMRC said that subject to the normal Admiral group chief executive, said: a provider”, providing a set of condi- offer a click through service. People rules on capping and unjust enrichment, “2010 is shaping up to be a year of tions were met. have to be careful about what they are it would pay claims for overpaid tax great opportunity and I’m extremely Shimon Shaw, a solicitor in law firm actually doing now in order to qualify charged on insurance introductory serv- proud of how everyone at Admiral has Matthew Arnold & Baldwin’s wealth for exemption.” ices that fell within the findings of the stepped up to the challenge.” management team, said: “Those peo- HMRC has stipulated that in order Court of Appeal.

Let’s put an end to nasty surprises

Consistently voted the Best Insurer* by brokers, our in-house survey team can offer your customers a free insurance valuations service for their buildings**.

More importantly, we honour our valuation at the time of any claim. Helping your customers avoid costly under-insurance slip-ups. you’re in good hands For more details visit www.ecclesiastical.com/goodhands

* Of those brokers who named an insurer in the survey, the majority named Ecclesiastical as the best insurer for Charity, Care, Heritage and Education insurance. Research carried out by FWD, an independent market research agency. ** Terms and conditions apply.

Care • Charity • Education • Heritage

12 Insurance Age September 2010 www.broking.co.uk Health news

Employee risk costs could soar NEWS IN BRIEF Axa PPP healthcare has introduced under retirement proposals a free iPhone app designed to enable users to access information on more Jamie Marshall, principal in Mer- that along with businesses, both insur- than 180 medical conditions and health By Liz McMahon cer’s Health and Benefits business, ers and customers will need to be topics ranging from Alzheimer’s to said: “Changes to demographics in the mindful of the impact that the change yellow fever. Policyholders can enter he Government’s decision to scrap workforce mean that employers need will have. details to pre-authorise a claim and are Tthe default retirement age from to address the impact of longer work- He said: “Insurers should amend also able to find out information on October 2011 could lead to key ben- ing lives on the design of their benefit their insurances so that those over nearby Axa PPP healthcare approved efits becoming uninsurable for older arrangements. The frequency of major 65 are not denied cover. Individuals private practitioners. Axa PPP’s head of employees, Mercer has warned. illnesses typically escalates with age and should ensure that existing and new e-business, Richard Cooper, said: “When The Marsh and McLennan subsid- could significantly increase expenditure insurances do not suddenly cease cover it comes to their health, people want iary said that the proposal, which on risk and healthcare benefits. at 65 or even earlier, and are flexible to straightforward access to relevant infor- would prevent employers dismissing “There are several steps that employ- give you the choice of when to retire. mation straight away.” staff because they had reached the age ers can take to alleviate these costs. We “Companies will no longer be able to of 65, was likely to bump up the cost advise organisations to reassess their force people to retire at 65. The Gov- Professor Sir Kenneth Calman has of providing employee risk and health- current benefit policies to ensure they ernment plan is great news for the 68% been appointed to the Wesleyan care benefits. meet the changing needs of employees of over 55s who want to work past the medical sickness advisory board. Craig Mercer has urged companies to cost effectively, and reflect the removal current standard retirement age. And, Errington, Wesleyan’s chief executive review their existing benefit structures of the default retirement age.” it is even better news for the 5% who and chair of the advisory board, said: to ensure they remain cost effective While Darren Dicks, head of annuity believe that they will be forced to leave “We are delighted that Sir Kenneth and reflect the requirements of an propositions for Aviva, has welcomed their current roles when they reach the has agreed to join. His reputation and older workforce. the Government’s decision, he said official retirement age.” experience will help ensure we remain focused on delivering what our cus- tomers want. To achieve this we need Individual responsibility required to reduce NHS strain an in-depth knowledge of our custom- ers’ lives so that we can stay in touch ore people will be required to already making some sort of effort to with any issues that impact on their Mtake out health insurance over provide for their own health.” financial needs.” the next decade as their access to free The report found that more than healthcare becomes increasingly lim- a third (38%) agreed that the NHS National Friendly has appointed ited, according to a new report by should not prioritise people who fail to Stephen Schofield and David Pooles Friends Provident. look after their own health. as new broker consultants for the Visions of 2020 said that in order for It also condemned Government North and South West respectively. the UK to retain a free National Health health campaigns, claiming they were Mr Schofield has spent the past seven Service (NHS) by 2020, it was “inevi- “failing” to persuade people to live years at Skipton Building Society as table” that individuals would take a Howard Hughes: “Healthcare does not healthier lifestyles saying penalties were sales manager for the home loans greater role. fit with the normal economic rule” the most likely solution in the future. division. Mr Pooles joins National Dr Patricia Macnair, a medical practi- Mr Hughes said: “Healthcare is a Friendly’s intermediary team from 425 tioner who worked on the report, said: that recent Laing and Buisson figures strange world as it does not fit with the Direct, a financial advice service that “There will be more responsibility on showed that 14.75 million people in normal economic rule of supply and was acquired by National Friendly in the individual to maintain their own the UK already had some form of demand. When someone becomes ill, September 2009. Intermediary distri- health but there won’t be a lot of money health insurance. the demand is almost inexhaustible.” bution manager, David Castling, said: coming from the state to help people to He continued: “This thought He said when the NHS was set up, “Our intermediary division is growing do that – it’ll be up to them.” provoking figure means that, either voluntary organisations were asked to rapidly and this will continue as we sell Howard Hughes, head of intermedi- individually or through a company support it where there was a “pinch” One Fund, which has been launched ary marketing at Simply Health, said scheme, 20% of the population is and this was still true today. exclusively to the broker channel.” Invitation to join our EXPRESS service... Working with brokers, helping you to secure business.

• Simple to use, 24/7, online, full-cycle trading platform • 7 commercial product lines that include 19 tailored insurance products • Commitment to provide outstanding service levels - 60 minute referrals • Regional Business Development Managers To find out more and to register your agency visit www.ceqonline.co.uk or call us on 0845 094 2077 Authorised and Regulated by the Financial Services Authority No. 311067 Cover in an instant www.broking.co.uk September 2010 Insurance Age 13 Results news

NEWS IN BRIEF Avivabossliststhreereasons QBE European Operations has reported a rise in pre-tax profit to forfallinGIoperatingprofits US$222m (£142.75m) for H1 2010, compared to $213m for the same this area improved slightly to 98% (H1 period last year. Gross written pre- By Liz McMahon 2009: 99%). mium increased 8% to $2.41bn (H1 In a statement, Aviva said it had expe- 2009: $2.23bn), net earned premium viva’s UK general insurance chief rienced good levels of retention across rose to $1.23bn (H1 2009: $1.19bn), Aexecutive, David McMillan, said all lines of business and that the reduc- while combined operating ratio the dip in the insurers’ general insur- tion of 5% in net written premiums from stood at 88.4% (H1 2009: 89.9%). In a ance and health operating profits was the first half of 2009 principally reflected statement, QBE said: “Soft market con- due to its decision to release fewer re- the impact of the action it took last year ditions continue to prevail, however serves this year. to exit unprofitable business. there are some signs that we are at the The insurer’s UK GI operating profit It added that commercial new busi- bottom of the cycle for most classes increased to £197m in the first half of ness levels had been strong and the with an upturn predicted by 2012.” 2010 (H1 2009: £159m), but when David McMillan: Released fewer reserves launch of its corporate risks offering combined with the health division the had been well received in the market. American International Group’s (AIG) results were less favourable, £268m “In the first half of 2009 we released Mr McMillan said the insurer was on general insurance operation, Chartis, has compared to £284m last year. around about £100m from our prior track to grow its large corporate risk reported an operating income before Mr McMillan said: “The half-year year reserves. This year we are releasing business by 20% in 2010. net realised capital gains of $955m results in 2009 versus 2010 show a fall around £30m. Lastly, the weather in Considering the wider market, Mr (£614m) for Q2 2010 (Q2 2009: $1bn). in profit but underlying that are three the first six months of the year has also McMillan said there was “no doubt” The group as a whole, reported a $2.7bn things. Current year underwriting per- slightly impacted the results.” that rates had hardened in the motor net loss for the quarter, compared to formance has improved significantly Net written premiums slipped to market and cited reports from the AA net income of $1.8bn in Q2 2009. The and we have released a lot less from £2.24bn (H1: £2.29bn), however Avi- and EMB that have indicated high insurer said Chartis incurred about previous years. va’s UK combined operating ratio in double digit growth. $287m of catastrophe losses as well as a net property loss of $23m related to the Deepwater Horizon explosion Groupama reports stagnant broking revenues and subsequent Gulf of Mexico oil spill. Excluding catastrophe losses, Chartis’ ombined revenues of Groupama £10.5m) before tax and amortisation. 2010 Groupama continued to build operating results before net realised cap- CInsurances’ UK broking businesses In personal lines, revenues increased its commercial product offering with ital gains increased 22% from Q2 2009. have remained relatively flat at £33.3m 7% to £151.9m (H1 2009: £141.9m). the launch of a new liability contract during H1 2010 (H1 2009: £34.1m). Groupama said “volumes in the private for small businesses Optima Liability Markel International reported gross The insurer described the perform- car portfolio remained relatively flat as and the introduction of an innova- written premiums of $395.3m (£251.5m) ance of its GUK Broking Services the company implemented double digit tive variable commission option across for the six months to 30 June 2010, subsidiary, which includes Carole Nash rating increases and took tough under- the commercial product range. In the compared to $358.1m H1 2009. The Insurance Consultants, the Bollington writing action to boost profitability”. second half of the year a new online insurer said the increase of 10% was Group, Lark Insurance, Mastercover Commercial lines revenues were flat professional indemnity product Optima due to additional writings across Markel and ChoiceQuote Insurance Services, at £57.5m (H1 2009: £57.9 million). PI is being introduced following a suc- International’s UK divisions and overseas as “robust” given the “weak economic In relation to the commercial result, cessful pilot with partner brokers.” operations. The combined ratio was environment in the UK”. Groupama said: “Trading conditions François-Xavier Boisseau, CEO 112% for the six months ended 30 June Total revenue from underwriting remain challenging and competition in Groupama Insurances, said: “At 2010 compared to 94% for the same activities at Groupama Insurances the open market for fleet and liability Groupama Insurances revenues are up period of 2009. It said the increase was increased 5.2% to £237.7m (H1 2009: business is fierce with inadequate rating but most importantly our clear focus primarily due to $32.7m of underwriting £225.9m) while profits in Groupama levels and continuing evidence of unac- on the bottom line has continued to loss related to the Chilean earthquake Insurances’ combined UK operations ceptable dual pricing activities. serve us well so that profitability has and Deepwater Horizon explosion. increased 30% to £13.7m (H1 2009: “During the first six months of improved too.”

Pubs & Wine Bars Restaurants & Cafes Takeaways Retailers Offices & Surgeries Hotels & Guest Houses Residential Let Commercial Let £ 15 Products Online 24/7 Underwriting Cleaning Contractors Tradesmen (Per Capita) General Contractors Leisure Manufacturing Wholesalers Tailor Made Policies Online 24/7 It’s easy as APC

APC Underwriting is a Commercial Insurance MGA – underwriting on behalf of Lloyds syndicates and Insurance Companies.

Our unique Trading Platform “QuoteMac” – makes life easy for brokers wishing to obtain quotes and covers for Property and Liability products, whether it be packaged, commercial combined or standalone policy’s. For more information on what we can do for you please contact our business development dept on 020-7256-3100 or email [email protected]

14 Insurance Age September 2010 www.broking.co.uk Results news

RBSI puts operating loss down NEWS IN BRIEF Axa’s UK general insurance gross to bodily injury claims injection written premium (GWP) increased 1% to £1.08bn in H1 2010 (H1 2009: “We are encouraged by our work £1.06bn). In personal lines, GWP rose By Louise Meeson with the Association of British Insur- by 19%, which Axa said was due to the ers, which has been successful in “excellent performance” of its direct he chief executive of Royal Bank of securing government support for the motor products. However, in commer- TScotland Insurance said its results Jackson review – a key factor in reduc- cial lines revenues were down 18%, were heavily impacted by the need to ing bureaucracy and litigation costs in which the insurer said was down to “the boost its reserves for bodily injury claims personal injury cases,” he said. continuing soft market, high levels of after reporting a £253m operating loss He said aside from that issue, the competition and the ongoing strategic for H1 2010 (H1 2009: £217m profit). insurer had seen strong performances focus on profitable business”. Axa said Paul Geddes said that the insurer’s in its other businesses, including home, the company’s ambitions in the large reserves had to be strengthened by a commercial and international, and good small to medium-sized enterprise mar- further £320m, resulting in a loss for progress on its transformation plans. ket were proceeding as planned. the period. “Our strategy to refine our pricing and The insurer reported an underwriting underwriting, improve our claims oper- Brit Insurance revealed it had cut its loss of £27m (H1 2009: £482m profit) Paul Geddes: “Slightly longer road to ation and reduce our cost base remains UK private motor book by 60% as it and total income of £2.08bn (H1 recovery than initially anticipated” the right focus in the longer term. reported a 10.8% drop in UK gross writ- 2009: £2.03bn) while the combined There is still more work to be done, but ten premium to £210.1m for H1 2010 operating ratio deteriorated to 120.2% injury issues, we have taken planned I am pleased with our progress. While (H1 2009: £235m), a 11.4% decrease (H1 2009L 95.2%). action on pricing and underwriting in we acknowledge the tough challenges at constant exchange rates. Brit said Referring to the reserve action, Mr motor, which has resulted in a decline we face, I remain confident about the the reduction was in part due to active Geddes, said: “Excluding these historic in policies as we exit less profitable seg- future of our business. It may be a underwriting portfolio management, motor claims, our underlying business ments of business.” slightly longer road to recovery than adding that in the UK it had also exited performance remains profitable, reflect- He said the company had reviewed its initially anticipated, but we have a clear from Local Authority (Municipal) busi- ing decisive action to address the issue data in the motor arena and that trends strategy in place, initiatives underway ness. In a statement, Brit said: “In each of and progress on our strategy. on such claims would continue to be and many opportunities, to help us these classes the unit does not believe “To address the emerging personal monitored closely. return to profitability,” he added. that it can generate a suitable return on capital across the insurance cycle. The division holds a leading role in Allianz head urges industry to match motor hikes micro-SME insurance through its Brit Lite proposition and continues to see good llianz chief executive, Andrew Tor- His call came as Allianz reported that increased to £511.5m (H1 2009: penetration through this segment.” Arance, has called on the market to its profit before tax dropped by 11% £493.3m) but the combined ratio dete- push up rates, as he promised further to £78.4m in H1 2010, compared to riorated to 95.2% (H1 2009: 90.9%). Legal & General’s (L&G) insurance double digit increases in private motor the same period last year (H1 2009: In retail, GWP increased from the division has reported a rise in operat- in 2011. £88.3m), with the overall combined previous year’s £331.7m to £349.7m ing profit to £14m for H1 2010 (H1 He claimed that there was a prospect ratio deteriorating by 0.4% to 95.3%. and the combined ratio improved to 2009: £6m). This figure was made up of underwriting profit in the private However, gross written premium 95.6% (H1 2009: 99.9%). Mr Torrance of £11m household general insurance motor sector next year. However, Mr (GWP) for the group rose by £36.2m said Allianz was aiming to achieve fur- operating profit (H1 2009: £6) and Torrance admitted he was “very dis- to £861.2m (H1 2009: £825m). ther 2-3% rate increases in household £3m of other business. The division appointed” with Allianz’s failure to Mr Torrance said the 11% drop in in the second half of 2010. reported underwriting results of £9m, push up commercial rates beyond 3%, overall profits was due to lower invest- “In the retail broker market our motor with £7m of this made up of house- adding that the hoped-for double digit ment returns and claimed that the account continues to decline modestly hold and £2m of other business. The increases had not been possible as insurers combined ratio compared in policies as we take corrective action. general insurance combined operating the commercial market had remained favourably with the rest of the market. However, the private car market has ratio stood at 90% (H1 2009: 99%). “underpriced and highly competitive”. In its commercial book, GWP continued to harden,” he explained. Overall, the whole business achieved a 34% rise in IFRS operating profit to £542m (H1 2009: £404m).

NIG exit sparks RSA return to personal lines Aon reported an 8% decline in SA has expressed a renewed appe- It came as the insurer reported a 9% “Given pricing and market conditions, commission and fees for its UK arm in R tite for personal lines business after rise in net written premium in the first we have been deliberately underweight Q2 2010 to $167m (Q2 2009: $181m). admitting it had previously been “delib- half of 2010 to £1.5bn. in the broker market. However, in late For the six months ended 30 June erately underweight” in this area. In commercial, overall premiums 2009 we started to see rate come back 2010 the UK business saw a 3% drop to Speaking to Insurance Age’s sister were up 9% to £865m on last year while and we have pushed it hard in 2010, $288m (H1 2009: $297m). It said that title Post, RSA’s chief executive, Adrian in personal, premiums were up by 10% implementing increases of between UK organic revenue in the retail section Brown, said the firm would look to to £596m, which RSA said was driven 23% and 37% in our target panels.” of risk and insurance brokerage services capitalise on NIG’s withdrawal from by strong growth in its personal broker He said the insurer had achieved rate decreased by 6% in Q2 2010, compared personal lines, adding that a key driver book due to increased rates and shares increases of 13% in personal motor, 4% to the same period the previous year. for growth was last year’s return to on targeted broker panels, with home in household and commercial rates by Total brokerage revenue increased 1% RSA of Steve Kingshott from NIG as up by 39% and motor up by 36%. 5% in liability, 3% in property and 5% to $1.6bn and worldwide revenue was director of personal lines broker. Andy Haste, RSA group CEO, said: in motor. up 1% to $1.9bn. www.broking.co.uk September 2010 Insurance Age 15 Schemes news

Sponsored by:

PRODUCT LAUNCHES CFCsuitetotacklerisks ATE claims arising from digital media support offered Lorega has launched an after-the-event (ATE) claims preparation, mitigation By Louise Meeson and negotiation service. Operated by the organisation’s independent loss pecialist lines underwriting agent adjusting company, Lorega Solutions, SCFC aims to address a host of emerg- which acts on behalf of the claimant, ing media risks including social network- Lorega said the ATE claims advocate ing with its new suite of products. costs would be individually negotiated The company has launched Esurance and could be charged at an hourly or Media, designed to cover all the major daily rate, percentage of the recovery, or risks of traditional authors, publishers, a flat fee. Brokers will also receive com- broadcasters and media professional mission. Malcolm Harvey, chairman of service firms; Esurance 2.0, which CFC Lorega, said: “By setting up a new ATE claims is the first comprehensive insur- claims advocate service to supplement ance policy designed specifically for our LRI product we can now provide social media companies; and it had brokers and their clients with the sup- introduced Esurance CPM (cyber, pri- port service they need regardless of how vacy and media), an update to its Graeme Newman: “Harder for traditional media companies to manage content risks” and when they want to pay for it.” previous cyber and privacy offering. Esurance Media and Esurance 2.0 content is relentless and this is making it insurers create policies that can flex to covers include media liability with cover harder for traditional media companies meet their developing needs.” MMA initiates for user-generated content, defamation to manage their content risks. Mr Newman said that the new breed including libel and slander, cyber, pri- “Insurance policies for media busi- of social networking sites such as Face- variable rates vacy, blanket professional, employers’ nesses that started life in the traditional book and Twitter represented a unique Broker-only insurer MMA has intro- and public liability, privacy breach notifi- space but are now increasingly operat- challenge for insurers. duced variable commission rates for cation costs, intellectual property rights ing in the digital arena have failed to “Their rate of growth, coupled with brokers transacting new business for infringement and property and business keep up with these changes. As a result, the highly uncertain legal landscape MMA’s Master Tradesman product. interruption, including cyber perils. these companies face growing gaps in in which they operate and the lack of Intermediaries can select the amount Graeme Newman, business develop- cover as their exposures change. For historical data, has made their risk hard of commission they will receive when ment director, said: “The way in which traditional media companies to survive, to quantify and even harder to price. placing new business for the Master we communicate today is very different they must evolve. It’s essential that they As a result there have been few, if any, Tradesman product using MMA’s Bro- to 10 years ago. The worlds of media and recognise the need for insurance cover viable insurance options for them – until ker Online system. Peter Knowles, head technology are converging and where that will evolve with them and that now,” he added. of UK development at MMA, com- content used to be tightly controlled by mented: “Offering variable commission editors and journalists, input from the For the latest schemes news levels gives our brokers greater control public is now deemed an essential part over how they run their businesses and www.broking.co.uk/tag/schemes of ‘news’. The trend towards online greater flexibility with their clients.”

PRODUCT REVIEW Broker ratings Theproductsreviewedonthispagebybrokersareratedfromonetofive,basedonthe Three options to suit all homes Product and the option to specify higher client- or visit www.allianzretail.co.uk/clear commented: “Simplified indemnity Allianz Clear home insurance range: led sums insured where required. All limits that are easy to explain are l Clear Essentials products include £2m public liability Key benefits always a welcome addition and plain l Clear Advance cover, domestic employee liability l Three products to meet the needs English detail that helps a customer to l Clear Complete cover, 60-day maximum unoccupancy of different clients – from the basic make an informed choice is vital in a period, cover for loss or theft of keys, Essentials cover to high, Defaqto 5 regulated environment. Accurate pro- Underwriter alternative accommodation cover, the star Complete cover duction of documentation and speed Allianz Insurance option to flex excess levels, trace and l High limits of indemnity of delivery have always been important access cover (limits apply). l Flexible commission options to the customer and the full-cycle Commission paid l All customers receive the same Alli- functionality provides the broker with The option of 15%, 20% or 25% Excess anz claims service the trading platform they need; it also Ranges from £50-£100 gives Allianz parity with competing Coverage Comment products available in the market.” All three Allianz Clear home insurance Contact Ian Hayes, insurance liaison manager products offer high limits of indemnity Your Allianz retail account developer at ChoiceQuote Insurance Services, Overall rating: HHHH

16 Insurance Age September 2010 www.broking.co.uk Schemes news

Bespokeclassiccarschemeunveiled “We have taken a step back to the By Louise Meeson days of real customer service. The main issue is the type of vehicle you ndependent insurance and finan- are dealing with – it requires very Icial services group Lucas Fettes has specialist knowledge and equipment to launched a new bespoke classic car look after them. It’s about providing a scheme for the motor trade. team of professionals that understand The company said the scheme, the client, the attention to detail and underwritten by Brit Insurance, aimed building a rapport with the client. It’s to address the complex issues faced by not appropriate for a classic car cus- classic car dealers and specialists, adding tomer to be dealt with in a call centre that consolidation in the market had environment as they require in-depth led to reduced choice and availability of knowledge and understanding.” a truly bespoke service underpinned by He continued: “Customers will relevant expertise. receive value for money through the Lucas Fettes has created a dedicated OliverWatts:Takenastepbacktothe provision of a commercial policy tai- classic car team, headed up by Oliver days of real customer service lored to their specific requirements Watts, who has over 13 years’ experi- – they will not be paying ‘over the ence, the last six of which have been in dominated by a couple of major players odds’ for irrelevant cover, nor will the classic car market. and we decided that it was a good area their business be made vulnerable by Mr Watts said: “The market has been to launch a new product. being underinsured.”

tion to our commercial combined panel from a 25% discount on all new business Axa e-product proves how wrong this view is.” premiums for the next 12 months. joins Acturis Axa has released a commercial com- MSLpolicygets Willis teams up bined e-trade product to brokers on the Acturis platform on an open market makeover for Patentwize basis. The addition of Axa Small Com- MSL Legal Expenses has revamped its Willis Group Holdings has announced it mercial Combined has increased Acturis’ legal expenses policy for businesses, is partnering with Innography to launch autorate panel for commercial com- which provides up to £50,000 financial Willis PatentWize, an enterprise-wide bined package, which already includes protection for legal costs per claim. business intelligence solution designed LV, QBE and RSA products. Aviva is MSL has improved its product and to help companies better manage their also in development. Theo Duchen, added levels of cover including employ- intellectual property risks. “Intellectual co-chief executive of Acturis, said: “For ment disputes, aspect enquiry cover for property is a growing part of the global years people have been saying that this tax, undisputed debt recovery and an economy, and carries a unique set of product is too complex and cannot be identity theft resolution service. The risks,” said Don Bailey, chairman and e-traded. Axa’s product, and its addi- provider said brokers would benefit chief executive of Willis North America. policy’s key benefits H Poor HH Average HHH Good HHHH Very good HHHHH Excellent

Product l Unemployment only l Claims payout for up to 12 months British Insurance Mortgage Payment Protection Insurance Minimum premium Comment Premiums start from 45p per £100 Ian Humphries, partner at Enness Pri- Underwriter vate Clients, commented: “The price is Great Lakes Reinsurance (UK) Excess competitive but the initial quote screen 30, 60, 90 or 180-day excess periods could be more informative. Unemploy- Commission paid ment cover has a 120-day qualification 20% net after IPT Contact period when most offer 90. Cover Tel: 08450 175 178 is available to self-employed people, Coverage Email: [email protected] which is unusual, that said it’s a fairly Half gross monthly income or Web: www.britishinsurance.com/ unremarkable product. The cover is £2,000. Made up of your monthly mortgage-payment-protection-insur- linked to mortgage payments, which in mortgage repayment on the property ance/mortgage-insurance.html the current market can be detrimental you reside in plus up to 25% extra to with record low interest rates. There cover mortgage related premiums. Key benefits are similar products already available l Accident, sickness and unemploy- l Carer cover that do the job better.” ment cover l Monthly renewable, so not tied l Accident and sickness only into the policy Overall rating: HH

www.broking.co.uk September 2010 Insurance Age 17 Risk management/claims

NEWS IN BRIEF London households most Crisis Survivor, a risk management firm, has been appointed by broker likely to claim for home theft Cowens Survival Capability. Stuart Williams, director at Cowens Survival POSTCODE TOWN/COUNTY/CITY PERCENTAGE Capability, said: “By working with Crisis By Liz McMahon Survivor we will be able to strengthen M21 Chorlton-cum-Hardy Manchester 8.65% our clients’ insurance programmes and study pinpointing the top 20 UK SE3 Blackheath London 8.17% also design a joint strategy that will Apostcode claim hotspots has found provide business solutions for every that London households are the most W6 Hammersmith London 8.06% eventuality, and this will help protect likely to make a claim for home theft. N4 Finsbury Park London 7.94% the balance sheet.”Tony Gimple, man- The research, conducted by Mon- LS8 Roundhay Leeds 7.88% aging director at Crisis Survivor, said eysupermarket.com, revealed that the the partnership would provide clients number of London postcodes to make Results based on 1.13 million home insurance quotes on Moneysupermarket.com for 12 months (full with a full-service business solutions the top 20 had doubled since its 2008 year 2009). Percentage related to households affected by theft or burglary in that postcode district programme that would give them full survey with 50% of the list to be found security and peace of mind. in the capital. million home insurance enquiries made escaping this and to make matters more Blackheath (SE3) and Hammersmith on the site during 2009 and broke complicated, there are no hard and fast Risk Management Solutions (RMS) (W6) were the most ‘at-risk’ postcode down, in percentage figures, households rules that apply. has enhanced its terrorism risk solution, districts in London for theft-related that were affected by theft or burglary in “Most insurers have a blanket enabling more detailed modeling of insurance claims. a particular postcode district (see table). approach when it comes to assessing international cities and incorporating the However, the cities of Manchester, Julie Owens, head of home insur- postcode districts for home premiums. latest insights into terrorism interdiction Leeds and Bristol all featured twice in ance at Moneysupermarket, said she This really needs to change. If houses modeling. The updated model, released the top 20 list, with the Manchester was frustrated by the ‘one size fits all’ are evaluated on a case-by-case basis with the latest version of RMS’risk man- town of Chorlton-Cum-Hardy taking approach to property cover adopted by it would mean homeowners received agement software platform, RiskLink the overall top spot in the UK. a majority of insurers. quotes at the best possible prices.” 10.0, also includes higher resolution Other areas with an increased likeli- “Properties classified as being in a She added that the research high- hazard information and refinements hood of claiming for theft and burglary ‘high-risk’ area – whether that be for lighted a broad mix of areas across to human exposure and building vul- included Finsbury Park in London crime, or something like flooding, the North and South of the UK with nerability based on data from recent (N4) and Roundhay in Leeds (LS8). could affect the price of your insurance criminals targeting key cities but also attacks. The International Probabilistic Moneysupermarket analysed over 1.1 premiums. Unfortunately, there is no affluent, suburban areas. Terrorism Model now covers the inter- national metropolitan areas of London, Rome, Milan, Toronto, Montreal, Ankara, IFB meeting expected to move CUE plans forward Istanbul, Dublin, and Copenhagen. he Insurance Fraud Bureau (IFB) said he hoped the meeting would result data sharing would be a significant step Ecclesiastical has warned that British Tis confident it will move a step in a clear plan of action to push the ini- not only for the travel sector but for schools are at increased risk of metal closer to creating a Claims Underwrit- tiative forward as the desire was there the industry as a whole,” he added. theft during the summer holidays. ing Exchange (CUE) travel database and that there would be “enough abil- This will be the third meeting of the According to the specialist schools following its latest member meeting. ity in the room to make it happen”. group and Mr Marr said the attendance insurer, 2010 was set to be one of the The meeting, which is scheduled on “The CUE model exists so all we list included insurers that had not pre- worst years for the theft of metal from 9 September, is due to be attended by would need to do is secure insurer appe- viously been involved in the dialogue. buildings since records began. The major travel insurers including Fortis, tite and apply a funding model. Once He added he was hopeful that the insurer said that while the majority of Aviva, Axa, LV, Ace, Chartis, Mondial this was done it would not take long to group would opt to attach the data to this type of crime affected religious and Insureandgo along with claims get the system up and running. the existing CUE database rather than buildings like churches, the number of management companies, representa- “Everyone is aware that fraud in the create a stand-alone option for travel thefts from non-faith buildings, includ- tives from the IFB and CUE database travel industry is a fundamental issue as this would allow the industry to ing schools, had increased and had now providers Insurance Database Services. and now we have the momentum we identify all types of fraud through the reached 18% of the total. Glenn Marr, spokesman for the IFB, need to ensure it is maintained. This “power of collective data”.

Two Lancashire brothers behind one of the UK’s biggest ‘crash for cash’ Brokers urged to highlight risks of credit card fraud scams have been convicted. Rezwan and Rehan Javed were found guilty of he Forum of Private Business has Jane Bennett, head of campaigns at “The losses involved can be huge and conspiracy to defraud and possession Tcalled on brokers to ensure clients the forum, has advised brokers whose SMEs are unlikely to see any good- of an article for use in fraud, following protect themselves when processing clients use online payment processing to will from the companies providing a trial at Manchester Minshull Street payments online. get them to look carefully at any agree- the payment processing system when Crown Court. They will be sentenced During the past month the forum’s ment with a payment portal provider. hundreds of thousands of pounds are in December. The two ran North West member helpline has seen a rise in calls “The contractual agreements between at stake,” she added. Claims Centre, a company in Burnley about payment processing fraud and the small firms and companies providing The forum’s adviser on merchant serv- which managed insurance claims. They organisation has warned that small to online payment processing are very ices, Richard Bradley of Accept Cards, organised fraudulent insurance claims medium-sized enterprises (SME), that complex, so many business owners are has recommended SMEs use a secure e- following collisions deliberately caused do not have adequate risk management unaware that they can be left paying commerce payment gateway, alongside by other members of an organised in place, are becoming increasingly the price if fraudsters get past suppos- added security modules provided by the crime group. exposed to credit card fraud. edly secure payment systems. major credit card companies.

18 Insurance Age September 2010 www.broking.co.uk “ThefirebeganinaBristol warehouse and spread to HighStreetsacrossBritain’’

A major fire doesn’t just damage property, it can destroy supply agreements, consumer goodwill and share value. That’s why FM Global takes a different approach. We are engineers as well as underwriters. So we can work with clients to understand and manage the critical risks intheirsupplychains,andhelptopreventaloss.Andiftheworstdoeshappen,theycanrely on us for prompt settlement. In short, we don’t just protect buildings, we protect business. For more information visit www.fmglobal.co.uk, or speak to an FM Global representative.

Secure the value you create

© 2010 FM Global. All rights reserved. In the United Kingdom, FM Global is the communicative name for FM Insurance Company Limited which is regulated by the Financial Services Authority. E-commerce

NEWS IN BRIEF Data hub launch discloses new Fortis has launched additional functionality for renewals on its Acturis pricing detail to non-direct market commercial electronic products. Having launched new business and mid-term “The challenge was twofold – to be adjustment functionality earlier this year, By Louise Meeson able to come up with a model that the latest move provides brokers with would work for the higher volumes full-cycle capability on all Fortis’com- oversure and Fortis are among through aggregators and the internet mercial package products. Fortis has Cthose that have committed to us- marketplace and secondly to find a way five commercial package products on ing a new data hub that aims to allow we could use this data in a non-direct Acturis: shopkeepers, including hair and brokers to compete on a level playing marketplace at point of quotation for beauty risks; office and surgery; property field with direct writers. pricing purposes.” owners, including residential and com- Insurance Initiatives, which was set Insurance Initiatives is currently mercial; homeworkers and Semploy up by three ex-Experian employees working with CDL, Open GI, SSP, Extra, which includes professional trades Peter Lacey, Mark Crane and Simon Insurecom and Data Matters. The as well as contractors. James, has signed up four insurers and software house links to the Insurance three brokers to use its IQ system, The data hub will allow brokers to Initiative data hub, which includes Mi has extended its accounting which offers consumer, vehicle and compete on a level playing field Claims and Underwriting Exchange functionality for wholesale brokers and claims data in a single enquiry. (CUE) data, consumer data and vehicle underwriters in the London market, via The company has also announced the for a number of years, and that’s because information, to aid pricing. a new partnership with Sapphire. The appointment of ex SSP employee Mark they deliver the quote through their Mr Lacey said that the pricing system Infor FMS SunSystems accounts solu- Woronowski and Lawrence Caley, for- own engine and their own premises. for IQ, which launches with private tion, provided by Sapphire, has been merly of Aviva. “It sends out the information, in motor in Q4 this year, followed by integrated with the Mi Trader platform, Mr Lacey, sales director of Insurance terms of the price, immediately, whereas household in Q1 2011, was based on allowing businesses to place and admin- Initiatives, said: “The information that the non-direct marketplace has never a percentage of business written rather ister risks, manage claims and handle Experian would host, that would nor- been able to implement that data for than a pay-per-click basis. accounts processing, in a secure online mally be consumer information, vehicle pricing purposes because they run them Talking about his appointment, Mr environment. Mi said it selected Sap- information and claims data, has been through the software house systems, Woronowski said: “I have been involved phire’s product as it believed it was one widely available to the direct market- where they put their pricing algorithms, in previous attempts to implement CUE of the leading financial management place for companies like Royal Bank of and there is no way of it to get external checking at the point of sale, and I know and accounting solutions in the London Scotland, Hastings, Admiral and Esure data from anywhere else. how important this is to the industry.” market, as well as being used by over 20,000 companies worldwide. PIA head urges insurers to embrace global risks Constructaquote.com has expanded its tradesman and small business liability nsurers’ conservative attitudes to- has already launched a multi quote- “Although I am aware of one other product into Northern Ireland. The com- Iwards risks outside the UK is holding and-buy facility in Holland and Malta similar system in the UK, no one pany revealed that it could now offer up back ambitious plans to establish multi and has plans to roll this out to Ger- else seems to be actively taking it to to £5m of public liability and up to £10m quote-and-buy systems worldwide, ac- many and Italy. Europe,” he claimed. of employers’liability insurance cover to cording to liability broker Professional “It took the UK a long time to wake The current platform will offer IT Northern Irish businesses. Lyndon Wood, Insurance Agents (PIA). up to the potential of SME being sold and miscellaneous professional indem- chief executive for Constructaquote, Graham Hearsey, director of PIA, said online. European Union (EU) brokers nity (PI) cover in Malta and Holland, said: “We are always looking to improve the firm had prepared multi quote-and- are very much behind the concept but and PI and directors’ and officers’ in our product offering by listening to our buy systems to operate in “almost any are still not quite ‘with it’ in terms of Italy and Germany. customers and this has come along at country in the world” but that what it technology,” he continued. PIA has also been working with the the perfect time to help the Irish busi- needed now was “more insurers and Mr Hearsey said PIA operated in Department of Business, Innovation ness community build their choice.” suppliers that were prepared to write the EU in the same way as a wholesale and Skills to target markets in Asia and covers for small to medium-sized enter- broker and that its system was client the Far East. Esure has migrated its IT platforms prise (SME) business across the globe”. facing and could fit directly onto any “It’s not just about the London and hardware away from former joint The Eastbourne-based intermediary other intermediary’s website. market,” Mr Hearsey said. venture partner, Lloyds Banking Group, through a £26m ‘build and run’ out- sourcing contract with Capgemini UK, which will now manage the majority LegalexpensesfirstasAimlaunchesproductsonCDL of Esure’s IT infrastructure for the next im Legal Expenses has claimed to provider to team up with a software each client. Both these tasks can now be five years. The move follows Esure’s Abe the first legal expenses provider house to develop such a product. This performed by the CDL system. management buyout in February from to target the broker market with an on- is an idea we contemplated for some “We see this as the future of purchas- Lloyds Banking Group, which had previ- line offering. considerable time, we wanted to try and ing legal expenses insurance, making it ously provided IT support. Peter Wood, The legal expenses provider has make inception and renewal of policies a a simple task for brokers rather than the chairman and founder of Esure, said: launched its motor and family legal far easier, streamlined process.” traditional, antiquated processes cur- “We needed a managed IT solution that expenses products on CDL’s platform. Mr Drucker explained that the exist- rently in place,” Mr Drucker said. would match the levels of quality, reli- Jared Drucker, Aim Legal Expenses ing process sees brokers manually filling Aim’s sales managers will also be con- ability and security that we require for business development manager, said: “It out monthly ledgers to submit policies ducting visits to brokers currently using all aspects of our business, and that is is our understanding that Aim will be sold to the underwriter. They also have CDL’s system to illustrate the benefits what Capgemini has delivered.” the first motor and family legal expenses to manually issue policy certificates for of the policy submission process.

20 Insurance Age September 2010 www.broking.co.uk E-commerce

Digital extension programme NEWS IN BRIEF Powerplace has launched an extranet to encourage regional broking site in a bid to give all brokers access to its online commercial insurance Brokers could ask clients to input market. Lee Anderson, Powerplace By Liz McMahon data directly using the iPad operations director, said: “Up until now, Powerplace has only been available overnment plans to transform the to Open GI users. We’ve had interest Gcountry’s digital infrastructure from non-Open GI brokers ever since could empower regional brokers and we launched back in April 2009, but we make the industry less London-centric, wanted to make sure we developed a according to IT experts. system that recognised their different The Government has launched a needs and not just rush out a poor imi- programme to extend the reach of tation. Over the past year, we’ve built mobile broadband across the country up our panel of insurers and range of and to deliver the latest technologies products as well as refined how Power- to consumers. place actually works.”

Minister for communications, Ed Image courtesy of Apple Vaizey, said: “We want the UK mar- Aviva has experienced a threefold ket to remain at the fore of delivering benefit regional brokers by reducing anytime, anyone. For regional brokers increase in personal lines new business devices like the iPad and smart phones the pressure on them to have a presence this means that getting out to clients volumes over the past two months, but they need the networks to continue in London and the Lloyd’s market. is much easier. Turnaround times will compared with the same period last to improve and increase services. “The Government plans may eventu- reduce dramatically as mobile access to year, after integrating its web-based “Under our plans, our mobile indus- ally lead to changes in how the Lloyd’s quotes will provide immediate pricing, rating engine with SSP’s motor quote try will have access to the 21st Century model operates and will absolutely rather than the broker having to go engine earlier this year. According to infrastructure it needs to give UK con- result in greater flexibility, bringing back to the office,” he explained SSP the move has allowed hundreds sumers the latest technologies and even brokers closer to customer productiv- In addition to this, Mr Mistry said of additional brokers to access Aviva’s better coverage for broadband on their ity,” he added. iPads would enable brokers to pro- competitive real-time pricing. By draw- mobile phones.” Dharmesh Mistry, chief technology vide “a more engaging experience for ing upon Aviva’s underwriting expertise Ashish Goel, senior business analyst and operations officer at software firm customers as the screen can be shared in the direct market, it said that SSP at IT consultancy Infosys, said this Edge IPK, agreed that the move would easily, so the broker could ask client to users were also benefiting from easy greater access to broadband and new have a significant impact on brokers enter data directly”. access to Aviva’s more advanced pricing forms of technology, such as the iPad, currently operating in areas without “Using the iPad will drive new ways elements “creating a transparent align- would allow brokers to conduct more broadband. for brokers to differentiate and com- ment between direct and broker prices”. business locally. “Mobile broadband will enable ‘mar- pete rather than focus on price only,” According to Mr Goel, this would tini broking’ – business anywhere, he explained. Brightside Group has launched NPSLive for its commercial vehicle direct division. The move is a trial prior Fresh hopes web revamp will boost its home book to the planned roll out across all the group’s divisions in the last quarter resh Insurance has announced an ing, whereas the buy online process will of 2010. Brightside Group IT direc- Fonline makeover as part of its aim be more streamlined and user friendly. tor, Simon Jones, said: “The system is to increase its share of the home insur- In addition, the user will be able to unique in the market place at present ance market during the next year. purchase non-standard products such as it is not only centered around real- The Midlands-based insurance group as buy to let and unoccupied proper- time feedback and scoring but also said that it currently had more than ties,” she explained. the quality of the information that the 5,000 home insurance clients and an Last year, Fresh introduced home system can capture is proving to be annual gross written premium (GWP) insurance to its product range and invaluable in terms of what our custom- of £1.75m. Ms McPherson said the business had ers are telling us.” Within the next 12 months it said developed quickly in a relatively short it intended to double the number of Lisa McPherson: “The user will be able period of time. Total Objects has been selected home clients on its books and boost its to buy non-standard products” “Most of our leads derive from the by Cogent Resources to implement GWP to over £3.5m. aggregator market, but this generally its global insurance and reinsurance Through its collaboration with Gra- ral search listings and setting up a relies heavily on price, rather than broking solution throughout the com- vytrain, a search engine optimisation pay-per-click campaign. price and service. It is paramount, pany’s operations. Cogent conducted a provider, Fresh has planned a range Fresh founder and director, Lisa therefore, that we have the right prod- review of its processes and determined of targeted marketing campaigns McPherson, said the group needed a uct, e-tools and user interface in place, that it required a more cost-efficient and e-initiatives to bolster its online more targeted niche site with easy to which we’re confident that Gravytrain and technologically advanced solution presence. access information regarding products. will provide us with through their with an extensive reporting capability Currently, Fresh has a basic website “A dynamic underwriting tool will knowledge of the insurance market,” to deal with its widespread operations. with a quote engine attached to it and also allow greater flexibility in our pric- Ms McPherson added. Total Objects said it was one of the a simple buy online process. In the only providers in the market that has a first stages of the collaborative project, For the latest e-commerce news fully integrated package with its own Gravytrain will help Fresh revamp its existing technology gateway to the www.broking.co.uk/tag/e-business website along with improving its natu- market repositories. www.broking.co.uk September 2010 Insurance Age 21 Expo 2010

Mr White, who has been at the heart of crucial regulatory issues such as commission disclosure and the recent Financial Services Compensation Scheme Interacting ideas levies debacle, will offer confidential and impartial regulatory advice to attendees on whatever regula- tory issues are keeping them awake at night. If you want to brush up on your website offering, Witharangeofworkshops,theintroductionofone-to-oneclinicsand, then Tom Wood, managing partner at ‘experience ofcourse,nearly100exhibitionstands,Martin Friel explains why the design agency’, Foolproof, is your man. Mr Wood will give brokers a hit list on how to get the most Expoisthebrokernetworkingeventoftheyear out of their website looking at the basic structure, whether the navigation works intuitively and ascertain whether any sales element of your website is meeting t’s been six years since the Broker Expo first really make the most of the sales opportunities out potential customers’ needs. He will give brokers a Iappeared on the industry’s radar. Back in 2005, there. A specialist in financial services, he will give sense of priority in tackling their web offering. under the title of Insurance Age Broker Expo, the brokers advice on how to get around the real chal- The fourth clinic is hosted by Mike Berry, a digital event kicked off at the Motorcycle Museum in lenges that managers and sales people face every day marketing expert, and will tackle the fast growing Coventry where 50 exhibitors attracted just over finding, retaining and growing business. and often misunderstood world of social media. Bro- 250 brokers from across the country. The event Finally, Stephen Archer of business consultancy, kers can expect straightforward and comprehensible has grown every year to the point where in 2009 Spring Partnerships, will discuss how brokers can advice on how to establish a presence using social it attracted 560 brokers who made the most of the find business opportunities in this new age of auster- media such as Twitter, LinkedIn and Facebook but expert-led workshops and 85 exhibitors in attend- ity. Now the emergency budget has been published more importantly, how to maintain that presence ance. And it just keeps growing. we can begin to see what the landscape looks like and make the most out of it. Now firmly established as a must-attend event in for the insurance industry and Mr Archer will discuss The quality and range of the content this year is the industry calendar, there will be nearly 100 stands with delegates what the new Government means for second to none but places for both the workshops to visit this year and as such we have had to move business and where the potential pitfalls are. and appointments at the clinics are limited. To reg- to a larger space within Coventry’s Ricoh Arena to ister for this free, broker only event and to secure meet demand. One-to-one advice your place at the workshops and with our experts at With increased numbers comes more opportuni- This year will also see the introduction of specialist the clinics, go to www.brokerexpo.co.uk ties to network but seeing the Expo merely as a clinics where brokers can book 20-minute one-to- So in theory, if you make the most of your chance to mix and mingle does it a disservice as the one sessions with industry experts. The clinics will attendance at this year’s Expo, you could get the content promises to be as a big a draw as the exhibi- give brokers the opportunity to get exclusive access necessary advice to start up a business, find out tion itself. The ever-popular workshops are of course to industry leaders in four key areas: business start- how to create, maintain and get the most out of present and the Expo has secured Chartered Insur- up; regulation; maximising use of your website; and your website, understand and exploit your brand, ance Institute accreditation for the content meaning how to exploit the growing world of social media. get all the necessary guidance to keep on the right that brokers who attend the workshops can claim In the business start-up clinic, brokers will be side of the regulator, get some expert tips on seek- Continuous Professional Development points. able to tap into the expertise and experience of ing business opportunities and converting them As always, we have a regulatory workshop hosted industry consultants, Salient Solutions, about the into concrete sales and once you’ve done that, then this year by Branko Bjelobaba. This is the second practicalities of setting up on your own. Clare and turn your hand to networking and you will have time Mr Bjelobaba has hosted a workshop agreeing Mark Ryder will talk brokers through the realities almost 100 insurance and associated providers des- to return to deliver his unique take on regulation of starting a new business including: how to secure perate to do business with you. Not bad for a day as he gives vital advice in an accessible and easy to insurer agencies; the need for a detailed busi- out of the office. n understand manner. If you’ve ever been baffled by ness plan; how to properly implement an internet the pronouncements or rules of the Financial Serv- strategy; and perhaps most crucially, how to raise ices Authority, then you can’t afford to miss Mr finance for any possible venture. Bjelobaba’s workshop. This year, he will be focusing For the regulation clinic, Broker Expo has on client money and with record regulatory fines secured the expertise of the British Insurance being handed out this year, he will encourage del- Brokers’ Association’s head of compli- egates to consider and analyse whether or not they ance and really are doing it properly. training, On the marketing side, we have Neil Johnson and Steve Mark Huxley, founders of Lamb Creative Market- White. ing. With 30 years’ experience in marketing and insurance respectively, Mr Johnson and Mr Huxley are perfectly placed to really get to the root of how brokers can establish a new brand or really get the most out of an existing one. The workshop promises to be first and foremost a practical, interactive ses- sion sending attendees away with ideas that they can start implementing immediately. Keeping with practical advice, Alan Fairweather, an international speaker, best selling author and sales growth expert, will home in on how brokers can

Free registration for the Broker Expo www.brokerexpo.co.uk

22 Insurance Age September 2010 www.broking.co.uk A perfect SOLUTION for your clients from the masters of high net worth insurance

Oak Underwriting specialise in high value home insurance and family motor fleet cover as a combined portfolio

Everything your high net worth client needs!

www.oak-underwriting.co.uk

OAK OAK UNDERWRITING PLC

For further details please contact Oak on T: 01608 648100 or E: [email protected] Agenda

That elusive crockofgold

he consolidation of the retail broking sector debt was repaid but overall its debts increased by stock market and the world financial situation. Just as Tstarted in 1998 with the creation of Towergate about £170m following the consolidation of Pay- the time seemed right, a financial crisis emerged forc- but gathered pace in early 2000 through to 2008. In mentshield, a sister company. ing delay. Those former owners who took shares as that period, some £3.6bn of commercial business was Its profit, EBITDA, was £118m, so its interest pay- part of their payment are locked in and cannot access acquired, which equates to 25% of the total commer- ments are well covered but it is vulnerable to interest their capital, employees lured by stock options, are cial insurance sector in the UK. In that hectic period rate hikes. It has renegotiated its borrowing facili- having to wait longer and investors are anxiously still of 2007/8 – prior to the changes in capital gains tax ties and has secured lending for another three years. hoping for those right conditions to float. – more than £2bn changed hands, which is an enor- Intangible assets, mainly goodwill, stand in the bal- mous amount of money for a comparatively small ance sheet just under £900m. To put borrowings into Unrealistic expectations sector. Some of the consolidators have been acquired perspective, Marks & Spencer has loans of £2.2bn The longer the delay takes the more chance the – Country Mutual, Smart and Cook and Layton secured against property assets of over £4bn and consolidator will not be treated as a go-go stock Blackham – and now there are five major players left: equity funds of £2.2bn, a gearing of one times equity. with a fantastic growth record, but a solid consist- l Towergate/CCV, backed by loan finance from Financial analysts suggest it should sell and lease back ent performer. For some, the drivers of the business Lloyds TSB; stores to pay off loans and reduce its gearing. are moving ever closer to retirement and this will l Oval, backed by private equity firm further impact on stock market sentiment and any Caledonia; flotation price. The stability in commission rates, l Jelf, AIM listed but now backed by With capital providers having continuing absence of real market hardening and Private Equity company, Capital Z; the recession makes it difficult to buy quality bro- l Bluefin, owned by Axa; to become more demanding to kers that really provide the returns demanded by l Giles backed by private equity firm satisfy their own investors, the outside speculators and exit prices that are attrac- Charterhouse. tive to sellers. Since May 2008, activity in the mar- segment is no longer so attractive. These conditions, in the absence of a hard mar- ket has dropped dramatically with only ket, will also affect year-on-year performance as a handful of large deals taking place. The sector Jelf has the constraints of being a listed company even maintaining profitability at current levels has been hit hard by the credit crunch and is now and it has worked hard in the past year to tidy up its becomes challenging without those transforma- having to integrate purchases to try to produce balance sheet. It has recapitalised and used some of its tional acquisitions. acceptable returns on capital without the benefit extra capital to reduce debt to £15m, which is only For most stakeholders, the consolidation model of rapid growth through acquisitions and leverage 15% of its equity. It has written off a chunk of good- has yet to fulfil their dreams. With capital providers of higher commissions. This is taking place against will and this is now £108m and its profit, EBITDA, having to become more demanding to satisfy their a background of high debt, large interest pay- of £4.14m for six months is covered five times. It is own investors, the segment is no longer so attractive. ments, huge amortisation of goodwill and voracious producing annualised profits before EBITDA of some Those with real underused tangible assets are likely demands from backers. The consolidation model is £2m and now appears to be in a financially good to be looked at more favourably. Sellers are not likely under threat and while small acquisitions are bound position with a backer that understands the market. to be interested in promises of more riches in some to continue the question is, will we ever see a return However, its share price is about 40% of what it was distant market flotation and key employees may well to those heady days of 2006-2008? at its peak and the stock market seems to have lost start discounting stock options and jump ship. appetite for the consolidation model. Other listed, Clients that face constant change as efficiency Comparing results albeit, smaller brokers such as CBG and Cobra have savings are sought may prefer smaller independent Two consolidators recently published results – Tow- suffered similarly from adverse sentiment. brokers, and insurers will become less frightened of ergate for 2009 and Jelf for the last half year. These Investors in consolidators consist of founders, losing out on a new market phenomenon and take a make interesting reading. Towergate made a loss outside investors, former owners of businesses more realistic approach to remuneration. There will of £15m but this was after interest payments and acquired, key executives and employees. For these, always be entrepreneurs who transform industries amortisation of intangible assets (EBITDA). Its the crock of gold at the end of the rainbow is still but it may take some time before we see another annual interest payment is in the region of £50m out of reach. The end game for all consolidators is major shift in commercial distribution. n on borrowings of about £650m. This is a gearing either a lucrative trade sale or a market flotation, of 2.5 of its equity capital. Annual depreciation of selling shares to the public. Email Tony Cornell of Cornell Consulting at goodwill and so on is about £50m a year and this The former was achieved by those that sold to Axa [email protected] is amortised over 20 years. Over the year, £12m of but the rest have been affected by the vagaries of the

24 Insurance Age September 2010 www.broking.co.uk Opinion Your letters

Insurance Age welcomesyourletters.Wearehappytonotprintyournameandaddressifrequested but these details must be supplied. Send your letters to Martin Friel, editor, Insurance Age,VNUHouse, 32-34 Broadwick Street, London, W1A 2HG or email [email protected]

OpenlettertotheABI,FSAandFOS engineer how to respond’ – while telling you they We have it all: human rights, data protection, statu- will write again within another specified time with tory obligations, regulatory regimes, codes of conduct, their decision, or, as is more likely, send a further corporate governance, rules of engagement, terms of letter advising it has not been possible to yet finalise reference, standards for this, standards for that and, ah their enquiries. Meanwhile nobody is constructively yes, let’s not forget, ‘complaints procedures’. engaging with the claimant or their representative According to the Financial Ombudsman Serv- – irrespective of urgency or the consequences and ice (FOS) Annual Review 2009/2010 only 3,437 additional risks which might present from delay. of their new cases involved complaints concerning I did manage to speak to one major insurer’s claims building insurance, more than double the 1,549 in manager, but after emailing him saying we were look- Editor’s comment their 2003/4 review. They do not give any further ing for a meaningful and constructive dialogue with breakdown but I think it a fair assumption that the a view to moving a claim toward amicable resolution, o the private motor sector has finally been majority concerned claims. he replied to the effect he was doing all that he could Srevealed as the insanely priced kamikaze Many complaints do not reach the FOS. Insurers within the constraints of the procedure. In other market that many in the industry always thought accede, compromise or persuade the policyholder words he couldn’t get down to brass tacks and ham- it was. The majority of players in this market their decision was correct. Some complainants give mer out an agreement or way forward. He had to have been feeling the pain for years but it is only up, a few litigate and others exceed the eligibility provide me with a formal decision letter and then I this year, as reserves dry up, that we are seeing criteria for FOS consideration but do not have the must do what was appropriate. the true cost of writing for growth. resources to sue. To take nothing away from insur- One major insurer refuses to let us present our case Royal Bank of Scotland Insurance (RBSI) has ers, I’m sure they resolve the overwhelming number to them stating they are contractually bound to, and reported a £253m operating loss for the first half of small value or straightforward matters. But what reliant on, the expertise of an outsourced supplier. If of 2010. The insurer argues that the majority of about the larger and more complex claims where that were true what business do they have offering this loss is attributable to a sharp rise in bodily problems arise during the claim cycle? It is in this area insurance for a peril in which they have no expertise? injury claims, an explanation that has also been that the complaints models and procedures fail miser- In another matter, with regard to a claim that has leapt upon by Equity Red Star to explain why ably and are unfit for purpose. been running now for seven years, but has been its parent company had to inject over £230m Looking back 30 years ago, 20 years ago, and even with the FOS for two and a half of those, we had a to shore up its reserves. Both companies (and 10 years ago, if we had a problem with a claim, or provisional decision over three months ago, but still they’re not alone) are sticking to their story but reached an impasse with our opposite number, we nothing final. In what way is that providing a service others in the market suggest the real careless- could call the insurer and speak to a claims manager to the consumer? ness is to be found in the underwriting of firms or senior claims handler, explain the problem and Association of British Insurers, Financial Services that are posting huge losses (p 1). the practical issues arising and between us agree a Authority and FOS, your complaints models are It’s not news that the private motor market is pragmatic way forward, perhaps by way of a meet- designed to follow regulatory correctness and to cre- tough. But the scale of the losses are stagger- ing, and/or by further discussions between parties. ate an audit trail of ticked boxes – but abjectly fail to ing. RBSI has experienced a near £500m swing It was hands-on with constructive engagement and get to grips with the problems. A case of the opera- in the wrong direction – it posted half year a mutual desire to resolve the problems if capable, as tion was a success, but the patient died on the table. profits of £217m last year. most were, of resolution. There was also a time when When things go wrong it is troubleshooting that Over the last year, many insurers have made if you wrote a complaint to a managing director or optimises the prospects of satisfactory resolution not a point of highlighting that the rate of bodily chief executive, they would actually read it and reply. a protracted procedure with a ‘like it or lump it’ letter injury claims were on the rise and one can only Not any more. The protocols of the complaints at the end. The current mechanisms completely defeat assume that they took appropriate action. procedures demand adherence to a timeframe and the objectives of circumventing delay, conserving costs, Assuming that is the case, the losses that a series of steps. Most complaints are conducted by resolving issues and providing an equitable and effi- are being reported could, to some degree, be ‘customer relations teams’ that say they will ‘inves- cient service to the legitimate claimant. Shame on you. attributable to other factors. Indeed, some in tigate’ – for which read ‘let me ask the adjuster or Steven Newman FRSA, Beecroft Sons & Nicholson the industry are now coming out and saying just that. It looks like bodily injury claims are being used as a convenient catch all to explain away rating that simply wasn’t taking in to account the true level of risk. Perhaps now that a number of insurers have really felt the squeeze this year, the private motor market can look forward to a return to something approaching sanity. Are you hold- ing your breath? Me neither.

Martin Friel, Editor [email protected] www.broking.co.uk September 2010 Insurance Age 25 The interview The almost great and th Martin Friel talkstoTheoDuchenand DavidMcDonaldabouthowActurisis over-delivering in professionalism and efficiencyinabidtoachievegreatness

heo Duchen, co-chief executive of soft- Tware firm Acturis, asks: “What makes a great company?” “Tell me what a great company in the insur- ance space looks like. It’s a difficult question isn’t it? We are not quite there yet,” he says with strong emphasis on the word “yet”. Mr Duchen is talking to Insurance Age alongside fellow CEO, David McDonald, about Acturis, its struggle to prominence and its hunger for expansion… and greatness. “Google is a great company,” he continues by way of comparison. “I can’t explain it – it’s just great.” But he proceeds to explain why he thinks his own company is on its way. “We can achieve greatness because we over- deliver and exceed expectations. If rivals are talking us down, that means we are doing something very well,” he says with a nod to some of the company’s market detractors. Mr McDonald takes up the thread: “Great companies have something that is different. You might find this odd but every single per- son who has entered this company has been interviewed by myself and almost everyone has also been interviewed by Theo. Mr Duchen explains that as he was con- straight through processing where business “Usually, that is delegated right down sulting in the industry, he was struck by the could be completed between a broker and an the organisation. Getting the right people is inefficiencies of its business transactions. insurer without picking up the phone or sign- job number two after our clients, which is “I had a sense of how brokers and insurers ing a single piece of paper. completely different to our competitors. We worked and where the inefficiencies lay and as “We could see that it could work but that probably have more engineering graduates from David was running the e-commerce practice, it would have to be real-time connected the top universities than all of our competitors he was able to translate that into a technologi- between the broker and the insurer processes combined,” he says with obvious pride. cal solution,” he explains. to get the efficiencies and make it trustworthy He believes that this expertise comes But it wasn’t as simple as identifying a malaise from an underwriter’s point of view,” says Mr through to the client base, which has grown and curing it as Mr McDonald explains. McDonald. considerably since Acturis launched as a left- “We did our first real-time trade between a field idea nearly 10 years ago. A cynical market broker and an insurer in 2002 but it took us Mr Duchen and Mr McDonald were both “When we started out in the e-trade world, another three to four years to get enough buy- partners at global management consultancy people in commercial insurance thought we in to get the whole thing cranking.” firm, McKinsey, running the insurance and e- were bonkers, that it could never happen.” It was hard going for many years and both commerce practises respectively. So what was it that Acturis was proposing are happy to admit that they underestimated and why was it met with such scepticism? just how difficult it would be. BIOGRAPHY – THEO DUCHEN What Mr Duchen and Mr McDonald had “It was a lot harder than it appeared at the identified was that commercial insurance was, outset. We didn’t expect it to be easy but we Theo Duchen is co-chief executive of Acturis. He was pre- relatively speaking, scrabbling about in the didn’t think it would be as hard as it was to viously a partner at McKinsey & Company, having joined stone age while its financial cousins were firmly gather the momentum,” says Mr McDonald. McKinsey in 1991 and becoming a partner in 1997. He led in the digital era. Brokers and insurers were He goes on to explain that a book called McKinsey’s general insurance practice in the UK, was a mem- still using paper slips, telephone calls and face- Crossing the Chasm by Geoffrey Moore laid ber of McKinsey’s European insurance leadership group, to-face meetings to conduct business. Acturis out almost exactly the experience he and Mr and has worked extensively with both insurers and major aimed simply to make conducting business Duchen went through in Acturis’ early years. international brokers over several years. Theo is an actuary in commercial insurance much more efficient “His concept is that in technology or adop- by training. through the use of technology – namely tion-type markets, often what you get is an

26 Insurance Age September 2010 www.broking.co.uk The interview

BIOGRAPHY – DAVID MCDONALD The possibility of acquisitions is an interest- ing one. Both point out that the reason they David McDonald is co-CEO of Acturis. He was believe their system is much more efficient is previously a partner at McKinsey & Company, that it doesn’t have to labour under several e good having joined McKinsey in 1990 and being different systems. So surely it would be folly elected to partner in 1996. He co-led McKin- to follow the same route? initial wave of people signing up but then sey’s e-commerce practice in the UK and has “In regards to an acquisition – in some everyone else waits to see if the initial wave extensive experience of business-to-business of these markets, there are providers with really takes off. e-commerce. David has worked across a very good platforms but they are specifically “In 2002 we had some very early adopters number of industries and was first involved tailored to the structure of those markets,” and there were others we were having conver- in e-commerce in 1993 while working in the explains Mr McDonald. sations with. It was really only in about 2004 US. Before joining McKinsey, David qualified “What we’ve got is 10 years’ experience of that we began to cross that chasm and get out as a chartered accountant and received an taking a market that is totally unelectronic to the other side of it. Then it took off.” MBA from INSEAD, France. a new world and that migration could involve Again, the two are in agreement that those the use of the Acturis platform or it could two years were rather dark times. “You don’t the way we are set up and the way our com- involve us using our expertise to develop a sleep so well going through a period like this,” petitors are,” he adds. different one. offers Mr Duchen. “We are software as a service so it’s all cen- “If you purchase a platform and don’t do any- But they did get through and with recent trally hosted – the others have a distributed thing particularly coherent with it as part of a big contract wins such as Willis and RSA Mr system.” larger plan, there’s a risk you end up with mul- Duchen and Mr McDonald are ready for the For all the Luddites out there, put simply, this tiplatform issues. Our model is about connected next wave of growth. means all users of Acturis are running off the business – it’s about connecting the different “For insurers, for the first time the needle of same system whereas other software providers players in the industry whether it’s using our electronic coverage for a portfolio is creeping often configure their systems to an individual system or another one. It’s a philosophy.” up. Traditionally, the only thing that was e- broker’s needs. The pros and cons of this could Is it too much of a stretch to suggest that traded was packages, which account for about be argued for many moons, but Mr McDonald Acturis is about a way of doing business rather 8-9% of a broker’s premium,” says Mr Duchen. and Mr Duchen are convinced that theirs is the than the technicalities of a software system. “Suddenly now we are into the big stuff most efficient system option not just for their Mr Duchen: “It’s half and half I’d say. If you like commercial combined and fleet, which is own users, but for the entire market. ask a lot of people in the market what the differ- 22% and 18% of the average broker’s premium “When we set up,” Mr McDonald continues, ence is, it is professionalism and efficiency.” respectively. That’s 40% with just two prod- “this was an industry with many, many people Which brings us back to what makes a great ucts. Only 18 months ago, some insurers were participating in different parts of the chain company. It appears that Acturis is on the cusp telling us that we couldn’t do it,” he laughs. – the idea was that they are all using common of something but it is too early to say if that is data so let’s just create one instance of that. greatness. Mr Duchen and Mr McDonald have Big money Let’s not have 6,000 instances of that. That’s spent nine long years convincing a sceptical He also predicts that brokers will easily be the big difference.” market that not only was their system a viable able to e-trade business up to premiums of “That was another reason the chasm was so alternative but that theirs was a completely £10,000 and even predicts that this could severe,” Mr Duchen chips in. “This was not new way of doing business. In an industry that move up to £20,000. only a new business, it was a different business.” is notoriously slow to pick up on innovation, “Even if something has to be referred, it’s And this “new business” is entering a new still electronic,” he explains. phase with European expansion the main aim. “I don’t think there is break point – it’s a A couple of months ago, the Acturis board The idea was that they are all continuum. At the small end it’s 100% elec- sold a minority stake to “growth equity firm” tronic completion and then you move along Summit Partners with the express purpose using common data so let’s just the spectrum where it is more about elec- of helping the firm establish itself in Europe. tronic communication without interference in Although they won’t be drawn on just how create one instance of that. That’s the rating.” much of a minority shareholding they have the big difference He makes it all sound so simple and logical sold, the co-CEOs are adamant that the focus but if that’s the case, why did it take so long of the company is still the UK market. David McDonald for people to see the value? What made them “We have a market share in commercial drag their heels? insurance of about 20% and there’s no reason they have done a remarkable job in convincing “I don’t think brokers were scared of e-trad- why we can’t double that,” says Mr McDon- some of the most influential players that there ing but they were sceptical,” says Mr Duchen. ald off-hand. is a more efficient way. But their sternest test “They were willing to give it a try but they And as Mr Duchen points out: “The UK is awaits them. They’ve got a fifth of the UK were already convinced that they wouldn’t the best route into Europe – if you continue to commercial market under their hat and are get any success out of it. Now that they have do a great job here, you not only have wonder- aiming to double that in conjunction with an given it a try, they can see that it works. ful references, but a lot of the companies are assault on Europe. “The most successful folks we see in this global so if things work well here, they tend They seem sure they will not allow this e-trade arena are brokers that have embraced to support that in other places. This market is to distract them from the fundamentals and it for their small to medium-sized enterprise very important to us – it’s number one.” they’ve got previous to show they won’t. business and even their mid-market commer- Mr McDonald picks up from here. Back in 2002 when all around them were cial. It’s still brokered but they are not doing “In each of these [European] markets there’s telling them that they were mad, they perse- it manually – they are doing it electronically.” going to be a mix of different approaches – vered, remained committed to their vision, As Mr McDonald puts it, they are “cutting working with existing clients, taking advantage and carried on regardless. If they can draw their customer service time down from three of country specific opportunities and possibly once again on this same focus and determina- days to half an hour”. making bolt-on acquisitions. It’s not like we tion, there’s no reason they can’t repeat their “There is a fundamental difference between have a singular plan.” domestic success on the Continent. n

www.broking.co.uk September 2010 Insurance Age 27 Regional power hour – Newcastle Talent scouting Thismonth’spowerhour,heldinNewcastleuponTyneandsponsored byEcclesiastical,discussestheleveloftalentintheindustryandhownew recruits of a high calibre can be attracted. Louise Meeson reports

How easy is it to attract graduates and new 100. I think the opportunity is there to try and talent into the industry? attract the graduates in and we need to move forward. Let’s face it, we are up against a lot of Janet: We are finding it easy to attract gradu- competition from the other professions. ates. We are fairly small and we’ve just taken on two graduates, high calibre as well, and are Karin: We have always been seen as a fallback, working to fast track them though the Char- default career. Nobody goes through school or tered Insurance Institute (CII) progression. college and aspires to be in insurance.

Karin: I have found the opposite. A lot of my Sue: We have found it easy to get the right graduate friends perceive insurance to be a people but we do find the people we have stuffy, grey-suited world full of people sitting got, which are of the highest calibre, are in front of computers. They don’t really under- actually telling us that they have come to stand that we get out and talk to people. insurance through people they already know in insurance and that while the presence in Gordon: When I came into the profession I Ian: I agree with Karin, when a lot of gradu- the universities is good from accountancy entered straight into loss adjusting straight from ates come across insurance it’s a little red firms and so on there is not so much from the university and it was a case of ‘if you want to phone, a nodding dog or a Meerkat. They insurance industry. We found once we pro- get on you must get your qualifications’. Then think of personal lines insurance and that it’s moted our graduate scheme it became very we went though a period when there was con- going to involve working in a call centre and competitive. Before we had a scheme we did solidation in the market and qualifications went therefore think they wouldn’t be interested. find we were getting graduates with less of on the back burner and some of the jobs that what we wanted. were there, in the call centres and so on, didn’t Gordon: It’s interesting. There was an article require that qualification. That’s where the in The Times about two months ago about Mark: What about the CII in terms of pro- other professions maintained their standard. graduate recruitment and Pricewaterhouse- moting insurance in society and the careers? Coopers (PWC) said that they spent £14m a Insurance does have very good career progres- Sue: I think that’s right. Where there is a pres- year on graduate recruitment training. It listed sion in terms of the qualifications and exams. sure on budget the first thing to get slashed is the top 100 graduate recruiters in the UK and Obviously as loss adjusters we tend to pick your training pot isn’t it and that’s something there were no insurance companies in that top up more senior people and multi-disciplinary that should be kept. people from all kinds backgrounds such as ATTENDEES engineering and the chemical industry to Karin: I spoke to some of my contacts represent the spectrum of insurance. I know nationally and I asked whether they have any Mark Adderley in our local insurance institute we do sup- structured training plans and obviously you Executive adjuster, MYI port open days at universities and in schools [Ecclesiastical] are an exception because the and when people talk to you, they are inter- general consensus, whether they are underwrit- Paul Chapman ested because they don’t appreciate what the ers or brokers, is that there aren’t that many Branch director, Bluefin options are. training structures in place. It’s more on the job training, which is great, but your older, Karin Clark Paul: I have a daughter who is a graduate. I experienced staff would have filtered the infor- Casualty underwriter, XL Insurance asked her ‘what are your views on the insur- mation down. With the downsizing of offices, ance industry in one word?’ and she said the closure of offices, we are losing those peo- Michael Farrell ‘boring’. There is this perception that it’s just ple either to redundancy or they are going off Partner, Lockton personal lines call centres and if you look at to work elsewhere. We have less skilled people some of the clients that we get to deal with, trying to bring on the new recruits and prob- Sue Maizonnier there are some very, very interesting busi- ably we are failing them. Head of underwriting development, Ecclesiastical nesses, and we get to learn about that. Mark: I think there’s a real issue over the past Ian McIntire Karin: I know when I started 13 years ago 10 years with regionalisation. For instance, Senior regional underwriter, MMA Insurance professional development qualifications weren’t Newcastle used to have loads of insurers and really pushed. It’s only in the past few years the vast majority closed. All the qualified staff Janet Moody they have really been taken seriously – things went into loss adjusting or broking. Fortu- Commercial manager, Wilby have changed. It’s about taking the profession nately, a lot of that is turning around, we are seriously – that can only be a good thing. It seeing a lot more underwriters coming back Gordon Vater might help attract graduates as it is seen as a into the market and that’s bringing those skills Director, Resources in Insurance Group serious career, rather than a job. and training back.

28 Insurance Age September 2010 www.broking.co.uk Regional power hour – Newcastle

Mark: Have you ever found that the graduates From left: aren’t at the level you would hope they were in Janet Moody, terms of basic skills of numeracy and literacy? Karin Clark and Gordon Vater. Below: Sue: You can demand a 2:1 but you also need Michael to look at what else is on the CV such as sports Farrell leadership, other qualities to show that there’s personality, leadership and initiative because those qualities are in the blood aren’t they.

Karin: Yes, those are the skills you want. You can teach people the technical aspects but you can’t teach leadership.

With the problems in the banking world has a career in insurance become more attractive?

Paul: If you take away the ‘boring’ element that some people still associate with the insur- ance world, as far as reputation is concerned it hasn’t fared too badly compared to some of the other professions.

Karin: I think sometimes we don’t dis- tinguish ourselves enough and we just get lumped in with financial services and we all Sue: But it’s not just the technical experts going on, but I think it needs to be taking get a bad name. you need, it’s the rounded person, the com- more of a role pulling the companies together. munication skills, the commercial savvy. It’s all It’s our responsibility as employers to attract Michael: I think we are almost regarded as the of that. Because we recognised that it wasn’t people but we could do with a helping hand poor relative of the financial community after just the technicians at the desk who couldn’t from the professional body. solicitors, accountants and bankers. That’s one articulate themselves. We launched our under- of the perception issues we have to deal with. writing academy, sales It’s not regarded as being such a good career academy, claims academy, but the reality is quite different. I think tradi- which have got common I have a daughter who is a tionally the other professions were regarded as standards, recognising the graduate. I asked her ‘what are your being better paid and better places to work but real succession issue. views on the insurance industry in that’s not true. Janet: We found that Janet: Broking itself is dynamic, it’s the least because we had such a high one word?’ and she said ‘boring’ boring job that you could have. Every working number of people going Paul Chapman day is different. through our scheme that we actually got a visit from the CII. They came up Michael: Insurance could turn itself into a bit Michael: As previously mentioned, PWC ▲ 30 from London to see us, which was absolutely of a seasonal employer for students for those spend a large amount of money on graduate astounding and the staff were thrilled to bits that want a job during the summer holidays. I recruitment and there is a huge that somebody had actually made the effort to know it’s difficult because we have a lot of cli- amount of demand for those come and spend some time with us. ent needs to address but I wonder if there’s a jobs. But, for every PWC way for the industry to facilitate seasonal place- partner that makes a million Gordon: Could the CII take more of an active ments for students so they would have an idea pounds a year, there’s a lot role in encouraging people into the industry? what it’s like. of people doing really mundane jobs that are Janet: I know they are doing a lot of that but Gordon: That’s what the accountants do. It’s not well paid and for they are still perceived to be fairly remote. certainly something worth looking at. whom it is mind-numb- ingly boring. Michael: We also got a visit [from the CII] Michael: With the best will in the world, and he said this was the first time he’d been up when you interview a graduate the chances to Newcastle. I think they have received criti- are they are not 100% sure about what they cism that they had been a bit London-centric want to do and you might not be 100% that and were not really doing as much as they they will be successful. You take a bit of a could in the regions. Maybe in the past we leap of faith and you don’t really find out didn’t need help from the CII as there were so until six or nine months down the line many insurers on our doorstep but now that whether they are going to be suitable by they are not there it would be good to get the that time, if they are not suitable, you CII back and get them working a bit more have wasted a lot of time and revenue closely with us. trying to make it work. If you had something pre-graduation then you’d Gordon: The CII is doing a lot, there’s a lot have a far better idea. www.broking.co.uk September 2010 Insurance Age 29 Regional power hour – Newcastle

CII. It needs to be more at a grass roots level.

Janet: It sounds as if we are all doing things individually doesn’t it but there’s no coordina- tion there or common framework for us all to go out there with the same message.

Sue: Hopefully the Aldermanbury Declaration will address that as long as we actually put it in practice and don’t just tick boxes.

Are there any particular skills that are lack- ing in the industry?

Ian: I’ve sat in quite a few interviews and the technical knowledge is excellent but it’s more the communications side of it that can be lack- ing. They were great at the underwriting side of it but they couldn’t sell it to a broker, which is a problem. Ian: I agree to a point with that but when Sue: So do you think that with all the pressure we opened the office we were looking for on exams and results in schools that they are someone at senior underwriting level and we not working so much on the rounded person? thought with Axa and NIG closing we would From left: Paul: Insurance broking still breeds entrepre- get lots of people but by the time we were Paul Chap- neurs. Within reason you can go wherever you Gordon: I agree with you to a certain degree recruiting a lot of those people had got jobs man, Sue want in this industry. but I also think the other thing that has hap- in the local market so its amazing how, if you Maizonnier, Ian McIntire pened is that we have lost a lot of talent, or are good enough, you will get a job in the and Mark Mark: They were talking this morning on grey hair, in the industry whereas when the market. Adderley the news about the increased number of youngsters were coming through in the past apprenticeships and the amount of money they would be learning from people who had Karin: Yes, you might be good enough, but the Government is putting into it. Nowadays, been doing the job for 20 years. unfortunately some people are at that age people are looking for an alternative to uni- where people won’t take them on. They have versity – something interesting with a good Paul: In our office we came from that back- two or three years left and although they are career progression and it could be a great ground and had the luxury of having guys technically excellent and well rounded, you opportunity for insurance. teaching us technically while on the job in a have lost them. And those are the people that really nice well-rounded way. We feel it’s our could have taken somebody under their wing. duty to do the same while we have still got the grey hair in the office. In an ideal world how would the industry We would like the CII to take attract more talent? a lead, some kind of national Sue: We have put the grey matter, the people with experience, through coaching skills train- Mark: We would like the CII to take a lead, presence or advertising to help ing so they have the right techniques. some kind of national presence or advertis- us fight our corner ing to help us fight our corner because at the Michael: That’s a good thing to do because moment there isn’t anything. Mark Adderley quite often the person with the knowledge is not very good at teaching. Janet: I think we should all continue doing what we are doing. We are not saying we want Gordon: We need talent in the industry Janet: What we do is with any newcomer to the CII to do it all for us but if they are there whether that’s a graduate or somebody who our company, we buddy them up and they go offering a framework it would reinforce things has just come out of school. As an industry, to them with everything. They can get advice all down the line. we have to start attracting those people in. I’m about all sorts of things. excited by this group of people – in fact we Gordon: We have to change our brand as an should go around the country trying to get Mark: Do we have more stability now? All insurance profession, let’s start there. n people interested. We are in the jobs day to day that grey hair we lost was because of the and we have been in the industry for years we closure of the branches and centralising every- For the power hour archive can enthuse about what we do and that’s where thing and maybe now we are starting to get a www.broking.co.uk/tag/power-hour I think there is a bit of a disconnect with the little more stability in that structure.

Ecclesiastical are proud to sponsor the Power Hour. www.ecclesiastical.com/goodhands

30 Insurance Age September 2010 www.broking.co.uk Viewpoint A transparent solution Evolution Underwriting CEO Paul Upton evaluates the pros and cons of commission disclosure for large and smallbrokersasthetransparencyofthecurrentmodelcomesunderscrutinybyprofessionalsintheUSand theUKaswellasbytheEuropeanCommission

ommission disclosure is one of those topics that and the US do not like the system. They regard Inevitably for some, this would be daunting – but Chas been in and around the headlines in our it as opaque and are openly lobbying for a sys- for others, it would present a genuine opportunity area of the insurance industry for some years now. tem based around fees and greater transparency. to explore additional ways of adding value to their While it is an ever-present preoccupation, no one While this discussion has mainly centered around clients’ business. This could be, for example, through – apart from, it seems, Willis, with its well publicised FTSE and Fortune 500-type exposures, it is safe to the provision of additional services in areas such as zero-tolerance approach to contingent reward – is assume that if this momentum continues we will risk management and business consultancy. Any such really saying anything very specific on the subject. see increasing resistance further down the premium development would generate a culture change in the But it is not hard to see why. scale to the commission-based sales approach. operation of the broking market and may place more Many of the most successful business models in The final part of the jigsaw is the European emphasis on an advice-led sales process with less the current distribution landscape are built upon Commission, which has placed the burden of emphasis on the retail price of the final transaction. levels of up-front and contingent commissions that proof firmly on brokers to have been negotiated upwards in return for volume demonstrate that the cur- of premium. As things currently stand, an insurance rent industry guidelines on In an open and competitive market with buyer has the right to ask precisely how much their transparency are working. intermediary is being paid and receive an answer. The UK regulator has, for multiple distribution channels and a wide Nothing wrong with that, you might think – how- the time being, called off the ever, this model, designed and implemented by dogs on this issue. It would range of differentiated insurer offerings, brokers with the regulator’s encouragement, is com- appear, though, that Brus- the buyer will decide what is fair ing under huge pressure from three main areas. sels is keen to push again for First, international brokers have gained real trac- mandatory disclosure unless tion in the US as the post-Elliot Spitzer restrictions the current system is proved, beyond doubt, to be The knock-on effects are uncertain. It could be, placed on them have now been recognised as unfair operating efficiently and fairly. for example, that in this scenario the larger players when smaller brokers are freely allowed to take Talking to brokers at the most recent British may find that just being big might not hold sway in contingent commissions. Although Willis intends to Insurance Brokers’ Association conference, the the way it once did. It may be that more of a pre- continue to refuse them it shows that contingents consensus is clear – in an open and competitive mar- mium is attached to the quality of advice a broker are once again moving up the agenda. ket with multiple distribution channels and a wide has to give and less opportunity to leverage volume. This leads to the second problem, which is range of differentiated insurer offerings, the buyer This would be analogous to the experiences of the that the major insurance buyers both in the UK will decide what is fair. If an intermediary provides international brokers post-Spitzer. a quote that meets the client’s needs in terms of Any such change would be good news for those Treating Customers Fairly and is priced at an accept- brokers that already operate a large proportion of able level relative to the competition, then that offer business on a fees basis and would be well placed will be accepted. The buyer is entitled to ask what to adapt to this brave new world. Such a move may his broker is being paid and he will be told. In real- force brokers to contemplate more of the add-on- ity, policyholders rarely do ask, principally because type products as seen in the personal lines sector, their concern is around the overall cost of the deal since the aggregators have bitten into margins. One rather than who gets what in the distribution chain. thing is for sure – if commission disclosure becomes Of course, what this process does not account for is mandatory, it will become increasingly difficult for the value of the ‘advice’ aspect of the service offered brokers to retain the level of earnings they currently by the broker against the value of the marketing enjoy. This is because sophisticated business buy- exercise and costs advocacy that they will also have ers will seize on the commission line as a point for carried out. In one sense, it is simple and of obvious negotiation – particularly where that number is a appeal to market practitioners. In another, it could high proportion of the gross premium. be seen as dumbing down the true value of the serv- Hard disclosure could genuinely level the playing ice being provided. field for smaller brokers and provide the opportunity However, it may yet prove to be wishful think- to help achieve the longstanding ambition to be ing to believe that the current state of affairs will regarded in the same light as solicitors and account- continue. Many times I have heard brokers and ants. However, the price would be a radical shake commentators bemoan the fact that insurance pro- up in the way some brokers are remunerated. The fessionals are not able to charge for their expertise future looks uncertain at best, so it could be worth on a fee-based approach as solicitors or accountants considering the implications of such a shift well do. It could be that if the current trend continues, ahead of time. ■ brokers may be forced down this route in order to demonstrate that the value of their service For the viewpoint archive and advice warrants a specific finan- www.broking.co.uk/tag/viewpoint cial charge. www.broking.co.uk September 2010 Insurance Age 31 Call Us: 01323 648000 Your clients can buy 24/7...

...even when you’re on holiday

FREE Multiquote Software with a panel of leading insurers www.insurancetechnology.co.uk

Professional Insurance Agents Ltd is authorised and regulated by the Financial Services Authority Registered in England with Company Number 3012122 Cover Feature

This month’s reportage focuses on all things liability. WeassesstheimpactofQuinn’swithdrawalfromthe solicitor’s PI market; question whether small businesses reallyneedD&Ocoveroriftheindustryistaking advantage of their fears; detail the liability risks inherent in the online world; and highlight one of the more Liability focus obscure long-tail liability risks.

34The domino effect

Liz McMahon asks what opportunities exist for brokers following the troubles of Quinn and its solicitors’ PI book

38 Cyber liability

36 D&O 39 Long-tail liability www.broking.co.uk September 2010 Insurance Age 33 Reportage: solicitors’ PI

“The current book was moving nicely towards profitability so the problems had noth- The domino effect ing to do with insolvency. If it wasn’t for the fact that Quinn was mismanaged it would have still been in the market this year. “For our clients there is still time and there ThemuchpublicisedtroublesofQuinnanditssolicitors’PIbookhavehada are alternative markets for them. We have been knock-on effect on other providers in the market. Liz McMahon asks what working closely with Travelers, which will cover as many firms as possible but it won’t opportunities and responsibilities for brokers now exist come cheap,” he says. Daniel Innes, managing director of profes- sional risks at Clear Insurance Management, n 1 October the playground taunt qualifying insurers at the same proportion as says Hiscox and Catlin’s exit means the mar- O“pinch, punch first of the month” will their share of the market. Replacing the Solici- ket that would have been available for Quinn be painfully apt for a record number of solici- tors’ Indemnity Fund, which was abandoned policyholders has been reduced even further, tors. Quinn’s much publicised exit from the in 2000, the pool was supposed to offer a solu- leaving just five players in the arena. One such professional indemnity (PI) market has left tion to the problem of providing compulsory candidate is new entrant to market, Vision 2,911 of the UK’s 10,000 law firms hungrily cover. However, in its current form, few would Underwriting, part of Liberty Mutual. With searching for a new insurer in a market with an agree it has come anywhere near to achieving its claims that it will target small firms with extremely limited appetite. Hiscox and Catlin its objective. an online proposition, it has been touted as a have thrown in the towel while Zurich, which Reforms from the Solicitors Regulation possible contender to “save the day” but as Mr previously had a 13% share of the market, has Authority (SRA) are on the horizon (see box) Innes points out, the industry has no real idea shut its doors to new business. Solicitors that for next year’s renewal period but for many, of Vision’s appetite yet. fail to secure PI cover will be left with no other this will simply be too late. option other than to enter the wilderness of Could the fast approach- the assigned risk pool (ARP). ing catastrophe have been It is entirely unfair that the Whichever way you look at it, it does not avoided if it weren’t for bode well. In fact, it looks extremely bleak. Quinn’s departure or is the insurance industry should pick up Prior to this year’s renewal period, there were problem more deep rooted the cost of firms that cannot obtain already around 213 firms in the ARP and fore- than that? casts suggest that post 1 October this year, the Prime Professions had insurance on the open market number could quadruple. 2,000 firms placed with To put this in context, the number of firms Quinn and is the recom- Peter Court in the ARP has risen from just 26 in 2007/8 mended broker for sole to 166 in 2008/9 and the largest estimate for practitioners. Therefore if anyone is up to their Speaking off the record, several experts ques- 2009/10 is around 270. neck in the situation it is director Richard tion how Vision can “realistically pull it off”. If the past is anything to go by, the expected Brown. He is frustrated by the popular mis- One source says operating online will mean the influx could lead to a dramatic cull, hitting conception surrounding the Quinn saga. insurer will only have the capacity to cover very small, high-street practitioners hardest. In the “It wrangles me as the troubles with Quinn straightforward risks. Firms that have anything four years from 2004/5 to 2008/9, only nine have nothing to do with any part of the busi- as complex as a claims history may have to firms insured by the ARP at the end of each ness being profitable or non-profitable and look elsewhere in an ever diminishing market. period were subsequently able to get hold of much more to do with Sean Quinn and his Jenny Screech, Zurich legal professions cover in the open market. dealings with the Anglo Irish Bank.” manager, says the reason behind the insurer’s In the ARP, cover is underwritten by the Mr Brown insists there is no evidence to sug- decision to snub new business is the uncer- gest that Quinn’s solicitors’ PI book poses a tainty surrounding the ARP. ARP STATISTICS greater risk than any other insurer’s. “There has been a significant increase in “The UK company losses have been well cov- firms entering it over the past couple of igures released by the Solicitors Regulation Authority (SRA) ered but the qualifying insurer for the PI book Fsuggest that £4.5m of assigned risk pool (ARP) premiums was the Irish arm of the company so the poli- were due for the 2008/9 year, but by June 2010 only £2m had cies were not even written in the UK.” been paid. Claims were stated to be estimated at £41m, but According to Mr Brown, Quinn’s projections are that this will soon deteriorate to £50m and the early entry into solicitors’ PI two final figure may considerably exceed this. years ago was not initially profit- From 2000 (when the ARP was formed) to 2007 the able but he is adamant that number of firms in the ARP had remained relatively static they were not alone in this. at around 20-30 per year. In 2008/9 this rose to nearly 150 He adds that Quinn had and in 2009/10 was in excess of 250. With Quinn, Catlin and reviewed its book aggres- Hiscox all having left the market this year projections are that sively last year, pushing this will increase to well over 500. rates upward as a result. The cost of the ARP is passed through to the rest of the pro- fession by increased premiums. In the first year of the ARP the cost was estimated at 3% of the Solicitors’ PI premiums. Last year, the cost was estimated to have risen to over 20% and projections are that this may rise to over 30% this year. There were 213 firms in the ARP on 13 July 2010. Data supplied by Peter Court, professional indemnity partner at Plexus Law

34 Insurance Age September 2010 www.broking.co.uk Reportage: solicitors’ PI

no quick solution is likely, due to current THE SRA STRATEGY FOR THE ENHANCED CONTROL OF THE ARP members of the ARP still being entitled to six The main actions approved by the board: years of run-off cover if they are forced out of l July 2010 – all firms currently in the assigned risk pool (ARP) reaching the end of their practice. However, he maintains that is not a two-year term were contacted to ensure there were robust plans in place for them to reason for not taking firm and decisive action leave the ARP by October – either through obtaining market insurance or through orderly to protect insurers and the majority of the pro- wind-down fession from what he calls “rogue firms”. l All firms in the ARP that had not paid their ARP premiums were contacted and told that Amid the varied and often passionate opin- they must pay promptly. Firms that failed to do so were warned that they would face ions in the market there lies a unanimous regulatory sanctions and/or court action, and/or will be declared ineligible for any further desire for change. Not that this is much com- term in the ARP and closed down fort to the approximately 3,000 firms currently l August and September 2010 – regulatory action will be pursued in relation to these mat- seeking cover. Never has a broker’s role been ters, so that by October as many firms as possible – particularly high-risk firms and those so important and relationships forged in des- failing to pay their premiums – will have been managed out of the ARP perate times will last into prosperity. The next l October 2010 – any firms whose position has not already been resolved will face the likeli- year will be virtually unbearable with an unfor- hood of intervention to close them down tunate number of casualties as only the fittest l Firms newly entering the ARP in October will be treated in the same way survive. The long-term future could bring l The Solicitors Regulation Authority has announced that it is to carry out a ‘root and branch’ improvement with the SRA and Association review of client financial protection, with a view to introducing the outcomes in time for the of British Insurers promising to collaborate renewal on 1 October 2011 closely in order to find a solution to satisfy all parties. The hope has to be that with reform years and this has translated into claims experi- not stepped in to target the premiums that are comes genuine change and not a repeat of the ence. As insurers are required to cover their not being paid before this point. It shouldn’t situation in 2000 where one unworkable sys- market share of the ARP, we cannot control have taken a real crisis to prompt action,” Ms tem was simply replaced with another. n the exposure taking on new business would Screech adds. bring,” explains Ms Screech. But Geoffrey Negus, spokesman for the SRA, QUALIFYING INSURERS FINAL PERCENTAGE She cites Zurich’s share of the ARP liability says the organisation has come to the best pos- PARTICIPATIONS OF THE ARP FOR THE 2009/2010 as proof of the mounting problem. The total sible conclusion. INDEMNITY PERIOD AS AT 31 MARCH 2010 incurred liability for the ARP in the 2008 year “The SRA board has had to weigh up numer- Qualifying insurer Participation is £41.3m. Of that figure £6.6m has been ous conflicting pressures while determining the paid with the balance of £34.7m being the future of the ARP. It came to the conclusion ACE European Group 1.147% amount reserved on the claims reported so far. that some of the suggested options might have AG Dore & Others Syndicate 2526 0.324% The total amount collected by insurers from had a disproportionately severe impact on cer- Chartis 15.381% the profession for primary cover in 2008 was tain types of firm and the board considered its £226m. This means that 18% of the premium decisions to be appropriate in the light of the Allianz Global Corporate & Specialty AG 4.406% collected by each insurer will need to be allo- information available at the time.” Aspen Insurance UK 0.788% cated for the paid and reserved ARP losses. One move the SRA has taken already is to Aviva Insurance 3.832% In 2008, Zurich’s share of the market was reduce the amount of time a solicitors firm roughly 16% leaving it with a potential liability can stay in the ARP from 24 to 12 months. Barbican Syndicate 1955 C/O Libra 3.401% for ARP firms of £6.7m. However, as Mr Brown highlights, this creates Catlin Insurance Company 0.046% Ms Screech argues this is “a very significant another set of problems. Catlin Syndicate SJC 2003 0.000% sum in relation to a group of 167 firms we “Firms that entered the ARP last year are chose not to insure”. guaranteed another year there and in that time Chubb Insurance Company of Europe SE 0.422% She also confirms that the departure of could be producing claims. The rule change Hiscox Insurance Company 1.637% Quinn has not been the only issue for the means this year’s firms and next will all come Hiscox Syndicate 33 0.056% market and Zurich has in fact been lobbying to an end in the ARP at the same time, which the SRA for quite some time to make changes will see a lot of firms needing run-off cover for International Insurance Company of 4.474% Hannover to the ARP, especially in relation to the broad a further six years. This kind of exposure is very scope that currently surrounds minimum terms difficult for insurers to quantify and throws up Lemma Europe Insurance Company 1.086% and conditions. a whole load of issues.” Liberty Mutual Insurance Europe 0.609% “The regulation of the ARP needs to Peter Court, PI partner at Plexus Law, does Pembroke Syndicate 4000 1.009% be more robust as there are too many not pull any punches and has even called for firms that do not pay their pre- the abolishment of the ARP. QBE International Insurance 7.916% miums. Rules and regulations “One of the principal reasons for the situ- QBEDAConstable Syndicate 386 1.022% are in place but they need ation we now face has been the failure of the QBE J Neal Syndicate 1886 0.000% to be appropriately SRA to identify incompetent and fraudulent applied. I do share solicitors and to prevent them from practising. Quinn Direct Insurance 9.831% the concern that the “The ARP should be abolished as it is RSA 5.588% number of firms entirely unfair that the insurance industry Solicitors Indemnity Mutual Insurance 0.488% entering the ARP should pick up the cost of firms that cannot Association may be too many obtain insurance on the open market and for the SRA equally it is quite wrong that this cost should Travelers Insurance Company 13.516% to realistically then be passed through to the rest of the W. R. Berkley Insurance (Europe) 2.044% police. It is profession by increased premiums. If a firm is XL Insurance 8.443% unfortunate uninsurable because of its record and because that the of its risk then it should cease to practise.” Zurich Professional 12.531% SRA has Like many others, Mr Court is aware that Total 100.000% www.broking.co.uk September 2010 Insurance Age 35 Reportage: D&O

may not result in claims, the rise did mean it was “highly likely” providers will be paying out more in the long term. Scare tactics However, D&O rates in commercial are not rising. Callum Taylor, head of management liability at Axa, which is launching into the small to medium-sized enterprise (SME) D&O sector next month, says the Louise Meeson asksiftherecessionhashighlightedthetruebenefits reason why the rates have remained static is due to ofD&Oorwhetherprovidersanddistributorsarejustusingitto a fall in the number of large class actions in the US and also increased capacity. frightenbusinessleadersintotakingoutunnecessarycover Mr Pearson adds that if AIG, which has rebranded as Chartis in the UK, hadn’t been bailed out then the D&O market “would be in a very different place s the fallout from the recession continues to on commercial D&O but that didn’t happen to the now”. He says that as it is, the insurer, which he Arain down, company chiefs must be more extent we thought it might, however, at the same describes as the biggest D&O underwriter in the aware than ever of the risks of running a business. time, there’s a lot of capacity so that’s once reason world, “can continue to write at a competitive rate With the tough economic climate creating a rise why it has been generally stable,” he adds. as millions has been pumped into the business”, in insolvencies and redundancies, what effect has However, while Nigel Pearson, UK and Ireland adding that while allowing the insurer to go bust the increased threat of litigation from disgruntled underwriting manager for Chubb’s financial lines would have had many negative consequences, bail- customers, creditors, employees and regulators had division, agrees that rate increases in the financial ing it out has created an “artificial market”. on the directors’ and officers’ (D&O) market and institutions sector has plateaued, he points out that it what does the future hold? takes a while for claims to be processed and that this Increasing interest According to the most recent figures from the means the full extent of the losses incurred cannot yet Russell Kilpatrick, executive chairman of Dual, Tribunals Services, 236,100 employment tribunal be calculated, adding that as only a few major provid- agrees that it is a “very challenging market” adding claims were lodged in the financial year 2009/10, ers service this sector, it will have a massive impact. he would not want to be a new entrant to the sec- an increase of 56% on 2008/09. Some 112,400 In relation to the commercial sector, Mr Pearson tor. Having said that, take up of D&O is on the rise. employment tribunal claims were disposed of in says it has been a very different picture. “Because of “We are seeing an increased take up of D&O 2009/10, an increase of 22% on 2008/09. the nature of the credit crunch it was a lot to do with of about 42% year on year and that’s largely from In addition, the Insolvency Service has revealed lending policies and banking practices, so most claims the smaller market as most large companies have that there were 4,080 compulsory liquidations and were likely to fall on the banks,” he explains. “Having it already. But, saying that, a lot of businesses have creditors’ voluntary liquidations in England and said that, there’s still an underlying increase year on gone bust. There is an increase in first time buyers Wales in the second quarter of 2010. This was an year in D&O. During the last half year, notifications but there are not as many businesses around now,” increase of 0.5% on Q1, although it was a 19.1% on the financial institutions side were down about Mr Kilpatrick adds. drop on the same period in 2009. 5-10% but on the commercial side new notifications He says that the importance of having D&O has In such a volatile environment, the threat of per- are still going up. In general, the been highlighted by events such as the RBS and sonal litigation against directors and officers must first half of this Madoff scandals, adding that cover is relatively cheap have increased. However, the market has reacted year, compared “in the scheme of things”. very differently over the past couple of years depend- with the same Similarly, Mr Pearson says: “You are still going to ing on business sector. While financial institutions period last be unlucky to get a D&O claim as they are not high have seen significant rate increases, premiums in the year, is up frequency, most accounts are never going to have a commercial sector have remained fairly static. 10%.” notification, but when you get one it very quickly Andre Basile, vice president of financial lines at He points gets very painful. When you have got to defend Chartis, says that over the past 18 months some out that yourself for six months, you could be talking about financial institutions had seen rate increases of more while noti- half a million plus in costs, for most that’s the end of than 50%, however he adds the market is now show- fications their business.” ing signs of stabilisation. Mr Taylor says that when Axa launches into the “We thought there would be a downstream effect SME D&O sector, it plans to do so with a broader “management liability product”, which will include CASE STUDIES FROM AVIVA D&O cover. “Some 90% of claims are made against the com- l A director was sued by one of his distributors for a pany, not the individual, which means pure D&O deliberate breach of an exclusive agreement between would not protect most SMEs,” he adds. both parties. It was alleged the director had used com- “When you look at the motor market, do they mercially sensitive information for personal benefit. The just sell third-party fire and theft? Why in D&O costs incurred successfully defending this claim exceeded do they sell one element of cover, covering only a £100,000 small element of the risk? l The Health and Safety Executive took action against two “Insurers have let brokers down. Some have prof- directors of a construction company for gross negligence ited, especially at the SME level, by continuing to manslaughter and other health and safety offences. The direc- offer just one element of the risk, rather than cover- tors responsible had failed to ensure risk assessments were ing the whole, and that’s solely for reasons of profit.” carried out, machinery and work processes were safe and proper train- With the impact of the credit crunch continuing ing and supervision had been provided. As well as more than £40,000 to send shockwaves through the financial com- in fines, the case incurred costs in excess of £150,000 munity and the coalition Government’s tough l Liquidators sued a director of a company that had failed, with losses of regulatory stance, business leaders are treading a £1.5m. The director had believed the firm to be profitable but the case was still precarious path. Although D&O cover may not found in the liquidators favour due to his negligence in failing to ensure accurate offer all the answers, it could help company chiefs financial records were kept sleep a little easier at night. n

36 Insurance Age September 2010 www.broking.co.uk Your senior partner in PI insurance

Justification

Intoday’sincreasinglylitigiousworld,lawfirmslargeorsmallneedmore than just Professional Indemnity cover. They need a partner with the legal knowledge, insurance experience, financial strength and commitment to stand with them shoulder to shoulderwhenitreallycounts.Here’showonefirmofsolicitorsjustifiedpartneringwith Travelers: “I would like to take this opportunity of thanking you on behalf of all of the partners for the robust way in which you were prepared to stand against the claim... It could easily have turned out badly but the eventual result is the best we could have expected.”

If you would like to work in partnership with one of the UK’s leading Professional Indemnity insurers, visit our website or call us today. Justvisitwww.travelers.co.uk/justificationorcall07002222999.

Travelers Professional Risks Limited is an appointed representative of Travelers Insurance Company Limited which is authorised and regulated by the Financial Services Authority. Reportage: cyber liability

for a data breach are more than $250,000 and amount to $10 per head. Smaller business may not have records on 25,000 customers, as is the average size of the data breach found by the research, but at Reducing online $10 a person the disclosure costs soon mount up. Given the costs involved, it is not surprising that investigating this sort of insurance is becoming a growing priority for firms that want to know what is available and to make sure that where insurance is in place it will respond as they need it to. Mr Newman says: “Attitudes are changing, espe- exposure cially in the larger companies that are now actively asking for this cover.” One of the other areas that brokers and businesses need to investigate is exactly when the media aspect Aswebsitesande-tradingtakeamoreprominentrolein of their cover will respond. Most policies will provide everyfacetofbusiness,onlineliabilityrisksgrow.Edward for communications made via company emails and websites, but is that enough? Murray askshowthemarketcankeepuptodatewiththe exposures and how brokers should best advise their clients Social media Social networking sites have now become busi- ness tools, while blogging has become the nation’s favourite past time. As such, a huge amount of com- munications do not take place in the strict confines of the company website or email system. Commu- nications with these mediums still have the ability to create liabilities, but they are not covered by most standard insurances. Mr Newman comments: “Most carriers restrict their online content cover to com- pany websites and emails and do not extend to blogs or other social media.” yber liability is one of those unhelpful phrases and the loss and reinstatement of data. There is the Mr Newman unsurprisingly believes that Cthat has become accepted in common parlance, media part of the risk, which concerns things like stand-alone cover is necessary if businesses are to but does not actually have a consistent or widely infringement of copyright, or defamation and finally, adequately insure their risks in this area and for understood meaning. Any computer or electronic there is security to consider and the liabilities created particular businesses this is true. However, there are liability can be thrown into the cyber liability basket by the loss or theft of customer and employee data. others in the market that have sought to include and as such it is both multifarious and confusing. CFC Underwriting is a specialist in this area. Its cyber cover as part of an overall liability package. The term originated during the dotcom boom of CPM – cyber, privacy, media – cover seeks to address Neil McCarthy, UK and Ireland regional under- the late 1990s and the covers originally created set all of these three areas. Graeme Newman, business writing manager at Chubb, says the insurer spoke out to meet the liabilities faced by online businesses development director at the insurer, believes that to its brokers and found that the majority did not that could not afford for their websites to crash. the privacy aspect of the cover has become the most want to sell stand-alone policies for the electronic However, as IT has developed and become omni- important for the majority of businesses and particu- risks carried by their clients and, instead, wanted the present in the commercial landscape, so too have larly those in the hospitality, retail, leisure, finance cover included in more traditional liability policies. the laws that surround its use and the liabilities that and entertainment sectors. Chubb has responded to this by updating and it throws up. releasing ForeFront Plus, which Mr McCarthy Indeed, many of the liabilities born out describes as “a package of cyber covers built into a of electronic communication and compu- Attitudes are changing, more traditional management liability policy”. The ter use are not actually new – it is just that product has been available since March and will be they have a new medium through which especially in the larger online by the end of the year. to present themselves. Defamation, for Whether brokers and their clients decide to cover example, is still defamation whether com- companies that are now actively their e-risks through stand-alone or packaged prod- mitted online or in hard copy. asking for this cover ucts will depend on the level of cover they need However, there are also new liabilities and the specific instances in which they want the to consider. By way of example, Cali- Graeme Newman cover to respond. fornia introduced mandatory disclosure With changing laws and increasing levels of crime legislation in 2003, which means that any firm that These sectors are most at risk because of the around electronic data, the liabilities thrown up by suffers a data breach has to report the incident to amount of customer data they hold and the high advances in IT now need to be met head on by the its customers. This disclosure is both costly and number of credit card transactions they process on a vast majority of the business community. time consuming. daily basis. As such, board room executives and brokers alike, There are now 46 states in the US with such leg- Mr Newman says that where a data breach occurs, will want to take time to really understand what lies islation in place, while countries such as Germany disclosure may not yet be mandatory in the UK, but behind the nebulous cloud of cyber liability and have followed suit and the European Union is inves- he asks if businesses can really afford not to tell their whether they really are adequately protected or per- tigating a similar approach at a continental level. customers. Unfortunately, he says that because disclo- ilously exposed. n For small to medium-sized enterprises, the risk sure is not required by law in the UK, the majority of posed by electronic activities breaks down into three insurances do not respond to the associated costs. For the latest liability news composite parts. There is the cyber aspect to the Research from the Ponemon Institute in the US, www.broking.co.uk/tag/liability liability, which relates to the likes of virus attacks claims that in the UK, the average disclosure costs

38 Insurance Age September 2010 www.broking.co.uk Reportage: long-tail liability

The good news is that pure siderosis is not asso- ciated with respiratory symptoms or functional impairment and does not predispose to tuberculo- Breathe easy sis. However, what insurers and employers need to be fully aware of is that exposure to silica or asbes- tos is not uncommon in many jobs that involve exposure to iron, and may give rise to mixed dust Neil Hackett advises how brokers and found in occupations such as quarrying, coal fibrosis (siderosilicosis) or to asbestos, with their mining, the pottery industry and in foundries. associated morbidity. can assist in the handling of long- Chronic (active) silicosis was a disease once wide- Finally, byssinosis is a form of chronic bronchitis tail liability claims for lung diseases spread in industrial countries and was common in (inflammation of the bronchial tubes due to expo- the Staffordshire Potteries. The main problem was sure to cotton dust), which is encountered in cotton such as pneumoconioses the use of silica sand and silica flour to prevent the spinning mills where raw cotton is processed into pots from sticking together or to the stands while cotton yarn. they were being fired. Not only did the dust from Evidence suggests that exposure to cotton dust ong-tail diseases are by definition gradual in applying the silica sand and flour cause silicosis, but does cause loss of lung function in textile workers Loperation, usually arising from cumulative by the time firing was complete the quartz used in as a whole and that a small sub group with byssi- exposure and where there is insidious manifestation making the porcelain was converted to cristobalite nosis develop respiratory problems, which can lead of symptoms. and the workers handling the items after firing were to death. However, it usually takes dust exposure Much of the focus of long-tail liability cases has at even greater risk. of between 20 and 25 years and, fortunately, it is a been on asbestos-related diseases such as pleural condition that has almost disappeared. plaques and mesothelioma. To date, little atten- Disease prevalence While these days pneumoconiosis may not receive tion has been given to pneumoconioses, excluding While it is now relatively uncommon in developed the same attention as other long-tail liability cases asbestos, a group of lung diseases caused by the countries, Garwyn has recently seen cases from the and new claims in the UK tend to be low, employ- inhalation of certain dust types. Though small in quarrying and stone mason sectors and in industries ers must ensure they comply with statutory and number, these cases need to be handled as expedi- where certain chemical compounds have been used common law duty to reduce the risk of exposure. ently as any other type of long-tail claim. This is containing silica. It’s vital therefore that employ- Again, this is where risk management expertise from where brokers can play a key role, adding value for ers, brokers and insurers remain aware of the risk brokers and insurers can help. Aside from specific insurers and policyholders. – indeed in developing countries the disease is still a legislation, such as Mines and Quarries Act, that may The Industrial Disease Claims Working Party, major problem. be applicable in certain silicosis claims, there are the of which Garwyn is a member, has created a Siderosis or ‘welders’ lung’ is due to exposure to Workplace (Health, Safety and Welfare) Regulations, framework to encourage speedy, pragmatic claims iron dust or iron oxide fumes. It is believed by some Personal Protective Equipment at Work Regulations handling among insurers, taking account of legal that the iron oxide does not cause a fibrous reaction and, perhaps most relevant, Control of Substances principles. Key to this is the provision of employers’ and may be Hazardous to Health Regulations. Compliance is liability (EL) insurance history – step in the broker. described critical not just for the health of employees but the They can provide valuable assistance in ensuring financial health of the business. such records are maintained and available When a claim does arise, the framework guidelines when claims arise. created by The Industrial Disease Claims Working Of course it helps to have some appre- Party suggest that where there is a single defendant, ciation of which industries are more the last insurer on risk for the period of culpable prone to produce long-tail pneumo- exposure should handle the claim, but with an coniosis claims. option for insurers with a greater interest to take Coal workers pneumoconiosis over this role. While for multiple defendants, the is well known, but less familiar is last insurer on risk during the culpable period for silicosis, siderosis and byssinosis. each should handle the claim for that defendant In 2008, 85 cases of silicosis and a coordinating role should be adopted by were assessed under the Indus- defendant insurers with the greatest interest. trial Injury Disablement Benefits Clearly, for claims to be dealt with by the Scheme. The numbers may appear relevant insurer, defendant employers need a small but this may not be the total detailed EL insurance history. This comes back picture of those affected by the to how brokers can provide valuable assistance in long-term physical and financial cost making records available and in ensuring no gaps of these conditions. in cover arise. Most of the serious disease claims If a full insurance history is available when such involve some form of damage to the lungs. claims are received they can be directed to the rel- A reduction in lung function tends to have evant coordinating insurers that will in turn notify serious effects on all parts of the body and may other insurers of their potential interest. The expedi- eventually cause death. The common feature of tious handling of meritorious claims has got to be pneumoconioses is that the dust inhaled has toxic as a benign the desired end result for all parties concerned and properties and causes dust reticulation. condition. It is often brokers can play a key part in this process. ■ The body has various defence mechanisations to called ‘welders’ lung’, because the heat of the welding help combat the harm caused by the inhalation of arc causes minute particles of iron oxide to disperse Neil Hackett is disease and illness manager at dusts or other foreign material. However, some into the air. ‘Welders’ lung’ may be complicated Garwyn Group foreign bodies, particularly those with a very small by exposure to fumes from other metals such as diameter, penetrate the defensive systems and this zinc-coated steels, or where welders are working in For the latest liability news gradually impairs the lung’s capacity. confined spaces. Fortunately, the claims are also rare www.broking.co.uk/tag/liability Silicosis is caused by the inhalation of free silica but that’s no reason for complacency. www.broking.co.uk September 2010 Insurance Age 39 Insurers’ PPI responsibility Accepting responsibility

Against the backdrop of the recent FSCS levy increases, Martin Friel l in particular, a firm asks what responsibility insurers have for making sure products sold should decide whether it is a product where customers would be wise to on their behalf are done so properly seek advice; l should review how what is occurring in practice corresponds to what was originally planned or he final bill for the payment protection insur- – that’s purely for PPI complaints and when you envisaged for the distribution of its products or Tance (PPI) mis-selling scandal could reach £3bn. haven’t actually been selling the stuff – never mind services given the target market. This involves That’s not a misprint – it could actually hit £3bn. mis-selling it – that is a considerable figure indeed. collecting and analysing appropriate management At least that’s the estimate provided by the Financial And one that is difficult to swallow. information such that the firm can detect patterns Services Authority (FSA) as it introduces new meas- So brokers have, quite understandably, been look- in distribution as compared with the planned tar- ures to ensure firms sell PPI in an appropriate way. ing for someone to blame and help in equal measure. get market, and can assess the performance of the Now all this cost isn’t going to rest on brokers’ The blame bit isn’t so hard. The regulator claims that distribution channels through which its products shoulders (it’s mainly to do with complaint redress the cost so far of PPI complaints can be largely attrib- or services are being distributed; and implementing the new measures) but there is still uted to five loan firms: Picture Financial Services, Aps l should act when it has concerns, for example by plenty of pain ahead for general insurance brokers. Mortgages (UK), Loanmakers, Twopart and Dean ceasing to use a particular distribution channel. The market has been up in arms about the cost of House Financial Services. Ever heard of them? Didn’t It would seem clear that, judging by the level of the Financial Services Compensation Scheme (FSCS) think so but you’re paying for them. complaints that PPI has generated, the majority levy this year (£61m) with some brokers of insurers did not comply with the above. One seeing eight-fold increases in their annual insurer that was willing to give its views on this was contribution. The bad news is that this is Rather than talking about bailing Axa. Claims director at the insurer, David Williams, just the beginning. The regulator predicts out we should be talking about openly admits that insurers have a responsibility there will be 550,000 PPI-related com- for the way their products are sold contradicting plaints every year for the next five years securing change. Clearly, the the ABI’s rigid approach. In order to protect itself and it calculates that each complaint costs from the worst exposures of PPI, Axa has taken the between £900 and £1,800. So a quick cal- process is wrong claims-handling process in-house, which allows it to culation tells us that the cost of predicted David Williams better track what is going on at the point of distri- complaints is going to top the £500m bution and identify any worrying trends. mark, at a conservative estimate, every year for the That five firms can cause so much damage to the “We as a company are more protective of our brand next five years. public and financial services is astonishing but a key values than any other company would be. The people Now the whole point of the FSCS is that the levy point is that they were not underwriting PPI them- we employ know what Axa stands for,” he says. it draws from the market compensates customers selves. They were selling on behalf of insurers, as all He has a lot of sympathy for brokers – “no busi- who have been wronged by firms that are no longer intermediaries do. So the big question at the moment ness should have to contend with these kinds of trading. As you all know, with every complaint is what role insurers have in all this? And perhaps increases. They are not rational or reasonable” – but received by the Ombudsman there is a financial cost more importantly, what responsibility do insurers he is unsure as to what the answer is. He says it’s for the firm that has had a complaint lodged against have for the way in which their products are sold? pretty clear something is wrong with the way the it. If we are looking at more than half a million com- The Association of British Insurers (ABI) has made levy is administered but says the idea of insurers bail- plaints a year, then that, it could be argued, is a lot it clear to Insurance Age that they see no moral ing brokers out isn’t going to solve the problem. of PPI providers possibly going out of business and, responsibility for their members to control or influ- “Rather than talking about bailing out we should by extension, a lot of compensation being provided ence how their products are sold. A spokeswoman be talking about securing change. Clearly, the proc- by the FSCS. for the organisation said: “It’s the regulator’s job ess is wrong so let’s work with broking organisations Now before you top yourself over these night- to ensure the firms that are selling the products are to raise awareness to see if something can be done. mare scenarios, the FSA predicts that the final cost compliant and, obviously, insurance companies are It’s just not right,” he says firmly. borne by general insurance intermediaries not responsible for regulating agents.” It may not be the bailout that brokers are looking over the next five years will be around However, a quick for but at least there is support. Mr Williams’ argu- £40m. But that doesn’t include check of the FSA ment is that if the regulator sees an entire industry any other compensation costs rulebook seems to putting its weight behind a push for change, it may contradict this. It points out to provid- just realise that something is very, very wrong. But as ers that when selecting distribution for brokers being able to avoid the levy, don’t hold channels, principles two, six and seven your breath and, to make matters worse, it doesn’t are “particularly relevant”: look like it’s going to go away any time soon. n

To see interview with David Williams www.broking.co.uk/insurance-age/news/1727381/video-axa-md-weight-brokers-levy-fight

40 Insurance Age September 2010 www.broking.co.uk Accurate risk pricing

necessity. We would not invest £75,000 in a passing fad and others will soon have to realise the way the market is heading,” says Mr Walker. “Currently, Homeprotect is unique but there are On the other really sophisticated pricing models like Kwik Fit’s already out there. In commercial lines, the big opportunity area is in the small to medium-sized enterprise (SME) market – this is the area that is under a lot of scrutiny from insurers at the moment. nose Now the market is far more advanced and with the birth of comparison sites, it is even more important for insurers to get the price right.” Chief actuary for Assurant Solutions European Businesses, Kyle Lawlor, says if the industry is to look to technology to help it price risks accurately then carefully crafted question sets aren’t enough as “there is a need for information”. “In some cases, when you don’t have accurate data – for instance if it hasn’t been captured in the past – then you cannot rate on that risk. As we move into Insurers are increasingly turning to a need for complex rate offering, even if the technol- technology to help them underwrite ogy is there, it does us no good if the underlying detail is not high quality.” their risks more accurately. Liz Mr Muzio says this is even more important when pricing SME risks: “We need good data, but does McMahon uncovers the key to it actually exist? In personal lines there might be 30 getting the pricing right million households in the UK whose data can be used to price risk. There are only 3-4 million busi- nesses so we are already down by a factor of 10 in terms of data. Households also pose similar kinds of ike it or not, technological advance- calculated individually and not held for a month risk whereas businesses do myriad things. Data is also Lment has forced many facets of – there is a need for speed of change. reliant upon interpretation. One insurer’s set of data the insurance industry to change so why “Certain players have reacted more quickly than could be skewed by one claim of £50,000, making it should underwriting be any different? His- others and it is starting to gain momentum. Using completely different to that of a competitor.” torically, there has been an enigmatic quality technology to price risk is not gimmickry – the Clearly, it pays to adopt a pioneering approach to pricing risk and even industry experts will initial results coming through have shown that it is to data collection and this can involve looking admit they have sometimes been baffled by definitely beneficial.” beyond the traditional customer base. Fortis is one certain insurer’s rates in the past. The manual No one has seen the benefits more clearly than such insurer that has recognised the value of using process of whispering over paper and pens may Avantia, which recently won broking initiative of the the information available via the Building Cost seem cosy to some but continuing to favour this year at the British Insurance Awards for their non- Information Service. Its Notional Rebuilding Cost approach in isolation could ultimately prove to standard property offering, Homeprotect. However, Matrix contains 2.6 million residential rebuilding be a costly mistake. chief executive David Walker is the first to admit cost values covering most houses, bungalows and That’s not to say brokers and insurers should that the success was the result of time, effort and flats. International development and data director, panic and buy the first online proposition to cross faith in the product’s potential. Andrew Thompson, not only believes it is the most their path – but they do need to stop, look and comprehensive dataset of its kind but that it has the listen. If they do, they might be surprised by what Spotting potential potential to expand further. they see and hear. Mr Walker says the squeeze in personal lines mar- “Could we move beyond residential property? Michael Muzio, underwriting and claims direc- gins was the catalyst for Homeprotect: “We saw an Yes. The industry is very attentive to the possibil- tor at Towergate Partnership, says he has seen an opportunity in non-standard home as it is the least ity of using commercial data. There are various increased blurring in the way personal and commer- technologically developed area with brokers and development areas we can see for our products. cial lines are transacted. underwriters still adopting a manual pad and paper Our building cost information is widely used by “In personal lines, algorithms dictate price and approach to pricing risks such as subsidence, flood- surveyors when they are conducting reassessments there hasn’t been much change – it is very much a ing and convictions.” for commercial re-instatement. We would like to case of ‘computer says yes or no’. However, while Realising a niche is one thing but taking advantage develop tools for the wider insurance sector – the there is still a focus on human interaction with com- of it can be a lengthy process. Avantia had to first principles will be the same,” he adds. mercial lines, at the smaller end we are starting to focus on extending the 5,000 lines of code necessary When using technology to price risk, the secret see the use of computer-generated quoting systems for a standard scheme to 36,000 lines of code needed to getting it right, if there is one, is not necessarily and most software houses are catching on to the to assess a non-standard risk. This initial hurdle took being first to market. That said, there needs to be a potential here,” he says. two years. The next step was to broaden the question balance and anyone who wants to stand out certainly This development certainly has not escaped the set from 25 to 150, but when this was achieved, the shouldn’t be standing still. Good e-trading practice attention of SSP’s divisional director of distribution, development team felt there were simply too many is starting to overlap in the personal and commercial Richard Crocker. He points out that online rating in questions for most consumers. Therefore they created arena and the next two years is bound to see some commercial lines is actually more sophisticated than a system that revealed supplementary question sets as exciting changes. Innovation may require blood, in personal lines as the systems have been developed the risk became increasingly non standard. sweat and tears but it is slowly becoming possible to with the value of hindsight. “Our experience shows using technology to price see how developments, which have impacted niche He explains: “There is a desire for the commercial risk accurately can happen but it is an expensive areas could provide inspiration for how the industry model in personal lines as it allows for rates to be investment. Do I see this as a gimmick? No, it is a steps forward as a whole. n www.broking.co.uk September 2010 Insurance Age 41 SMEs and Government Acurefortheeconomy

Smallbusinessisthebackboneof Small enterprises have the capacity to hire regionally for employing people and major tax breaks on profits and locally in a way that larger organisations cannot. in the first five years, provided there is a certain level theUKeconomy,saysStephen They also have the ability to hire and harness skills. of re-investment. In the short term, tax revenue from Archer, and the Government These skills in small enterprises can create new prod- start-ups may not be bumper but unemployment ucts and services with innovation and speed, which benefits will fall and David Cameron’s big society may needstoencourage,ratherthan are two features that all too often atrophy in larger even start to emerge at the business level. hinder, its growth organisations. Regulation needs to be waived in many areas of Certainly speed is all too rare in big business. business. Local authorities and the Government’s Speed will be a vital component of the ability of the procurement processes are great examples of where ith the coalition Government’s announcement UK economy to compete in the world. With China this can be slashed. The Government’s buying proc- Wof a possible 600,000 public sector job cuts sprouting 15,000 engineering graduates a year and ess militates very strongly against SMEs – it requires and slow growth in the private sector, economists’ having an economy that encourages copying West- many years’ accounts, ISO accreditation, health predictions of a recovery with low job uptake is, ern products (quickly), we have to be smarter and and safety certification, diversity policies and much sadly, looking likely. One thing is clear, the turna- fleet-of-foot. Small enterprise can do this. more. This kills the chance for SMEs to supply the round, recovery, the improvement of the balance of Vince Cable clearly knows this, as do the more Government and serves no-one well – except paper payments and growth will need to come from pri- enlightened members of the Government, but we suppliers. And it is not just the Government that vate sector business. But for private sector growth to need to make enterprise far easier to start. The most makes it tough for small businesses. Big businesses occur, the Government needs to rethink its support obvious area of help is with finance. Banks need to can be equally bound up in a red tape procurement of businesses. This cannot be just lip service, though be far more imaginative and co-operative with enter- process and deter SMEs as suppliers. I shudder to suggest that another quango is created prise. All too often to help this take place. the banks still display There can be no sustainable recovery until the a ‘tick box’ approach The Government’s buying process militates private sector is hiring again and the levels of gross to finance. They are against SMEs – it requires many years’ domestic product (GDP) deriving from the absurdly risk averse. state falls from its current high of 44% to They make entrepre- accounts, ISO accreditation, health and under 35%. In the medium term this neurs go through all may mean low level GDP growth, the hoops and then safety certification and diversity policies but so long as this is accompa- take a charge on their nied by the shift from state to house. The banks act is if they are in the risk busi- Employment law needs to be eased for SMEs, private GDP growth, ness, but are actually far from it. too. The rights of employees and the propensity to it should not be Paradoxically, the ‘tick box’ approach diminishes use no-win, no-fee lawyers can be very damaging viewed as a as the investments get bigger. Why? Because big- for small businesses. This deters hiring and has been problem. ger investments are handled by more senior bank a significant factor in the growth of the contrac- The Govern- staff who have more experience and freedom to tor market. Why employ someone when you can ment needs support investment. They also have more scope for contract them and reduce the responsibility to an to encourage risk and get excited about the larger customers and acceptable level? There are many people that love enterprise investments. Banks need to start seeing the small being business owners but too many do not enjoy – for small to enterprise investments as exciting as opposed to a being employers. medium-sized distress service or a chore they have to get through. The rise in employer national insurance contribu- enterprises What does the end game look like? We could do tions must be stopped. This is a cost that SMEs (SME), but far worse than to copy the German economic model, don’t need. The Enterprise Finance Guarantee particularly the which is based on SMEs and scheme should be extended and broadened to small enter- manufacturing. Finance is encourage more enterprise. There should be far prises, which strongly geared to support- stronger local support for enterprise. Business Link are the back- ing SMEs because they are could be more focused in this regard and so too bone of the the backbone of not just the could the Chambers of Commerce. Businesses UK economy, economy but also society. SMEs should be the heroes of the land since they will be employing as provide employment at a local level, the employers and the social glue in many areas. they do 52% which means far less regional unem- Finally, we need a rather more real Dragons’ Den of the UK ployment ‘black spots’ in Germany. or Apprentice to be seen by the public. These pro- workforce. In the UK, the employment picture is far grammes really distort reality. Business must be seen too polarised to the South and away from as attractive, fun, worthwhile, rewarding and com- regions such as the North East and Northern munity building. We live in a free market economy. Ireland. There is no reason why this picture Let’s make it a lot freer – and fast. ■ has to prevail. It is not just regional devel- opment agencies that can make the change. Stephen Archer is director of Spring Partnerships Wales is a good example – why can’t the same be done in the northeast or even in Stephen Archer will advise how to find opportuni- counties such as Suffolk? ties in the era of austerity at this year’s Broker Expo Business founders not only need greater enterprise www.brokerexpo.co.uk investment support but also tax breaks. Tax breaks

42 Insurance Age September 2010 www.broking.co.uk Inspiring “A wise man will make more opportunities than he finds” Francis Bacon

Inspiring

PB Management Event 2010 | 6 October | Marriott Grosvenor Square | London

Insurance broking is evolving rapidly, creating The PB Management Event provides a central a constant stream of new challenges for forum in which to debate these challenges and broker managers. work together to define solutions.

Don’t get left behind. Register today at pb-managementevent.co.uk

For more information about commercial opportunities at this event, please contact: Oli Henry on 020 7316 9071 or email [email protected]

Sponsored by

This event has been accredited by the CII and can be included as part of Underwriting your CII CPD requirement should you consider it relevant to your professional development needs Market moves

A monthly look at who is moving where…

BROKERS Egan to take on the role of group chief Peter Clarke has been taken on as PricewaterhouseCoopers (PwC) has financial officer. Scott will replace Mat- head of property and strategy exposure recruited Tim Edwards to join its Heath Lambert’s London corporate thew Scales who has agreed to remain management, commercial lines by UK insurance group as director. He team has appointed Alan Midson as with the group until Scott joins. Scott Zurich’s UK general insurance division. joins PwC from the Financial Services a sales director. The division, headed joins from Zurich Financial Services, Peter will be responsible for the contin- Authority and has 26 years of experi- by Judy Baker, has recruited Alan from where he has held various roles includ- ued profitable development of Zurich’s ence in the insurance industry. Tim Aon, where for the past four years ing group financial controller and UK £450m property book and joins Zurich will be responsible for assisting clients he developed new business across a chief financial officer of Zurich UK. from Axa Corporate Solutions where he in achieving the requirements of range of vertical markets in the large Prior to joining Zurich in 2007, he held was regional commercial manager for Solvency II. In another change to the corporate arena, both in the UK and numerous positions in Aviva including the UK, Ireland and Scandinavia. Solvency II team, Paul Clarke will be globally. His new role will be predomi- finance director of Norwich Union, UK replacing Mark Batten as chairman of nantly to cultivate new business across general insurance, and managing direc- Torus has expanded its casualty platform the PwC European steering group on all sectors. Commenting on Alan’s tor of RAC Insurance. with the appointment of David Why- Solvency II. Mark will remain active in appointment, Ms Baker said: “I am man as senior vice president, UK head of the insurance market and will continue delighted Alan has joined us at such Sarah Smith has been promoted to casualty, based in London. Reporting to to be involved in Solvency II. PwC has a crucial stage in our development. I operations manager within Allianz’s David Perez, president and chief under- also added four new partners to the want to make sure the London corpo- claims division. Sarah joined Allianz in writing officer of global casualty, David insurance practice – Symon Dawson, rate team can evolve, by offering great 1995 and has held a variety of claims will develop offerings for the London Matt Nichols, Kirsty Ward and David service and products to both existing positions with the division, most recently market. David’s casualty career spans Wong. relationships and prospective clients.” as operations controller. In her new role, over 27 years, all in the London market. Sarah will be accountable for overseeing Prior to Torus, he was a director at Aon, Samantha Ross has joined Assurant Keelan Westall the operational support functions for focusing on excess liability placements Solutions as European compliance has appointed the claims handling centres ensuring for North American domiciled risks. He officer. She will be based in the Wayne Tonge as professionalism, efficiency and a high has also held senior underwriting posi- European headquarters in Windsor. head of business. standard of customer service. tions at Liberty Mutual Insurance Europe Samantha will lead the European com- Wayne brings over and Zurich Specialties. pliance function and advise the board 17 years’ financial Aegis London on regulatory matters across services industry has announced Paul Shires has the region. Samantha joins from experience to the appointment been confirmed as Mercer where she spent the past two Wayne Tonge his new position. of a new specie the new sales and years as regulatory coordinator for Prior to joining team led by Ian marketing director Europe. Prior to that, Samantha was Keelan Westall, he was sales director at Seakens, senior of Westfield Health. an insurance supervisor for retail firms Powerplace where Mr Westhall said he underwriter, Paul was head of at the Financial Services Authority helped grow gross written premium and supported partnerships at (FSA) for two and a half years. Before from £1.3m to £14.1m in the first year. Ian Seakens by Ian Morton, Cigna for six years joining the FSA, Samantha spent four He held the same position at Towergate underwriter. Re- Paul Shires and was responsi- years at PricewaterhouseCoopers from October 2007 to December 2008. porting to John Chambers, deputy ble for corporate working out of London and Sydney, Wayne will be responsible for driving active underwriter and head of specialty distribution partnerships and commer- Australia. sales for both Keelan Westall and its let lines, the team will be responsible for cial management of private hospitals property insurance scheme Biba Let. building a portfolio of specie business, and other related service providers. Cega has strengthened its personal His remit will also cover underwriting, including jewellers’block, fine arts, gen- Prior to this, he spent 13 years working accident (PA) claims team with the marketing and operations. eral specie and motor material damage for Barclays Bank, where he started as a appointment of three new personal and theft. Both underwriters join from financial adviser. Paul’s first management accident claims specialists. Among the Richard Croucher, former head of mar- Broadgate Syndicate where Ian Seakens position was for Barclays’Private Client new recruits, and heading Cega’s PA keting at Broker Network, has joined was underwriting manager with respon- division where he managed a team of team, is Heather Jacobs, whose previ- Cobra as group marketing manager. sibility for three portfolios of business: private bankers and financial advisers. ous roles have included team leader In addition to the five and half years theft, bloodstock and livestock, and for the schools personal accident Richard spent at Broker Network, he has property schemes and Ian Morton was OTHERS department at HSBC and personal previously worked in senior marketing underwriter, property special risks. accident technical claims controller and development roles for Aon, Allianz, Powerplace has appointed Darren for Groupama. The latter involved Aviva and UKI. Richard will be respon- GCube has appointed Natasha Brown Rowe as sales director. Darren will lead high-value claims such as profes- sible for all marketing across the Cobra as head of liability and Jamie Flem- the 36-strong Powerplace field force sional sports injuries and reinsurance. Group. Commenting on the appoint- ing as new business development including the three regional manag- Also joining the PA team are Sarah ment, Steve Burrows, chief executive executive. Natasha previously worked ers as well as business consultants and Mahoney and Amy Lawrence,who, officer, said: “This is a new position, within the international liability and US business development managers. Pow- between them, have more than 14 which reflects the strength of the Cobra casualty division at Aegis, Natasha will erplace chief executive, Matthew Reed, years’ experience with Aviva. Group and the exciting stage we are at develop GCube’s liability practice. Prior commented: “It’s no secret that I’ve set in our development.” to this, Natasha spent time working some ambitious targets for the business If you have any new appointments for Endurance worldwide and Zurich. to achieve over the next couple of years. for the market moves page, please INSURERS Jamie Fleming joins from HDI-Gerling Making brokers aware of the full poten- email them to Liz McMahon at: where he was responsible for competi- tial of Powerplace is fundamental to [email protected]. Subject to approval from its board, Brit tor analysis and market research into ensuring we reach our goals and Darren All images must be print quality Insurance Holdings has selected Scott the renewable energy market. is just the man to lead the charge.” JPEGs and 300dpi

44 Insurance Age September 2010 www.broking.co.uk biggerTake a look at the TFP Multi Vehicle scheme Working solely through a network of intermediaries across the UK, TFP Schemes has built an excellent reputation as one of the leading wholesale insurers in the market.

The TFP Multi Vehicle scheme provides named driver policies for: - Taxi - MPV - Minibus - London Mini Cabs - London Hackney Cabs

The TFP Schemes product range • TFP Taxi Fleet • TFP Taxi • TFP Liability TFP Multi Vehicle...simply • TFP Executive • TFP Funeral Homes streets ahead WINNER • TFP Minibus To find out more about TFP Multi Vehicle contact • TFP Truck our broker helpline. • TFP Special Types Tel:029 20 30 10 30 All TFP Schemes products are underwritten by Aviva Authorised and Regulated by the Financial Services Authority www.tfpschemes.co.uk Classified Policy Gold

Leisure & Entertainment Risks

UKF, as an IHL Group company, has direct access to Lloyd’s and exclusive in-house Underwriters

• Amusement Arcades • Late Licence Bars • Nightclubs No.1 in the handling and disposing of motor vehicles • Snooker Clubs The handling and disposing of motor vehicle salvage is a constant drain on financial • Sports & Social and administrative resources. HBC reduce this by providing an unrivalled service. We are prompt, efficient and fully in accordance with current industry guidelines and Clubs environmental legislation. We also require only minimum administration to collect and dispose of your vehicle salvage. For a quotation, contact Albert Robinson on 01204 372553 or With continued investment and systems development we are able to set the email [email protected] standards that others struggle to achieve. We are the safest hands in salvage. Opening the doors of Opportunity www.hbc.co.uk T: 01268 696444 U K Facilities Ltd is authorised and regulated by the Financial Services Authority No. 306675 Registered in England & Wales No. 2306227 Registered Office 63 St Mary Axe, London EC3A 8AA Fax: 01268 510087 Email: [email protected] BRITISH VEHICLE HBC Vehicle Services, HBC House, Charfleets Road, Canvey Island, Essex SS8 0PQ SALVAGE FEDERATION

The site boasts: – 15 year combined archive – Regular broadcasts such as‘What the papers say’and‘An audience with’ – Digital edition of Insurance Age and PB – Polls and competitions – Weekly blogs – Exclusive reader offers – Access to the Broker Forum

Powered by: At the heart of the broking community

46 Insurance Age September 2010 www.broking.co.uk Policy Gold Classified

Professional Insurance Cover from the Professionals

Equestrian Rural Taxi Funeral Directors Executive Car Overseas

• Horses • Suitable for rural areas only • Premises • Wedding Cars & Limousines • Motor, homes & pets • Horseboxes & Horse Trailers • Competitive Premiums • Vehicle Fleets • High value cars • Available for Spain & Portugal • Riding Schools • Cover options • Breakdown for hearses & limos • Competitive premiums • Local claims service • Liability • Operators Liability Cover • Brokers to the National • Cover options • Competitive Premiums • & much more • & much more Association of Funeral Directors • Operators Liability Cover • & much more Call Call Call Call Call 0845 450 0736 0845 450 0649 0845 450 0648 0845 450 0647 0845 450 9376

 Generous Commission  Free help & advice  Award winning customer care  Experienced niche market brokers  Competitive rates  & much more

Equestrian Underwriting Agencies is a trading name of South Essex Insurance Brokers Ltd. South Essex Insurance Brokers Ltd. are authorised and regulated by the Financial Services Authority. 000791

PROMOTIONAL CAPS & CLOTHING

P C6699 FROM R ONLY GREAT C6701 Your logo, your BUY £2.65 I FROM message on a Wide N £11.95 Range of Products for Conferences, T CHILDRENS Meetings, SIZES E AVAILABLE Golf Days, D Fund Raising, EMBROIDERED CAPS Price FRUIT OF THE LOOM & Events, GILDAN 12000 SWEATSHIRT REGATTA THOR FLLEECE includes multi-colour embroidery HEAVYWEIGHT WHITE T-SHIRTS Ladies Nights, W Heavyweight sweatshirt, set-in 100% polyester in navy, royal, C6699 9 colour combinations 180gms white cotton. Price Award Ceremonies, sleeve 19 colours & white. Price for red, slate grey, bottle green and Prices from £2.25 each. includes durable transfer printing I 1 colour print, full colour badge/logo black. Price includes multi-colour C6701 11 colour combinations. in 1 to full colour in 1 position Give-Aways, & print or embroidery from £7.45 ea. embroidery from £11.95 each. Prices from £1.95 each. from £2.65 each. Souvenirs T NO HIDDEN EXTRAS! HVV2 HVV4 H Polo shirts in FREE DESIGN SERVICE! a wide variety Delivery of printed items of colours. usually within 14/21 days charge. Y Just add ONE £35 charge O and our Catalogue/Online prices fully include U designing printing/ processing your message R as specified on your chosen items & delivery UK for any KUSTOM KIT TEAM JACKET number of different products PROMO BASEBALL CAPS Lightweight 2 tone jacket with ordered at the same time M White cotton with pop-it size HI VIS JACKETS cotton jersey lining. Black or royal COTTON PIQUE POLOS 230gms. adjusters and blue, red or green Knitted polyester with velcro blue with red collar or navy with 100% cotton polo shirts. Sizes S-XL. - TALK TO US ABOUT E buttons and peaks. Price includes closure including 1 colour print. yellow collar. Concealed hood and Prices including printing from £5.95 YOUR SPECIAL multi-colour transfer print on the HVV2 Vest from £2.95 each. 2 front zip pockets. Price includes 1 each. Multi-coloured mbroidery with REQUIREMENTS - S front from £1.50 each. HVV4 jacket from £4.55 each. colour print - from £12.45 each. 7000 stitch design from £7.25 each. Our catalogue of S VI 1000s of other Gift Ideas EW O will be rushed to you A N & EMC ADVERTISING GIFTS Tel: 0845 345 1064 L B on request. IN UY G Derwent House • 1064 High Road • Whetstone • London N20 0YY E E Fax: 0845 345 1065 E-Mail: [email protected] Web: www.emcadgifts.co.uk CLOTH 1.09

www.broking.co.uk September 2010 Insurance Age 47 Classified Policy Portfolio

How can a young offender Cleaning Contractors Computers avoid becoming an older offender?

Join leaders from the insurance industry to help young people overcome barriers and get their lives working.

Switchboard:0844 5762303 Fax:0844 5762321 Email: [email protected] [email protected]

princes-trust.org.uk/insurance Burnett & Associates Ltd 19 St Thomas Street, Ryde, Isle of Wight, PO33 2DL

The Prince’s Trust is a registered charity, number 1079675, incorporated by Royal Charter. Authorised and Regulated by the Financial Services Authority

Alarm Companies Alarm Companies cont’d Caravan & Chalet Parks Cleaning Contractors Catering Liability

The Catering eXperts...

Suitable for any outside caterer with the option to extend cover to include business equipment and stock cover. Tel: 0845 094 2077

Authorised and Regulated by the Authorised and Regulated by the Financial Services Authority Financial Services Authority www.ceqonline.co.uk

48 Insurance Age September 2010 www.broking.co.uk Policy Portfolio Classified

Catering Trailer Caravan Static Park Homes Credit Hire Electrical Contractors Events

Introducing When it comes to The CX CARAVAN insuring events, you Catering STATIC can’t afford to do this… eXperts... Event Assured is designed to be the best on the market, and is now the best on the web too.

If you want the best cover, with quality Cover also available for underwriters park homes and you want to work with a team FREE 25% personal of experienced contents cover insurance professionals, the New for old - up to 5 years choice is clear: Legal cover included automatically Cover for mobile and Main residence acceptable fixed catering trailers with 10% discount Dry cleaners / Laundry including portacabins Your event, our risk with the option to extend 20% BROKER cover to include business COMMISSION LAUNDRETTE & ¥ +44(0)1376 330624 interruption, stock and home: money cover. For information on DRY CLEANING www.event-assured.com Tel: 0845 094 2077 CX Caravan call INSURANCE BUREAU event insurance: 0845 094 2077 or visit www.ceqonline.co.uk www.event-insurance-online.com Wider Cover exhibitor insurance: www.ceqonline.co.uk www.exhibitor-insurance-online.com

Catering Van Caravan Touring Lower Rates Electrical Contractors Fire Extinguisher Introducing Lloyds & BIA The CX CARAVAN Catering TOURING Tel 020 8202 4474 eXperts... Fax 020 8202 1943 [email protected]

Up to 50% discount FREE 25% personal contents cover To Advertise Awning cover included Imported caravans in acceptable Caravan length 8 metres Insurance Covered if unattended whilst attached to the Age please towing vehicle - no wheel Exclusive scheme clamp or hitch lock required call covering Ice Cream Vans, Hot Food 20% BROKER COMMISSION Oliver on Vans & Mobile Shops. For information on 020 7316 Tel: 0845 094 2077 CX Caravan call 0845 094 2077 or visit 9405 www.ceqonline.co.uk

Authorised and Regulated by the www.ceqonline.co.uk Financial Services Authority www.broking.co.uk September 2010 Insurance Age 49 Classified Policy Portfolio

Fleet Household Let Properties Nightclubs P/.I Inurance

LET LINE PROPERTY TRIDENT OWNERS SCHEME Excellent Residential Property Owners Package for Student/Professional/DSS/ Asylum Seeker/Let Properties Professional Indemnity Insurance For For ON-LINE QUOTES visit us at Computer Consultants www.rawlinsinsurance.co.uk/let-line SPECIALISTS IN Burnett & AssociatesLtd Plc are a specialist Wide cover and competitively priced Broker within the Computer Industry and Large portfolios welcomed provide Professional Indemnity Insurance for DISTRESSED RISKS & clients within the IT industry, inc IT Consultants, Web Designers and Telecommunications. HIGH NET WORTH We can also assist with other types of businesses including Management Underwritten by Aviva Insurance Consultants, Media, Recruitment and Accountancies amongst many more. Visit us at Call Us Very Competitive Premiums www.trident-insurance.co.uk 01782 753000 Generous Brokerage 01782 753001 Please contact us on Telephone:Switchboard: FaxFax: [email protected] Email: [email protected] 5762303 442227 :084402380 5762321 442210 Email:Email:[email protected]@[email protected], www.rawlinsinsurance.co.uk [email protected]@burnett.co.uk Immediate cover and fast response BurnettBurnett & Associates Ltd Plc Authorised & Regulated by The Financial 19 St Thomas Street, Ryde, Isle of Wight, PO33 2DL Services Authority # 311460 39-41 Victoria Road, Woolstone, Southampton SO19 9DY All sub-broking provided for www.burnett.co.uk

Immediate facilities available Let Properties

Call for details and a TOBA

Frank Pace 0800 038 9000 Email: frank [email protected] Authorised and Regulated by the Financial Services Authority

Gifts Let Properties Nursing, Residential & Rest Homes To Advertise in Insurance Age please call To Advertise Oliver on in 020 7316 Insurance 9405 Age please call Oliver on 020 7316 9405

Authorised and Regulated by the Authorised and Regulated by the Financial Services Authority Financial Services Authority

50 Insurance Age September 2010 www.broking.co.uk Policy Portfolio Classified

P/.I Inurance Security Self Drive Hire Tour operators Unoccupied Properties

Specialist Schemes available for Self Drive Hire I • CLASSIC CARS P 4u • COMPANY SCHEMES Your Professional Indemnity Partner • HIGH

Authorised and regulated by the www.pi4u.co.uk Financial Services Authority PERFORMANCE To become a pi4u partner and Performance • EXECUTIVE earnupto20% brokerage via INSURANCE • LEGAL PROTECTION A member of Mayfair Insurance your pi4u on-line system & Mortgage Consultants Limited please contact us:

t: 01903 815111 0870 062 7613 Calls may be monitored for training purposes f: 01903 815123 E-Mail: [email protected] www.performanceinsurance.co.uk e: [email protected] w: www.pi4u.co.uk Student Let ON LINE QUOTE

Recruitment / Employment Agencies / Consultants

Authorised and Regulated by the Authorised and Regulated by the Financial Services Authority Financial Services Authority

Security Tree Surgeons

To Advertise in Insurance Age Please please call Oliver on 020 mention 7316 9405 Insurance

Age when Unoccupied Properties responding Authorised and Regulated by the Financial Services Authority to these To Advertise in adverts Insurance Age please call Oliver on 020 7316 9405 Authorised and Regulated by the Authorised and Regulated by the Financial Services Authority Financial Services Authority www.broking.co.uk September 2010 Insurance Age 51 News review

News review: August Polly C Axa Insurance customer crunch to cut back on costs. into the build-up of claims [email protected] experience director, Paul Joe Plumeri, chairman and worth £104,000 over a four- Meehan, expressed interest in chief executive of Willis Group year period. Family members filling the senior management Holdings, recently informed Nadeem Dad and Amer Dad vacancy in the company’s com- staff globally that annual sal- were both sentenced to 15 mercial division. The opening ary reviews will recommence months’ imprisonment. exists due to the departure of at the next financial year. A commercial managing director spokeswoman for Willis: “We’re Aggregators claimed the THE HOTTEST INSURANCE GOSSIP Ant Middle, who takes over pleased that Willis will resume success of their model in as Aviva’s head of strategic its normal practice of annual the motor insurance market partnerships in December. Mr salary reviews in April 2011. Our will be replicated in other healthy dose of irony is good for the soul and Polly found Meehan has been in his cur- people continue to work hard personal lines. Gocompare Aher fix in Zurich’s misfortunes this month. Believe it or not, rent position for two years and through the economic crisis and Comparethemarket have her role at Insurance Age extends further than merely swanning his contract is up for renewal and soft insurance market to predicted an increase in the around, looking stunning and charming, as she mingles with this month (September). Mr deliver solid results and com- use of price comparison sites, terribly important people at parties. Sometimes she actually has Meehan told Insurance Age’s pete vigorously in the market.” particularly in the household to do some work. When the Financial Services Authority an- sister title Post that the role sector. The claims follow nounced Zurich UK’s whopping £2.3m fine, imposed for los- appealed to him as it would NMJ Insurance Brokers research published by Deloitte ing a back-up tape of customer data in South Africa, Polly just place him at the heart of Axa’s bought Derbyshire-based last week, which found two in so happened to be leafing through some of the latest products broker business. Protheroe Insurance for an five consumers had purchased on the market. Lo and behold, she saw that that her friends at undisclosed fee. The deal for a non-life policy through an Zurich had recently launched a product to cover data security Crawford & Company the Belper-based company fol- aggregator in the past 12 risks. Oops. revamped its fraud investiga- lowed the acquisition of Ridge months, with 44% using sites to tion process in a bid to further Insurance in January 2010. It buy home contents policies. improve its detection rate after was acquired from Brian Mil- es Polly went gaga for the World Cup and what a waste of new figures revealed it gener- ward who is retiring from the Confused surrendered top Ytime that was. Still, she was left with a more than a mild ated a 45% increase in fraud business. Nick Potts, director spot in the aggregator market interest in watching athletic men get all hot under the collar savings for customers com- at NMJ Insurance, said: “We and admitted that its most and she has since found rugby to be a more than a fitting sub- pared with last year. The firm are delighted to have acquired recent TV advertising cam- stitute. She might not understand the rules, but hey the muscles claimed it helped save custom- Protheroe Insurance which has paign was “unsuccessful”.In are bigger and there’s more physical contact. Polly is the peren- ers £22m for claims worth up an excellent local reputation.” the first half of 2010 revenue at nial champion of the underdog and loves the drama of a David to £100,000, equating to an £18 Confused reduced by around and Goliath moment. Therefore she couldn’t help but feel a bit return for every £1 spent inves- Broker Network broke 10% to £36.6m (from £40.2m smug for the ULR Samurai Internationals when they beat Avi- tigating a claim. Crawford vice through the 700-member mark in the first half of 2009), while va’s Premier side London Irish 15-12 in the Middlesex Charity president, counter-fraud solu- after adding more than 50 pre-tax profit fell by around Sevens final. tions, Bobby Gracey, said: “The intermediaries to its proposi- 20% to £8.8m. Parent company old argument is that investigat- tion in the first half of 2010. Admiral said: “Success in price ing fraud is too expensive, but The Towergate-owned busi- comparison depends heavily lthough perhaps not as smug as when she learned of Aviva’s our statistics suggest that it is ness now has 741 members, on marketing. Confused moved Aslipshod PR attempt to push bike insurance. The campaign, not the case when you look at it with 483 being part of the from being the leading price conducted by Red Consultancy, involved creating bike ‘honey holistically and not in isolation.” Countrywide offering and a comparison site for car insur- traps’ in the top five hotspots for theft in London. The bikes were further 258 under the Broker ance (by market share) in 2009 checked every half hour but when it got to day two an unlocked Marsh and Mercer Network umbrella. The new to being second in H1 2010.” bike outside Euston station and one insecurely locked outside an announced the consolidation members will bring £80m in office block had failed to lure any thieves so there was no choice of their Manchester operations gross written premium to the Jardine Lloyd Thompson but to abandon ship. The PRs had better luck in Fulham where into one location. The firms, division. The network claimed pledged to invest in its Asian two unlocked bikes were nicked, one after just 20mins. Red Con- both part of professional serv- that five of the new brokers operations after posting strong sultancy said its exploits showed the need for bikes to be appro- ices firm Marsh and McLennan defected from UKGI, while two international growth in its priately secured. Polly wonders whether that’s what Aviva had Companies, signed a 10-year have joined from both Cobra half-year financials. The inter- paid them to show though. lease to occupy office space in and TEn, and one from Ink’s mediary announced revenues city centre development Bel- new network Westinsure. of £377.8m for the first half vedere House in Booth Street. of 2010 — a 21% rise on the olly was tickled to learn that ‘Mr Loophole’, who also goes Marsh and Mercer’s Man- The imprisonment of two £313m for H1 2009 — and Pby the name of Nick Freeman, found himself £5,000 out of chester operations had been men for trying to defraud underlying profit of £70.7m pocket after failing to read the small print on his pet insurance spread across three locations. insurance companies for (H1 2009: £57.8m) aided by policy. Mr Freeman earned his title for being notoriously ‘slippy’ Approximately 400 employees household claims worth more the performance of its Asian, after representing the likes of cricketer Andrew Flintoff, golf pro will be housed on three floors than £100,000 was described Latin American and Aus- Colin Montgomerie and model Caprice. However, he clearly at Belvedere House by the end as the industry’s first significant tralasian retail divisions. JLT’s slipped up when he forked out for poorly pooch Rocco’s tests at of July 2011. conviction for household fraud. Latin American arm produced his holiday home in the South of France. When he tried to claim The Insurance Fraud Bureau growth of 42% adjusted for the vet fees back, he discovered that the terms and conditions Willis reintroduced annual and Lancashire Constabulary’s exchange rate, while Asia grew clearly stated that he was required to inform his insurer before salary reviews following a two- Operation Flash concluded at by 12%. Australasia posted 2% taking Rocco abroad and pay a £100 excess. Five year-old Rocco year pay freeze implemented Preston Crown Court, follow- growth and produced a trad- had a suspected parasite but it is Mr Freeman who has so far failed at the height of the credit ing a two-year investigation ing profit of £17.5m. to worm his way out of footing the bill.

52 Insurance Age September 2010 www.broking.co.uk www.broking.co.uk AOP Digital Business Publisher of the Year 2010 September 2010

Serving the broker community for over 30 years EXPO EXPO READ ALL ABOUT IT!

Broker Expo is the must attend networking event for UK insurance brokers, showcasing almost 100 exhibitors alongside an exciting programmeofexpert-ledworkshops and one-to-one business clinics.

Register today to apply for your place – www.brokerexpo.co.uk/visiting The event where brokers do business

Workshop Programme This year’s workshop programme has been built in line with the business Alan Fairweather critical issues facing the UK insurance broking community. Cutting edge sales growth expert sessions focusing on best practice for marketing, regulation, and practical advice for the sales process will help prepare you for the challenges ahead.

Expert speakers:

Neil Johnson and Mark Huxley founders, Lamb Creative Marketing Branko Bjelobaba regulation & compliance consultant, Branko Ltd

Stephen Archer director, Spring Partnerships

Broker Clinics For the first time, Broker Expo will be running “Broker Clinics” - a chance to meet industry experts for a one-to-one consultation to assist you in developing your business. Clinic appointments can be booked online - reserve a place with one of our experts today!

Broker Clinics will be run by:

Tom Wood - managing partner, Foolproof Clare and Mark Ryder - directors, Salient Solutions Topic: Website Usability Topic: Start-up Businesses

Steve White - head of compliance and training, Mike Berry - digital marketing expert British Insurance Brokers’ Association Topic: Social Media - using Linkedin, Facebook and Topic: Regulation Twitter to market your business

Register today to apply for your place – www.brokerexpo.co.uk/visiting Networking Networking is essential to Broker Expo, and a crucial part of your time at the event. Take advantage of this opportunity to meet new contacts, strengthen existing business relationships and meet with friends and colleagues old and new.

Broker Expo provides the perfect networking environment – whether you choose to make use of the spaciousAPCBusinessZone,enjoyamoreinformal Connect to Broker Expo at setting over the complimentary lunch, or take the www.linkedin.com chancetodiscusstheindustry’shottopicswithexperts

during our varied workshops and clinics. TM

But don’t limit your networking opportunities to one day! Join Broker Expo on Linkedin and Twitter to get a head Follow the Insurance Age team - start on the discussions that are shaping the industry. @BrokingLiz and @BrokingLou

We are pleased to announce that this year’s event has been accredited by the CII and can be included as part of your CII CPD requirement should you consider it relevant to your professional development needs.

Register today to apply for your place – www.brokerexpo.co.uk/visiting The event where brokers do business

Broker Clinics to feature at this year’s Expo

Have you got a question you’d like to discuss in private? Broker Expo is excited to introduce Broker Clinics, a brand new feature to this year’s event, and your opportunityforaone-to-one20minuteconsultation with an expert in either start-ups, regulation, website usability or social media. Fortis headlines Broker Expo Find out more and apply for your place online: Fortis is delighted www.brokerexpo.co.uk/visiting to be the headline sponsor of this year’s Broker Expo, providing an excellent opportunity to meet with brokers and find solutions to meet their needs. Speaker spotlight: Alan Fairweather Fortis has recently announced that it will shortly be As an international speaker, best selling author introducing its new name ‘Ageas’, replacing the Fortis and sales growth expert, Alan will be applying his brand name and reflecting the company’s position as a knowledge to help grow your broking business. Alan’s stand alone international insurance group, following the strengthsasaspeakerandseminarleaderlieinhis disposal of Fortis’ banking assets in 2009. depth of knowledge across business sectors coupled with energy, enthusiasm and sensitivity to participant Look out for the new name in insurance coming soon! needs. He is also conscious of the need to satisfy theclientorganisation’sbusinessobjectives–and will be presenting practical tips to improve your sales processes in this insightful workshop session. We are pleased to announce that this year’s event has been accredited by the CII and can be included as part of your CII CPD requirement should you consider it relevant to your professional development needs.

Hosted by Organised by

Register today to apply for your place – www.brokerexpo.co.uk/visiting