The Journal CII - Oct/Nov 2019

thejournal.cii.co.uk October – November 2019

Going nowhere Counting the cost of recent travel disruption

Autopilot How will driverless cars impact claims?

Senior moments How to get up to speed ahead of SM&CR

CHIP OFF THE NEW BLOCK Examining the ethics of artificial intelligence

01_Cover_Oct-Nov 2019_Cll The Journal 1

25/10/2019 09:17

The people you meet and the contacts you make locally help you as you develop your career.

The CII’s network of 56 local Institutes are an invaluable constant through your working life.

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

CII.10.2019.002.indd 2

25/10/2019 11:56

OCTOBER - NOVEMBER 2019

C O N T E N TS NEWS 28-30 Autonomous vehicles Anticipating the impact of driverless cars on premiums

5 President’s letter Nick Turner explains why benevolence is a key pillar of trust

32-33 Talk 2 10K A new CII challenge aims to help women take charge of their finances

6 -11 News UK and international news from the CII

36

12-13 Regional news News from the local institutes 21 Regulatory radar The latest legislation updates from the UK and Europe

FEATURES

18-20 Hot topic Examining the cost of catastrophes and disruption

3

STUDY ROOM

14

44-46 Study room: Digital ethics Analysing the FCA’s approach to artificial intelligence

24

49 Q&A The big ten questions to test your knowledge

22 Cyber risk How the market is changing its approach to cyber cover 24-26 Chartered overseas A look at the Chartered journey in Asia and Africa

36-37 Motor claims How insurers are embracing technology to better serve customers 38 Agile working claims Potential injury and liability claims from remote workers

14-15 The Interview Jennette Newman on technology, talent and the future of claims 16-17 SM&CR What insurers need to do ahead of the compliance deadline

34-35 Underwriting The launch of a brand new CII Society in revolutionary times

50 CII blog When is the right time in your career to specialise?

28

42

50 CEO comment Final thoughts from Sian Fisher

CONTACT US

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

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

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

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

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

Cover Image: Xxxxxxx Istock

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

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

Average total net circulation more than 82,000

thejournal.cii.co.uk / The Journal / October - November 2019

03_Contents_Oct-Nov 2019_Cll The Journal 3

25/10/2019 09:18

CHARTERED INSURANCE INSTITUTE

4

CII ENGAGEMENT BOARD MEMBER We are pleased to announce a newly created Board role – Engagement Board Member for which we are now seeking applicants

T

his is the first of four new Engagement Board Member positions that are being introduced to the Chartered Insurance Institute Board to ensure that the voice of the member is taken into account during Board discussions and decision-making.

Each appointment will represent a different sector of the CII diverse and wide membership and this appointment will represent the financial planning sector.

The Engagement Board Member roles are open to all members who can demonstrate the experience and insight from a strategic perspective,

gained either as a business owner/ partner, or having previous experience as a board member.

The Engagement Board Member will be capable of working co-operatively and collaboratively at Board level to influence and drive the strategic direction of the CII, interpreting complex data and contributing to robust decision making. The Engagement Board Member role is open to all members who can demonstrate that they have recent and an active member engagement experience. For example, attending regional events, actively participating with their local institutes or regions and attending webinars. ●

HOW TO FIND OUT MORE AND APPLY If you are interested in this position you can find an application pack with further information on the role, role requirements and recruitment process available to download at: www.cii.co. uk/engagement-board-member We welcome applications from our diverse membership and in particular from under-represented groups.

If you would like to apply, please e-mail your CV, CII/PFS PIN and cover letter outlining how your skills and experience meet the requirements of the role to: governanceroles@cii.co.uk

On applying for the role we would also like to invite you to complete the equality monitoring survey at: surveymonkey.co.uk/r/MMR7ZWY This survey is anonymous, used for monitoring purposes only and will have no impact on your application for this role.

The closing date for applications is Tuesday 31 December 2019 at 5.00pm GMT

04_Board Member Advert_Oct-Nov 2019_Cll The Journal 4

25/10/2019 09:22

PRESIDENT'S LETTER NICK TURNER

A LITTLE KINDNESS GOES A LONG WAY Focussing on the CII’s pillars of trust, Nick Turner examines the importance of benevolence

CUSTOMER TRUST

W

hile it feels like only yesterday that my term as president began, by the time this edition of The Journal is published, more than a third of my tenure will be complete.

I am sure the passage of time will only accelerate as I begin to attend local institute dinners across the country – I am tremendously excited at the prospect of meeting many of you at these events during the coming months.

In my first letter, I wrote that my presidential theme will be to help all individuals working in our professions appreciate that, regardless of their job role, insurance and financial services professionals have a significant impact on the reputation of the industry. In the past few months, we have made some good progress on tangibly linking the four ‘pillars’ that can build or erode individual trust, to the CII’s Public Trust Index.

I intend to focus each of my next few president’s letters on one pillar of trust. As with ancient buildings, the trust we build with consumers is only as strong as our weakest pillar and we should regularly challenge ourselves to improve. The first pillar I have chosen to write about is benevolence – in many ways the most impactful of the four.

Simply put, benevolence places the customer at the heart of all decision-making. The most conspicuous failings of consumer trust tend to be due to organisations or individuals prioritising short-term results over customer interests. Think of the £36bn UK banks have paid to compensate payment protection insurance misselling and consider how an absence of benevolence has cost them dearly.

Benevolence has a role to play in so many aspects of our businesses and we all have room for improvement. Consider for example, the interaction between a claims handler and a claimant following a burglary. For the claimant, this may be the most important interaction of their year, with the potential to positively or negatively define their perception of their insurance provider – or the whole profession – for many years.

For the claims handler, this is just one of many similar cases that pass over their desk every day. It can be easy in these circumstances not to show empathy, to fail to follow up with the claimant when promised, or to exhibit a multitude of other behaviours that inadvertently indicate to a customer that their needs are not your priority. A truly benevolent approach would see every event from a customer’s perspective, understanding that in those circumstances, taking the time to ask how they are, to reassure, or even just actively listen rather than absent-mindedly follow a process, can mean everything.

Interactions like these occur across functions with both customers and colleagues every single day. I am reminded of the encouragement from J M Barrie, author of Peter Pan, that we should “always try to be a little kinder than is necessary”. Imagine how much more trustworthy consumers would perceive our profession to be if we all took this on as our own personal challenge. ●

5

SIMPLY PUT, BENEVOLENCE PLACES THE CUSTOMER AT THE HEART OF ALL DECISION-MAKING

Nick Turner is president of the CII

thejournal.cii.co.uk / The Journal / October - November 2019

05_Presidents Le_Oct-Nov 2019_Cll The Journal 5

25/10/2019 09:22

NEWS

FROM THE CII TWITTERATI »

@WOWi sGl o ba l WHAT AN INCREDIBLE MORNING! Thank you so much to all the mentors and mentees, @TheLondonEye @NationalTheatre and our supporters @Bloomberg and @CIIGroup’s Insuring Women’s Futures for helping to make today possible

@ DAC B c l ai m s @CII_NIreland #Insurance #Masterclass great to hear from members of the Juris Resolutions panel including Rt. Hon. Sir Paul Girvan on #ADR

@nfum_Horncastle Jayne was at @Dunston_Hall today for @CIIGroup for a general insurance professional focus conference with 7 presentations from fraud, presentation skills, robotics and insurance topics #CII #learning

INSURING WOMEN’S FUTURES

GET TALKING TO TACKLE FINANCIAL WELLBEING

6

On 21 November, the Insuring Women’s Futures (IWF) initiative, which is led by the CII, wants to get as many women talking about money as possible.

Earlier this year, IWF issued a challenge to more than 1,000 volunteers, including insurance professionals and financial advisers, to speak to at least 10 women each about how they can improve their financial wellbeing, during Talk Money Week (18-22 November 2019).

As well as the face-to-face meetings, on 21 November IWF

wants as many women as possible to join conversations taking place on Twitter, Facebook and LinkedIn under the hashtags #femalemoney #InsuringFutures #MakeEachMomentCount.

Insurance professionals will be online to take part in these conversations, explain the financial perils and pitfalls that women face, and flag up organisations that can help women overcome these problems.

Read our Talk 2 10K article on page 32 of this month’s Journal.

SOCIETIES

CII LAUNCHES NEW UNDERWRITING SOCIETY

The CII has launched the Society of Underwriting Professionals, with Phil Williams, managing director MGA at Simply Business, leading the society as non-executive

director, and David Williams, managing director of underwriting at Axa Insurance UK, currently acting as the chair of the new professional body.

The Society of Underwriting Professionals will provide technical advice and support to underwriting professionals, as well as relevant and accessible support for their professional development.

Good practice guides tackling subsidence issues for underwriters, the Senior Managers & Certification Regime, and vulnerable customers will be produced for members in the next few months and made available on the society’s website.

The society’s board will provide

strategic direction for the professional body and consists of: Mandy Hunt, chief underwriting officer of RSA; Janet Edey, head of management liability for UK and Ireland at Chubb; Nick Hankin, director of risk and governance for UKGI at Aviva UK; Sophie Ezadkhasty, underwriter for energy casualty at Swiss Re; Paul Harris, underwriter for professional indemnity at ArgoGlobal; Tony Hutchins, underwriting director of Ecclesiastical UK; Michael Muzio, chief executive of now4cover; and Karen Shaw, head of commercial underwriting for NFU Mutual Insurance.

For more information, visit: www.socup.org.uk

thejournal.cii.co.uk / The Journal / October - November 2019

06-07_News_Oct-Nov 2019_Cll The Journal 6

25/10/2019 09:23

NEWS @ EC3 Le g al Another insightful podcast from @CIIGroup this time talking #mentalhealth #wellbeing #insurance #broker #MentalHealthMatters

@GeoffEvansTutor Many thanks to Vivine from @CIIGroup for enlightening @UC_Oldham students with reference to career opportunities within financial services #financialplanning #insurance #risk #reward

@ Fl i n t _ I n s u ran c e Congratulations to the newest member of Flint Insurance to become Cert Cii qualified.

Jack Chaudhry is the 29th staff member to hold this qualification #flint #insurance #Certcii @CIIGroup

#CIIGroup Twitter

17,375 Followers and counting...

MENTORING

M E N T A L H E A LT H

CII LAUNCHES E-MENTORING

CII COMMITS TO PRIORITISING MENTAL HEALTH

Members of the CII can now mentor and be mentored by other members from anywhere in the world. The platform, called Connect, was built to promote professional development and learning for insurance professionals at any stage of their careers.

Mentoring can be undertaken in a flexible manner to suit different preferences, such as meeting face to face or online, enabling a much broader range of people to share their specific skills

and experience.

Both mentors and mentees may be able to accumulate continuing professional development (CPD) hours for their participation.

Mentors and mentees will be able to pair themselves up in accordance with specific criteria, such as skills and specific learning needs, which the participants will self-declare.

In so doing, the programme will make the most effective use of the broad range of skills and expertise within the personal finance profession, regardless of geographic location.

To find out more, visit: cii.co.uk/connect

UNDERWRITING

GUIDE ON SUBSIDENCE COVER PRODUCED Four actions that underwriters should take when dealing with subsidence cover are outlined in a new good practice guide.

The Society of Underwriting Professionals’ Good Practice Guide for Subsidence states: 1. Each request for cover must be treated individually; 2. Underwriters should recognise other potential causes of damage; 3. Underwriters should thoroughly assess whether underpinning could be required, so that coverage can be priced appropriately; 4. Identify how previous claimants could receive cover.

The six-page guide also highlights other material on subsidence produced by the insurance profession that underwriters and

claims professionals should be aware of.

Philip Williams, non-executive director of the Society of Underwriting Professionals, said: “With temperatures rising in the UK, more hot summers are expected. This will have an impact on more properties being hit by subsidence, as well as impacting existing claimants.

“There will be a greater need to investigate and action cases of subsidence, as well as preventing subsidence from reoccurring. We hope this good practice guide will ensure underwriters and claims professionals feel better equipped to do that.”

To read the guide, visit: socup.org.uk/87607

7 The CII has signed the Inside Out Leadership Charter, committing the professional body to prioritising the mental health and wellbeing of employees.

By signing the Inside Out Charter, the CII has committed to: 1. Prioritising the mental health and wellbeing of CII employees; 2. Having a board-level sponsor for mental health; 3. Discussing mental health and wellbeing at board meetings at least twice a year; 4. Producing a dedicated annual report on employee mental health and wellbeing; 5. Introducing at least one mental health and wellbeing initiative each year and reporting on the impact of this work; 6. Encouraging role-model healthy behaviours in our senior leadership teams (awareness of the pillars of wellbeing – sleep, exercise, stress management, social connection, purpose, doing good, nutrition – and adopting good practice in these areas).

thejournal.cii.co.uk / The Journal / October - November 2019

06-07_News_Oct-Nov 2019_Cll The Journal 7

25/10/2019 09:24

NEWS

CHARTERED

CAMPAIGN TO RAISE AWARENESS OF CHARTERED STATUS The CII has launched a web and social media advertising campaign to explain what Chartered status means to consumers.

Launching in October 2019, the advertisements will appear online on the websites of financial publications such as The Telegraph, Business Insider and Financial Times. The adverts will continue to appear for the following six weeks.

The advertising campaign is designed to raise awareness among consumers of what they can expect from companies that have

8

achieved Chartered status.

Chartered status is a symbol of technical competence and signifies a public commitment to professional standards.

The advertising campaign, which costs £200,000, comes in response to feedback from businesses to the CII’s Chartered Consultation.

Members called for the CII to invest in promoting Chartered and increase awareness of how financial advisers and insurance firms achieving this status benefits consumers.

TECHNOLOGY

CLAIMS

CII AGREES INSURERS MUST DEBATE AI USE

CLARITY NEEDED ON BUSINESS INTERRUPTION POLICIES

The CII has agreed with a Centre for Data Ethics and Innovation report stating the profession must engage with the public to reach a consensus on what constitutes a responsible use of artificial intelligence (AI) and data.

The Centre for Data Ethics and Innovation paper, titled AI and Personal Insurance, takes a closer look at the potential use of AI across the insurance profession, how AI is used today and explores the arguments for and against such applications.

The report recommended the profession engage with the public to reach a consensus on what constitutes a responsible use of AI and data, for example, by deciding under what conditions it is acceptable to process data from social media platforms or to use algorithms to predict people’s willingness to pay higher premiums.

The profession is encouraged to consider whether tighter controls need to be put in place on the use of personal characteristics in pricing.

To read the report, visit: bit.ly/2JcTvqX Read more about the Centre for Data Ethics on page 45 of this month’s Journal

The Chartered Institute of Loss Adjusters, the Society of Claims Professionals and the Insurance Institute of London have issued a joint update on how insurers might clarify the wording of business interruption policies.

The institutes found a variety of terms being used to clarify what insurers would pay out in the event of a business being unable to operate and make a profit.

During the last six years, the institutes noted that the limited change to wordings seen represented “tweaking” of terms that would enable policyholders to understand what they could claim for in the event of business being interrupted.

There has more recently been wholesale adoption of many of the recommendations in policies, supporting a need for this refreshed edition, which was first issued in October 2012 and has received more than 260,000 hits online.

To read the updated pdf, visit: bit.ly/2MNegxE

thejournal.cii.co.uk / The Journal / October - November 2019

08-09_News_Oct-Nov 2019_Cll The Journal 8

25/10/2019 12:03

NEWS

WORSHIPFUL COMPANY OF INSURERS

WCI APPOINTS FIRST EVER WOMAN MASTER Rosemary Beaver has been elected as the new Master of the Worshipful Company of Insurers (WCI) – the first woman to be appointed Master in the organisation’s history.

Now celebrating its 40th year, the Company is part of the historic City Livery movement with more than 500 professionals in the insurance industry as members.

Ms Beaver joined the WCI in 2012, at a time when there were relatively few women members – there are now more than 70. As Master, she is responsible for leading the Company, chairing the court and key committees, as well as being the figurehead for its work with the city of London and other livery companies.

The WCI currently has two charitable trusts: one focussed on education in insurance and the other on general good causes. The Company supports the Lord Mayor’s Appeal and distributes up to £200,000 each year to charitable organisations working with young people, homelessness, the rehabilitation of offenders, environmental issues and mental health.

fashioned image, but they have an important role in the City of London and provide an incredibly valuable fellowship for people working in it, as well as a focus of collaboration for those who would like to do good in wider society.

“We have set up iEngage, which aims to encourage younger insurance professionals, including members of the CII, who are interested in Immediate Past Master, Terry Masters the WCI to become part of and Rosemary Beaver, Master the organisation,” Ms Beaver added. “We are developing Ms Beaver said: “After more than 30 specific leadership and networking events years in the industry, it is a huge privilege to programmes for young professionals, be appointed to this unique role and I hope where they can meet and share ideas with to serve the Company and our profession those more senior in the market. We are well – demonstrating to society the value ready to welcome new members into what of the insurance profession. We have so is a very vibrant and warm fellowship.” much support from the CII in all we do. I am The WCI has a historic and ongoing delighted to continue to collaborate with alignment with the CII and welcomes the Institute and help add value wherever enquiries about membership from we can.

CII members.

“I would like to see us “Invest in the To find out more about joining the WCI, Future”. Livery companies have an oldvisit: www.wci.org.uk

9

G E N D E R PAY G A P

CII ALMOST HALVES GENDER PAY GAP The mean gender pay gap at the CII has almost halved in just two years.

It is two years since organisations in the UK started publishing figures on the gender pay gap.

The CII can now report that while the professional body had a gender pay gap of 28% in April 2017, by April 2019 the gap had shrunk to 14.77%.

During the last two years, the CII has re-evaluated roles to address the historic unfairness towards part-time

workers; trained managers to recognise and overcome unconscious biases; and encouraged social networks within the organisation to support people as they take on more responsibility.

To help the profession to tackle the gender pay gap, the CII’s My Personal Finance Skills programme provides an opportunity to raise the profile of the insurance profession and to encourage both girls and boys to consider the varied roles in insurance and financial services.

thejournal.cii.co.uk / The Journal / October - November 2019

08-09_News_Oct-Nov 2019_Cll The Journal 9

25/10/2019 12:03

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

M YA N M A R

NEW CII DISTRIBUTOR IN MYANMAR The CII has signed a distribution agreement with the Myanmar Insurance Association (MIA), an industry body in the southeast Asian nation. MIA takes a major role in the Myanmar insurance industry to encourage and promote industry development.

Under the signed agreement, the MIA will promote CII learnings to insurance professionals and students in the country.

In addition, the MIA has also registered to be one of the CII’s public examination centres in Myanmar.

HONG KONG

10

CHINA

CII SIGNS NEW AGREEMENT WITH HKUSPACE

Keith Richards leads the CII Hong Kong team signing an agreement with HKUSPACE

The CII has signed an agreement with the Hong Kong University School of Professional and Continuing Education (HKUSPACE) in August. Under the agreement,

HKUSPACE will promote CII learning units and deliver face-to-face technical training programmes to students in Hong Kong, with training material support from the CII.

MOU SIGNED WITH THINK TANK FOR CHINESE INSURERS

The CII and the Think Tank for Chinese Insurers (TTCI) from Peking University have agreed and signed an historic first memorandum of understanding.

Registered with the China government, TTCI’s mission is to serve as an expert panel for decision-making within the Chinese insurance industry, by providing firstclass intellectual services such as training, education, consultancy, performance assessment, competition, international forums and professional exchanges.

This preliminary agreement will provide for adoption of the CII qualification framework, including study materials, learning, training and accreditation services for the insurance services sectors of China.

thejournal.cii.co.uk / The Journal / October - November 2019

10-11_Asia Pacif_Oct-Nov 2019_Cll The Journal 10

25/10/2019 09:24

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

SRI LANKA

SRI LANKA

CII PLANS FAST-TRACK ROUTES FOR STUDENTS

CII AT ANNUAL INTERNATIONAL CONGRESS

The CII’s regional team – Sainesh Dar and Zainab Fidai – along with the director general of the Insurance Regulatory Commission of Sri Lanka, Damayanthi Fernando, and CII Goodwill Ambassador in Sri Lanka, Pubudu Wimalaratne, met with Vayamba University, Sabargamuwa University and Sri Jayawardena Pura University at the Insurance Regulator’s office in Colombo in October, to

discuss areas and fast-track routes for students to achieve CII qualifications and build their knowledge and skills in insurance.

The presentation was well received and the universities will be applying for the CII’s Awarding Body Recognition of Prior Learning shortly, to acquire the quality benchmark for their insurance, risk management and financial planning programmes.

SRI LANKA

NEW CII EDUCATION PARTNER PRESENTATION COOPINSU – the CII’s new education partner – invited Sainesh Dar and Zainab Fidai of the CII to address more than 100 students at its centre in Colombo in October.

The presentation captured details on how insurance as an industry is growing globally and the career opportunities it

offers. Following the CII presentation, more than 30 students registered for the CII’s foundation qualification – Award in General Insurance (W01).

The CII welcome the first cohort of students and wish them all the best for the CII exams and their journey ahead.

The CII attended the 19th annual international congress organised by the Sri Lanka Insurance Institute (SLII) in October, at the Shangri-La Hotel, Colombo.

David Thompson, CII international director, along with Sainesh Dar and Zainab Fidai, of the CII regional team, were welcomed by the SLII at the opening ceremony and CII certificates were awarded to successful students.

Panel discussions were held around the theme “Challenges to Insurers in an ever evolving world”. The congress was well received by more than 500 national and international delegates who attended the two day event.

11

SRI LANKA

CII AT REGULATORY COMMISSION OF SRI LANKA The CII met the Insurance Regulatory Commission of Sri Lanka along with the institute’s strategic partner and local body, the Sri Lanka Insurance Institute (SLII), in October.

The meeting explored areas of further collaboration to raise professional standards of the insurance industry in Sri Lanka and was then followed by a visit to the SLII office to discuss plans and key steps to enhance

insurance education in Sri Lanka.

The regulator and the local Institute (SLII) are keen to promote CII qualifications to enhance the knowledge and skills of people working in the Insurance Industry in Sri Lanka.

Already, the regulator has made the ACII qualification one of the mandatory criteria for setting up any kind of insurance or broking practice in Sri Lanka.

thejournal.cii.co.uk / The Journal / October - November 2019

10-11_Asia Pacif_Oct-Nov 2019_Cll The Journal 11

25/10/2019 09:24

REGIONAL NEWS

8

NOVEMBER

TECHNICAL LIABILITY BRIEFING → 12:15 pm – 1:30 pm The Insurance Institute of Cheltenham and Gloucester www.cii.co.uk/cheltenham

11

NOVEMBER

LIABILITY INSURANCE: HOW BEST TO COVER YOUR CLIENTS → 1:00 pm – 3:00 pm The Insurance Institute of the Isle of Man www.cii.co.uk/isleofman

12

NOVEMBER

INVESTMENT UPDATE AND MARKET OVERVIEW → 11:00 pm – 12:30 pm The Insurance Institute of Leicester www.cii.co.uk/leicester

LUTON

CII SUPPORTS WOMEN IN INSURANCE In September, the Insurance Institute of Luton & Herts hosted its inaugural Women in Insurance Forum. Kate Atkins, an international speaker on Impostor Syndrome, was the keynote speaker and provided an engaging session to local members. The event also provided an excellent opportunity for networking.

Join the institute at one of their upcoming events. First, they have a social event at Mecca Bingo, Stevenage – which they are calling ‘Stay for a

12

game or stay for a few – it’s up to you!’

– on 26 November at 7.00pm. Second, there is an educational event at Beales Hotel in Hatfield, where they will welcome Nigel Cliffe of Value Exchange to provide an informative talk, entitled ‘LinkedIn – How to establish your online personal brand’, on 6 February 2020.

The events are open to all and the institute looks forward to welcoming you along. → For more information visit www.cii.co.uk/luton

MANCHESTER

YOUNG MEMBERS BALL 2019 In September, The Insurance Institute of Manchester hosted its summer ball, encouraging future up-and-coming professionals to meet and network.

Guests from the profession and associated businesses came together to enjoy an evening of dinner and entertainment.

Held at the Lowry Hotel, delegates heard from guest speaker Daniel John, head of office Manchester, Marsh and JLT, about the achievements in his career; and George Stanbury, campaigns officer for the National Autistic Society.

There were raffle prizes to be won and lots of money raised for the charity.

Victoria Royle ACII, Insurance Institute of Manchester president, said: “Our industry is all about people – and local institutes give you the opportunity to build your network and meet like-minded individuals. Getting involved

with our local committees also provides you with skills you might not acquire in your dayto-day jobs, such as project management, problem solving, presentation skills and much more.

“For me, the very core of the institute is about learning, which is the main reason I joined the Manchester Education and Development Committee. I wanted to provide more services to our region to help people become qualified, so watch this space for our fast track diploma course coming very soon – a replica of the fast track ACII programme I attended myself with the encouragement of trainers, ITP. [Through that], I became chair of the Education and Development Committee and have also sat on various committees such as Style in the City, governance and council, all of which led to my current role as president.” → For more information visit: www.cii.co.uk/manchester

@BirminghamCII A great Professional Focus event comes to a close. Brilliant to see many from the local institute here. Don’t forget to join us at the local institute if you’re not already signed up. #cpd #insurance #professionalfocus

thejournal.cii.co.uk / The Journal / October - November 2019

12-13_Regional N_Oct-Nov 2019_Cll The Journal 12

25/10/2019 09:25

REGIONAL NEWS

13

NOVEMBER

SM&CR: WHAT IT MEANS FOR BROKERS → 12:30 pm – 2:00 pm The Insurance Institute of Bournemouth www.cii.co.uk/bournemouth

14

NOVEMBER

GDPR UPDATE → 12:15 pm – 1:45 pm The Insurance Institute of Southampton www.cii.co.uk/southampton

14

NOVEMBER

HACKING – THE NEW STING → 6:00 pm – 7:15 pm The Insurance Institute of Guildford www.cii.co.uk/guildford

LEEDS

NORTHERN IRELAND

ANNUAL CHARITY RAFFLE DAY 2019

XMAS BOX CAMPAIGN LAUNCH

On 23 July, The Insurance Institute of Leeds visited offices in the city to raise money for The Insurance Charities and local charity CHANGE. The theme was ‘summer’ and the day lived up to it, being bright and sunny. On the day, volunteers raised £1,480.10 and one lucky raffle winner, Jackie Bennett of Bartletts, won £250 – of which she redonated £30 back to the charity.

Since this event, the institute has been jointly awarded the Insurance Charities Centenary Charity Shield with The Insurance Institute of Dublin, on account of their significant contribution to fundraising and

publicity on raising awareness.

Congratulations to both institutes. → For more information visit www.cii.co.uk/leeds

13

BRISTOL

LOCAL INSTITUTES

EVERYTHING YOU NEED TO KNOW ABOUT FRAUD

The first full-day regional continuing professional development (CPD) conference held jointly by the Southampton, Reading, Guildford and Bournemouth institutes took place in September. Fraud was discussed from six different

The Insurance Institute of Northern Ireland’s theme for the institute this year is #MakeADifference – or #MAD for short – and the challenge to its members is to help make a difference to their institute, workplace and community.

Council members are encouraging members to support the Homeless Action Group in efforts to help homeless people on the streets of Northern Ireland.

Members are being asked to create a Christmas gift box for the homeless, including clothing, toiletries and non-perishable food.

Gift boxes can be brought to the IINI Masterclass on 21 November 2019 at the Clayton Hotel, Belfast. → For more information, visit: www.cii.co.uk/northernireland

perspectives and more than 100 members walked away with six hours’ CPD, comprising varied statistics, facts and knowledge on fraud.

The Winchester venue proved a great success, welcoming many new and familiar faces.

The institutes look forward to collaborating again to hopefully make it an annual occurrence. → For more information visit www.cii.co.uk/ southampton

2020 VISION: A GENERAL & FINANCIAL SERVICES CONFERENCE The Insurance Institute of Bristol is holding an annual conference on Thursday 23 January 2020 at Gloucestershire Cricket Club in Bristol.

This exciting day will give delegates a chance to hear from and share views with senior local and national insurance leaders and representatives.

In addition, the conference will spend time looking at visions and topical issues surrounding our profession and industry, and support CPD needs by providing the opportunity to attend and participate in

a number of relevant CII and Personal Finance Society learning carousels.

The day will conclude with a motivational talk by a representative from Gloucestershire Cricket Ground, along with drinks and a chance to network at the close of the conference. → For more information on the event, please email emily.westacott@cii.co.uk → For more information on the Insurance Institute of Bristol, visit: www.cii.co.uk/bristol

thejournal.cii.co.uk / The Journal / October - November 2019

12-13_Regional N_Oct-Nov 2019_Cll The Journal 13

25/10/2019 09:25

THE INTERVIEW: JENNETTE NEWMAN

JENNETTE

NEWMAN

Specialist

Regulation

Action

Jennette has specialised in complex and multiparty bodily injury litigation for insurers, reinsurers and risk carriers

She has led regulatory prosecutions against local authorities, housing associations, retailers, the care sector and other corporate bodies

Jennette has acted in relation to incidents during the Wembley stadium construction and the Liverpool Docks crane collapse

J

14

ennette Newman has more than 25 years’ legal experience in insurance claims and regulation, but as we reach the end of the decade, she reflects on a time of unique challenges, change and opportunities for the sector.

“It is fantastic to be involved in insurance at a time when it is going through such a massive period of change,” says Ms Newman. “Seeing how organisations, trade and professional bodies are pulling together to move forward and take the future of insurance to the next level.”

Now a partner at law firm Clyde & Co, following a successful career with BLM, Ms Newman has spent the last year as president of the London Forum of Insurance Lawyers (FOIL) – a new division of the wider-reaching FOIL group of specialist expert lawyers, collaborating and seeking solutions to larger thematic issues facing the industry.

Ms Newman says: “I have now been involved in both FOIL groups and have been incredibly impressed by the work they do to support the profession. It is an excellent example of how much we can achieve if we work together.”

As inaugural president of London FOIL, Ms Newman’s initial focus has been examining the needs of that market. “Our discussions have included new models, new technology, getting to grips with the progression in catastrophic losses and categories of risks potentially becoming uninsurable, all while keeping one eye on a rather volatile political situation.”

The desire for new talent and broader skillsets in insurance and insurance law has also been high on the agenda, as well as continuing to be part of the diversity and inclusion discussion.

“I have tried to broaden that conversation to look at talent retention and diversity in its widest context, to support the market and acknowledge the great work done by Dive In, the London Market Group and the CII. “This is not just because it is the right thing to do – which I believe it is – but also because it is very difficult to address our challenges and maintain professional standards without having the best people, the diversity of thought and talent for innovation,” adds Ms Newman.

CII exams and the talent and drive for success within this contingent of mentees really is inspirational.”

This is in addition to her involvement with the CII’s Insuring Women’s Futures (IWF) initiative on one of the workstreams and also as a member of the expert panel.

“Some amazing work has been done through IWF,” says Ms Newman. “I will certainly be attending the Talk 2 10K event in November and Clyde & Co has agreed to run a Talk 2 10K scheme for the entire Clyde & Co staff, clients and guests.”

CLAIMS TRENDS Ms Newman has always worked in a contentious claims environment and, looking to the future, feels there will be a shift in the nature of claims that arise and are disputed.

“We can expect a growing trend in cyber claims and claims related to data hacking will become more numerous and complex.

“As the environmental, social and governance profiles of businesses grow, we are likely to see an increase in directors and officers claims.

“Environmental and product liability claims linked to climate change litigation have not reached their peak by a long way and these could rise considerably,” she notes.

With advances in technology, Ms Newman feels there will be more potential for products and new technology to be involved in losses, giving rise to new types of claims and further product recall, an area many businesses are concerned about.

“But it is not all doom and gloom!” says Ms Newman.

“In regard to casualties, we are seeing huge advances in technology, medical science and prosthetics, meaning improvements around treating injured claimants.

“In 10 to 20 years’ time, automated vehicles should massively reduce the number of road traffic claims. If you drive out risk, you will drive out claims, so there are some significant positives in that regard.”

And Ms Newman adds that she has no doubt the insurance profession will rise to the challenges that the future holds.

“Throughout my career, the talent I have encountered both in the UK and globally is incredible. People in our sector are highly skilled, passionate, they want to innovate and embrace change, while technology is being adopted quickly and safely.

I am very hopeful for the future of insurance and law.

“Insurance is an amazing sector to be involved in.

It protects vulnerable people, protects business, manages risk and ensures that our day-to-day lives can continue despite natural disasters occurring or risks that may arise.

It is something we should all be very proud of.” ●

PEOPLE IN OUR SECTOR ARE HIGHLY SKILLED, PASSIONATE, THEY WANT TO INNOVATE AND EMBRACE CHANGE

INSTITUTE INVOLVEMENT Ms Newman has always been very aware of the CII as a professional body and has attended numerous training seminars and thought-leadership events over the years.

“More recently, I have been part of the Insurance Institute of London mentoring programme as an advocate mentor.

The programme involves supporting people through their

Luke Holloway is editor of the CII

thejournal.cii.co.uk / The Journal / October - November 2019

14-15_Interview_Oct-Nov 2019_Cll The Journal 14

25/10/2019 09:26

THE INTERVIEW: JENNETTE NEWMAN

Clyde & Co’s Jennette Newman talks to Luke Holloway about London FOIL, future trends and the next generation of sector talent

15

LEGAL INNOVATION 14-15_Interview_Oct-Nov 2019_Cll The Journal 15

25/10/2019 09:26

R E G U L AT I O N

CULTURE SHIFT 16

With the deadline for Senior Managers & Certification Regime compliance fast approaching, James Moorhouse looks at what firms need to do

W

ith December quickly approaching, many insurance firms will still be checking to see if they meet the requirements of the Senior Managers & Certification Regime (SM&CR).

The programme was designed by the UK Financial Conduct Authority (FCA) as a response to the 2008 financial crisis. At its launch in 2016, the SM&CR applied to banks and building societies.

However, it has also been extended to include solo-regulated firms from

thejournal.cii.co.uk / The Journal / October - November 2019

16-17_SMCR_last_Oct-Nov 2019_Cll The Journal 16

25/10/2019 09:27

R E G U L AT I O N

ISTOCK

WHILE MORE RESPONSIBILITY IS BEING PLACED ON FIRMS AND INDIVIDUALS, A MUCH HEALTHIER CULTURE WILL DEVELOP WHERE GOOD OUTCOMES FOR CUSTOMERS ARE TAKING A GREATER PRIORITY

9 December 2019. The aim of that is to improve trust in financial services by making senior staff accountable for their actions.

The SM&CR focuses on: ● Identifying senior managers; ● Their responsibilities; ● What happens if they don’t meet their responsibilities.

The regime is intended to address the root causes of harm to consumers and market integrity by examining business models, strategy and the culture of financial services. But what does ‘good’ look like?

For firms to demonstrate that they are compliant, they must look at the culture of the company. Each firm must have an actual purpose. This purpose needs to be constructive and in the best interests of their customers. A good culture should be inclusive and diverse, so that it can benefit from a wide set of opinions and experiences. This should help inspire innovation and relevance across the entire organisation.

Secondly, this purpose needs to be led by managers who can demonstrate strong leadership and good behaviours.

There are five conduct rules that set the minimum standards for behaviour

across the firm, which are: ● Act with integrity; ● Act with due skill, care and diligence; ● Be open and cooperative with regulators; ● Treat customers fairly; ● Observe proper standards of market conduct.

In short, the SM&CR is a requirement to behave in a professional way. In most cases, firms and senior managers will already be fully compliant with these rules. However, by setting these rules as the backbone of the regulation, all financial services now have a consistent set of standards to measure themselves against. These rules can all be summarised as ‘taking accountability’.

CAPABILITY AND COMPETENCE In terms of certification, David Blunt, head of conduct specialists at the FCA, summarises its purpose as “looking at the people in firms who do really significant roles, roles which could cause real harm to consumers, to markets or to the firm itself”, adding: “What we want to do is ensure that firms turn their minds to the capability and the competence of individuals doing those roles.”

By placing these responsibilities in the hands of the firm, senior managers will now make sure that ‘certified individuals’ are fit and proper to do their jobs well. References of at least six years are now required for individuals

who hold significant responsibilities.

Doing this will prevent those with a poor conduct history from holding roles where they could cause more harm.

The certification process will take place every 12 months, to ensure that all certified individuals remain competent in their role. Certified individuals will also appear in an online directory by December 2020, which will give greater visibility of those holding certain roles.

To ease this transition, there are two provisions to help firms move to the new regime: ● Senior managers and certified individuals must be trained by 9 December 2019; ● Other staff must be trained within the next 12 months.

For firms to recognise what they need to know by the implementation date, the key points are: ● Senior managers must identify certified individuals while being accountable to the FCA; ● Certified individuals must hold relevant regulatory references and start training other staff on the conduct rules; ● Everyone else must understand the conduct rules within the next year.

Looking at the SM&CR overall, while more responsibility is being placed on firms and individuals, a much healthier culture will develop where good outcomes for customers are taking a greater priority.

By creating a better culture, whether through embracing diversity, reducing the fear of complaining or setting a minimum set of behavioural standards, employees will have a better idea of what is expected of them. The result being that customers will trust firms that understand them better and buy the products and services they offer. ●

17

James Moorhouse is content manager of the CII

thejournal.cii.co.uk / The Journal / October - November 2019

16-17_SMCR_last_Oct-Nov 2019_Cll The Journal 17

25/10/2019 09:27

H OT TO P I C : T R AV E L A N D D I S A ST E R S

HOT TOPIC

WHAT'S THE DAMAGE? Hurricanes, typhoons and wildďŹ res have dominated the catastrophe list in 2019, while manmade disruption has come from hundreds of strikes worldwide. Liz Booth counts the cost

GETTY

18

thejournal.cii.co.uk / The Journal / October - November 2019

18-20_Hot Topic_Oct-Nov 2019_Cll The Journal 18

25/10/2019 12:48

H OT TO P I C : T R AV E L A N D D I S A ST E R S

W

hile you might be forgiven for wanting to leave the UK and the Brexit latest behind, 2019 has not necessarily been the year for travel.

The implication for travel insurers has been huge, as commercial travellers and holidaymakers alike have had their plans seriously disrupted with every likelihood of claims to follow – all at a time when travel insurers are facing tough market conditions.

While the hurricane season has not been the worst ever (though as we go to press there is still time for that), it has been remarkable in other ways.

Most notably, Hurricane Dorian – which travelled so slowly and lingered with such devastating impact over the Bahamas.

But even before the estimated insured losses from Hurricane Dorian to the US of between £395m and £1.2bn (according to RMS) land, other hurricanes have hit the US, including Hurricane Barry with its estimated losses of almost £400m. The RMS loss estimate for the US reflects property damage and business interruption to residential, commercial, industrial and automobile lines of business.

For the Caribbean, RMS estimates total insured losses from Hurricane Dorian will fall between $4bn and $8.5bn. Included in this range are insured losses to the Caribbean and US, as well as insured losses associated with wind damage in Canada, which RMS estimates to be close to £400m. The highest proportion of total insured loss from the storm will stem from the Bahamas. Insured losses will constitute a fraction of the total economic losses, particularly in the Caribbean, as it has a lower rate of insurance take-up.

GLOBAL CATASTROPHES

THE IMPLICATION FOR TRAVEL INSURERS HAS BEEN HUGE, AS COMMERCIAL TRAVELLERS AND HOLIDAYMAKERS ALIKE HAVE HAD THEIR PLANS SERIOUSLY DISRUPTED…

However, the Atlantic Basin is not the only area to have faced severe storms this year. In Mozambique, two massive cyclones chose the same path as they swept inland – the first time that has happened in recorded history.

The cyclones did not cause so much in the way of insured losses but British Airways pilots is reported devastated countries that are far less to have disrupted journeys for able to withstand such shocks to their 180,000 passengers. Thomas Cook economies, including Mozambique, also collapsed leaving around 150,000 Malawi and Zimbabwe. In the betterpeople either stranded abroad or with insured South Africa, insurers have their holiday cancelled. been reeling from the claims from To compound the UK problems, severe hailstorms and fires.

Air France staff have been on strike And Asia has not been immune. and the annual air traffic controllers’ A powerful typhoon passed over strike also affected all those overflying the Korean peninsula in September, France in August. KLM staff too have leaving five people dead and 460 been taking action – in two-hour slots houses damaged or destroyed in North but causing disruption throughout Korea, according to state media. the day – and Ryanair has also been Two powerful typhoons have hit striking through August Japan in recent months, causing and September. multiple deaths and flooding large Although the Thomas Cook collapse areas. Most notably, Typhoon Hagibis is unlikely to impact insurers, was one of the most UK newspaper the devastating typhoons ever Evening Standard did to hit Japan. spell out the likely It flooded huge areas of compensation for the country, destroying consumers from a homes and commercial strike. It explained property, for example in that airlines are not a train depot in Nagano obligated to pay 10 high-speed ("bullet") compensation after a trains were submerged. strike as it is termed an Each train has been valued extraordinary event; at £23m. however, after strikes Source: Mintel The typhoon also in 2018, Ryanair was disrupted the rugby World Cup forced by the Civil Aviation Authority potentially impacting hundreds to pay between €250 and €400 of traveller's insurance policies. per passenger.

Thousands more were impacted as rail The Association of British Insurers stations and airports were closed.

(ABI) was also reminding consumers: Indeed, airlines have been having a “Travel insurance may cover pretty bad few months. The summer additional lost accommodation costs in Europe brought strike misery to and other expenses if booked prior hundreds of thousands of passengers. to the dates when the strike days Staff at Heathrow Airport threatened were announced. action, while a one-day strike by “Where this cover is provided, →

19

22%

GROWTH IN THE AVERAGE TRAVEL INSURANCE CLAIM VALUE BETWEEN 2013 AND 2017

thejournal.cii.co.uk / The Journal / October - November 2019

18-20_Hot Topic_Oct-Nov 2019_Cll The Journal 19

25/10/2019 12:48

H OT TO P I C : T R AV E L A N D D I S A ST E R S

20

it will usually apply where any refunds have not been obtainable from any other source. Customers should speak to travel providers, accommodation providers and credit card providers first.”

And to top that all off, there is terrorism.

British Airways and Lufthansa flights to Egypt were suspended briefly earlier this year after warnings of a possible threat. And after the bombings in Sri Lanka, people were warned against all but essential travel.

Again, the ABI has been advising consumers. It stressed: “If you travel against government advice, then you could be putting your travel insurance cover at risk. This is because policies expect you to take reasonable care and not expose yourself to unnecessary and avoidable risk. Check with your travel insurer if the reasons for any

travel would impact on your cover.”

TRAVEL COVER All of which neatly brings us to travel insurance.

A recent Mintel report pointed out: “Travel insurance providers operate in a tough environment, with strong price competition, rising claims costs and uncertainty over Brexit dampening demand for overseas travel. Maintaining profit margins is a priority for many suppliers but remains challenging.”

Overall, it said that following several years of decline, total gross travel insurance premiums increased by an estimated 9% in 2017, to reach £769m. Members of the ABI, which includes three of the largest four providers, accounted for £519m of this total.

TRAVEL INSURANCE PREMIUMS Forecast of gross written travel insurance premiums – Fan chart, 2013-23

1,000

Best case (£m) 916

Market value (£m)

900

Mintel forecast (£m) 848

(£m) 780

800

Worst case (£m) 780

700 600

Confidence intervals 500

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Est. Actual

95% 90% 70% 50%

Forecast

Source: Mintel report Travel Insurance – UK 2019

In comparison to 2017, total premium income barely grew in 2018, reflecting a slowdown in the foreignholiday market. Total gross premiums are projected to have grown by 1% to £780m.

However, there was some good news for the travel insurance market.

Even before all the events of this year, the Mintel report stated: “Looking solely at ABI data, the average multi-trip premium increased from around £30 in 2013 to £40 in 2017. The increase reflects a hardening of rates in the affinity/packaged sector, along with rising claims costs over the past four years.”

Of course, there is always a downside and the Mintel report also found: “The average travel insurance claim value grew by 22% between 2013 and 2017 (rising to £756 in 2017), driven mainly by rising medical expenses inflation.”

Back to this year and a likely uptick in demand for insurance. Mintel found 80% of people who have been abroad consider cover for airline/supplier failure important, but only 33% are prepared to pay extra for it. Cover for delays and disruption caused by unforeseen events is similarly popular with most people, but only 24% would pay extra for it.

It will be interesting to see whether consumer attitudes change in the wake of a year of such travel disruptions, and whether they take a harder look at the smallprint of their existing policies. ●

thejournal.cii.co.uk / The Journal / October - November 2019

18-20_Hot Topic_Oct-Nov 2019_Cll The Journal 20

25/10/2019 12:48

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

QUEEN’S SPEECH

1

BREXIT UPDATE

Within the Queen’s speech we heard mention of two new pieces of relevant legislation – the Financial Services Bill and the Pension Schemes Bill. The former aims to “ensure that the UK maintains its world-leading regulatory standards and remains open to international markets after we leave the EU”.

This will be done by simplifying the process that allows overseas investment funds sold in the UK; implementing Basel standards to strengthen banking regulation; and securing long-term market access to the UK for financial services firms in Gibraltar.

The Pensions Schemes Bill, meanwhile, sets out to: create the legislative framework for the introduction of pensions dashboards; include rules on how pensions schemes need to provide data to dashboards; and give powers to The Pensions Regulator to respond earlier to irresponsible management of private pensions schemes, including introducing new criminal offences, with the most serious carrying a maximum sentence of seven years’ imprisonment and a civil penalty of up to £1m.

We will monitor this legislation closely and provide you with updates as each Bill progresses.

At the time of writing, the Prime Minister, Boris Johnson, has announced a new deal agreed between the UK and EU negotiators, which removes the contentious backstop and instead creates a new customs zone in the Irish Sea. However, despite passing its second reading, the agreement is yet to pass through parliament, although with potential amendments it could be the first deal to receive a working majority of support.

In the statute books sits the Safeguards Act (commonly referred to as the Benn Act after its proposer Hilary Benn), designed to compel the government to seek an extension to the deadline, in order to avoid a no-deal exit and ratify a new deal, including all of its necessary legislation, in a timelyy fashion.

Follo Following the first House of Commons Saturday sit sitting since 1982 – an the passing of the and Let Letwin amendment to the government’s motion – th the Benn Act forced the government’s hand in seekin seeking an extension to the UK’s Brex Brexit deadline, in order to have eno enough time to lay the necessary Withdrawal Agreement Bill legislation in front of parliament.

While a vote on the Withdrawal The CII takes a look at what’s Agreement Bill was successful new on the policy and public and it passed second reading, a government loss on the timetable affairs front this month for the legislation led to the Prime Minister freezing the process of the Bill. This made it impossible for the UK to leave the EU on 31 October.

Despite some progress in certain areas, uncertainty still reigns supreme and there is still just as much likelihood of no deal at the end of this process, as there is of securing a good deal. Although the date for this has, to all intents and purposes, been deferred.

The CII still recommends preparing your businesses for any regulatory or trade changes in the coming months, and staying aware of the latest government advice on what is expected of your business, if trading with the EU.

2

21

WHAT’S ON THE RADAR?

thejournal.cii.co.uk / The Journal / October - November 2019

21_Reg Radar_Oct-Nov 2019_Cll The Journal 21

25/10/2019 12:53

CYBER

A

s big names in the market start to announce plans to change the way they approach cyber cover, the Association of British Insurers (ABI) has, for the first time, revealed that 99% of claims made on ABI member cyber insurance policies in 2018 were paid.

The news comes as both Allianz and AIG have said they would not automatically include cyber cover in other policies – the so-called silent cyber. The insurers, who are expected to be followed by others in the run-up to 1 January reinsurance renewals, said they would make it clear to clients whether cover was affirmed or excluded in a variety of policies including property and casualty.

The ABI figures revealed that standalone cyber cover has been working well, the trade body stated. A spokesperson for the organisation said that 99% of claims being paid made it one of the highest claims acceptance rates across all insurance products.

However, it said that despite this, the take-up rate of cyber insurance by businesses in the

UK is still “worryingly low”, with the overall market size estimated at less than a 10th of the size of the UK’s pet insurance market. Just 11% of businesses are thought to have a specific cyber insurance policy in place, meaning millions of small businesses could be at risk. There remain some challenges for insurers, with the inability to access raw breach data risks being just one.

The ABI has been asking the Information Commissioner’s Office to make anonymised cyber breach data publicly available, which would enable insurers to price risk more accurately and manage exposure more effectively, by feeding this data directly into their modelling.

Ultimately, this would make cyber insurance more widely available, more accurately priced and better tailored to each business.

The ABI explained that standalone cover protects insureds when there is: 1. Cyber business interruption loss: If a cyber attack interrupts business operations, insurance covers loss of income during the period of interruption and beyond.

2. Privacy breach costs: This protection covers costs arising from dealing with a security breach. For example, notifying customers of a cyber

£2.8bn WORTH OF CYBER PREMIUM IS UNDERWRITTEN AROUND THE WORLD – LESS THAN £100M IS FOR UK RISK

22

breach, the cost of hiring a call centre to answer customer enquiries, the cost of public relations advice, IT forensic costs and any resulting legal fees.

3. Cyber extortion cover: This protects against ransomware and other malicious attempts to seize control of operational or personal data until a fee is paid. This clause will typically provide for a reimbursement of the ransom amount demanded by the attacker, as well as any consultant fees to oversee the negotiation.

4. Hacker damage: This protects against damage inflicted by a hacker on digital assets. In particular, it provides protection against the loss, corruption or alteration of data as well as the misuse of computer programmes and systems.

5. Media liability: This protects a business in the event that its digital media presence leads to a party bringing a claim for libel, slander, defamation or the infringement of intellectual property rights. This is especially important for companies that rely on the transmission of digital data via email, a website, or a large social media presence.

6. Cyber forensic support: This aspect of cover provides for nearimmediate 24/7 support from cyber specialists recommended by the insurer in the period following a hack or data breach. These specialists can assess systems, identify the source of any breach and suggest future preventative measures. ●

CYBER RISING As cyber insurance begins to show its worth, Liz Booth looks at how it can achieve greater market penetration

thejournal.cii.co.uk / The Journal / October - November 2019

22_Cyber Risk_Oct-Nov 2019_Cll The Journal 22

25/10/2019 09:27

Connections made easier Introducing your new e-mentoring platform Whether you’re looking for career development support, or keen to share your experience to guide the next generation, Connect is designed to help.

Start your mentoring journey.

Visit: cii.co.uk/connect CII.10.2019.023.indd 23

25/10/2019 11:57

CHARTERED

24

Liz Booth spoke to ďŹ rms in Africa and Asia to examine the Chartered journey of overseas insurers

WORLDWIDE JOURNEY TO CHARTERED thejournal.cii.co.uk / The Journal / October - November 2019

24-26_CII Overse_Oct-Nov 2019_Cll The Journal 24

25/10/2019 11:50

CHARTERED

AFRICA

Z

EP-RE is a regional reinsurance company established in 1993 in Nairobi, Kenya with a mandate to support the development of insurance markets within the Common Market for Eastern and Southern Africa. With a local presence in seven countries on the continent – Kenya, Uganda, Ivory Coast, Zambia, Zimbabwe, Ethiopia and Sudan – ZEP-RE underwrites more than 4,000 treaties with 500 companies and draws business from 50-plus countries in Africa, the Middle East and the Indian sub-continent.

Headquartered in Nairobi, ZEPRE directly employs 72 people and has a programme of learning not just for its own staff but also for the wider insurance profession in east Africa, including for local insurance regulators.

Joseph Nabimanya, the company’s HR director, told us: “We are deeply committed to improving the skills of our staff. Our managing director and CEO, Hope Murera, has a clear policy that we find the right ght person for the job and then ensure they are properly qualified – they need to be the rightt fit fit to join us rather than being highly qualified. We can manage that after they join us.

“Having said that, we have a total staff of 72 people, of which 30 are directly involved in insurance and of those, seven are Chartered insurers.

On the underwriting team, uniquely (certainly in this market), everyone is Chartered or working towards becoming Chartered. In the rest of the overall team, we have about half of them with Chartered status in their own disciplines. So, for example, they will be Chartered accountants or Chartered surveyors.”

In terms of support, Mr Nabimanya said: “These people are going to be advising our clients, so it’s essential they are as well qualified as possible.

To help them achieve that goal, we will cover their subscription costs for CII membership and pay for their exams.

We also buy the relevant books so they can prepare for those exams.”

Beyond that, however, ZEP-RE operates its own training academy.

Run by Shipango Muteto, the academy serves to train not just ZEP-RE staff but also insurers and brokers across eastern and southern Africa. In the past year, it has also started training for the national insurance regulators.

Mr Muteto said: “We realise there is often a huge gap in people’s understanding of reinsurance, even when they are a the very people buying the policies p or setting the policies.

So, So we launched the academy to t help h l bridge the gap. It has been really important to engage with the regulators, identifying the gaps in knowledge across the sector.”

IKON

THESE PEOPLE ARE GOING TO BE ADVISING OUR CLIENTS, SO IT’S ESSENTIAL THEY ARE AS WELL QUALIFIED AS POSSIBLE. TO HELP THEM ACHIEVE THAT GOAL, WE WILL COVER THEIR SUBSCRIPTION COSTS FOR CII MEMBERSHIP AND PAY FOR THEIR EXAMS.

DRIVING STANDARDS ZEP-RE has also developed its own reinsurance certification programme, working with the Nairobi-based College of Insurance. Now, Mr Muteto would like to go one stage further.

“We are working with various regulators to see if we can have this certification made compulsory for those working in the reinsurance space,” he said.

"It would help drive standards upwards, build capacity (which is part of our mandate), improve resilience within insurance companies and engender greater trust in insurance among consumers – which is much needed across the region.”

And beyond that, Mr Shipango said: “Ideally, we would build a stronger relationship directly with the CII and eventually maybe the certification can be approved so that candidates automatically have some points towards their CII qualifications.”

He believes this is very important for emerging markets, where there is an urgent need to upgrade skills but candidates are often struggling to pay the fees. Another challenge, he said, is relevance.

“If the first exams that candidates take are designed locally, they will be more relevant,” he explained. One of his co-workers who recently sat her CII exams said the greatest challenge was in understanding the context of the questions.

“I have never been to the UK and don’t know the rules of the road, for example. I don’t know UK law either and, while it has been very interesting to learn about it, I am unlikely to ever need that information,” she said. →

25

thejournal.cii.co.uk / The Journal / October - November 2019

24-26_CII Overse_Oct-Nov 2019_Cll The Journal 25

25/10/2019 11:50

CHARTERED

WE HAVE SPONSORSHIP FOR THOSE WHO CAN ACHIEVE HIGHER QUALIFICATION IN THE FINANCIAL PLANNING FIELD

26

ASIA IPP is a licensed financial advisory company serving high-net-worth and high-income executives, business owners and entrepreneurs in Singapore and the southeast Asia region. It offers advice in the areas of estate planning, life and health insurance economic life planning, key owner/executive life insurance and business continuation planning, comprehensive financial and investment planning.

Headquartered in Singapore, with an associate office in Hong Kong, the organisation has nearly 600 financial adviser representatives and staff.

We spoke to managing director Alan To about the company’s growing relationship with the CII. ● How long have you been a member of CII Asia?

Although the CII is very experienced and has existed for a long time, the exposure in Hong Kong (HK) is lower than in the UK and still improving.

In HK, we often attend events hosted by the Institute of Financial Planners of Hong Kong (IFPHK). However, we have now started asking the CII to host continuing professional development (CPD) courses for our firm.

● How many staff hold Chartered status and how many are working towards it?

We do not have anyone that holds Chartered status with the CII currently.

But I am planning time to allow for that. The most advanced designation is certified financial planner (CFP). I am a CFP in HK and have the cross-border certification in China, while 15% of our firm are CFP HK holders – and the number is increasing. I know that the only way to have a lasting career in financial planning is to be more professional. And I am moving my team in this direction. ● Do many of your staff hold other qualifications – for example, Chartered accountant?

As I said, we have about 15% advisers who are CFP HK. In financial planning in HK, the most valued status is CFP. We also have many qualified retirement advisers (another accreditation from IFPHK) in our firm.

In addition, many of us studied IFPHK courses so as to become CFP and associate financial planner.

● What do you do as an employer to encourage your staff to improve their qualifications?

We have sponsorship for those who can achieve higher qualification in the financial planning field. We allow extra study leave, on top of the number of days’ holidays, for our advisers for studying. ● Have you/or your staff encountered any challenges in answering questions – for example, learning UK law?

More than 10 years ago, I learned that the regulators were making changes to an advisory-based career in UK. I got a shock, as I was a senior branch manager in Prudential at the time.

That is one of the reasons I moved from a tied agency to IPP. ● Would you like local certifications to count towards CII exams and do staff struggle with the cost of the exams?

Of course, if IFPHK’s courses can be counted towards CII qualifications, it would be very good. In my firm, exams are not a big issue as most of the advisers we have are graduates.

They would not be very resistant to sitting further exams. ●

thejournal.cii.co.uk / The Journal / October - November 2019

24-26_CII Overse_Oct-Nov 2019_Cll The Journal 26

25/10/2019 11:50

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

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

27_Robot Digital Ad_Oct-Nov 2019_Cll The Journal 27

25/10/2019 11:01

MOTOR

W 28

hen autonomous vehicles eventually appear on public roads, what will be the impact on the insurance sector?

Adoption of autonomous vehicles could remove 60% of premiums from the motor market, according to a new report published by law firm Kennedys.

There is ongoing debate – partnered with some scepticism – about when driverless cars will be introduced. The UK government is currently funding numerous research projects working on simulation and modelling to aid the development of connected and autonomous vehicles, while striving towards its target of seeing “fully driverless cars” in use in Britain by 2021.

DRIVING CHANGE With the race to roll out driverless cars on UK roads gathering pace, Luke Holloway examines the possible impact on the insurance sector

thejournal.cii.co.uk / The Journal / October - November 2019

28-29_Autonomous_Oct-Nov 2019_Cll The Journal 28

25/10/2019 09:28

MOTOR

In October, self-driving taxis became the latest autonomous automobiles to be tested on public roads in the UK. This followed a 30-month, jointly funded £13.6m programme led by the government alongside the DRIVEN autonomous vehicle technology consortium.

The small group of cars successfully completed pre-programmed routes through the streets of Stratford, east London, with minister of state at the Department for Transport, George Freeman, stating: “We want to drive the rollout of self-driving vehicles and continue to support innovators developing this groundbreaking technology.

“The success of trials like project DRIVEN underpin our ‘Future of Mobility: Urban Strategy’, highlighting our ongoing support for innovation, research and the trialing of exciting new technology, which cements our position as a global leader in this space.”

However, some experts are less confident. They cite the quality of road surfaces, traffic laws and signs and road markings that autonomous vehicles can recognise as just some of the factors that will delay the technology’s introduction.

Brian Reimer, research scientist at the Massachusetts Institute of Technology, said: “While many individuals out there are working on the development of self-reliant automation – a robot capable of making its own decisions in today’s infrastructure – the reality is that today’s infrastructure is not well equipped for autonomy.

“In essence, potholes, poor lane markings and other crumbling aspects of our infrastructure are not going to support high-tech well.”

ISTOCK

INSURANCE IMPLICATIONS Following discussions with insurance industry professionals, Kennedys revealed the consensus is that insurance premiums for private road users will go down because of autonomous vehicle technology

if there are fewer accidents; with one insurer predicting that as much as 60% of their motor premiums could disappear in a fully automated marketplace.

It is also acknowledged that the new generation of road vehicles will encounter less wear and tear.

In theory, this should reduce maintenance costs as well as further lowering insurance payouts and premiums.

However, maintenance and repair costs may still be high as the sophistication of the technology increases and because usually only the manufacturer will be able to conduct the required servicing.

CONNECTED AND AUTONOMOUS VEHICLES WILL CREATE A MASSIVE INCREASE IN DATA, WHICH MAY HELP TO IMPROVE RISK PRICING AND ULTIMATELY REDUCE PREMIUMS

CHANGING FOCUS Removing the scope for human error behind the wheel, as seen with full automation, removes the driver from the liability equation and weakens the relationship between the driver and the insurer. In its place, the market will have to move more towards a product liability focus.

Richard West, head of liability and innovation at Kennedys, said: “The rapid development of autonomous vehicles will have a profound impact on the insurance industry. Insurers will be faced with strategic challenges in continuing to support the classic insurance model, towards new risk models in which the liability moves towards product manufacturers.

Mr West continued: “Insurers will need to develop autonomous

£52bn UK’S MARKET FOR CONNECTED AND AUTOMATED VEHICLES IS ESTIMATED TO BE WORTH £52BN BY 2035 Source: Gov UK

vehicle insurance propositions as they see changes in consumer appetite for insurance products. We are likely to witness a move away from annual renewals towards on-the-go insurance and the growth of more transactional relationships where less is understood about the risk profiles of individual drivers.”

The report recommends that, to adapt with growing automation and shifts towards different policy structures, there must be a robust framework and agreement in place between insurers, technology firms and original equipment manufacturers to ensure a transparent view of vehicle behaviour, while also accommodating data privacy of users and commercially sensitive information.

Mr West concluded: “Connected and autonomous vehicles will create a massive increase in data, which may help to improve risk pricing and ultimately reduce premiums, but only if such data is not siloed. To ensure that insurers are central to providing risk management solutions to their customers, they will need to take an active lead in autonomous vehicle initiatives – as is already being seen with those investing in mobility research and development.”

While technology is invested in, laws reviewed and infrastructure improved, insurers must be aware that a significant shift in premiums and liability, as well as a more distant relationship with the driver, may be on the horizon. ●

29

Luke Holloway is editor at the CII

thejournal.cii.co.uk / The Journal / October - November 2019

28-29_Autonomous_Oct-Nov 2019_Cll The Journal 29

25/10/2019 09:28

CLASS ACTIONS

A TOUCH OF CLASS Class action lawsuits are becoming more commonplace outside the US. Graham Ludlam and Duncan Strachan examine what this means for the insurance market

ISTOCK

30

thejournal.cii.co.uk / The Journal / October - November 2019

30-31_DAC Beechc_Oct-Nov 2019_Cll The Journal 30

25/10/2019 11:01

CLASS ACTIONS

H

aving been a feature of the US legal system for years, signs are growing across the world that class actions – where a group of individuals seeks redress against a corporation or organisation – are gaining more traction. Crossborder scandals such as Volkswagen’s dieselgate and the Petrobras corruption securities class action, one of the largest of all time, are contributing to this growing awareness.

US AND AUSTRALIA LEAD THE WAY Class action activity has flourished in Australia and the US because of how their respective legal systems are structured. Contingency agreements are available that shield plaintiffs from having to cover the costs if their case fails. Plaintiff law firms and litigation funders, if successful, can receive rewards of up to 45% of the damages awarded.

Class action activity in Australia is at unprecedented levels and is having a major impact on directors and officers (D&O) insurance, with premiums having been rising for some time.

By contrast, the US business community – influenced by the Trump administration's pro-business position and changes to members of the Supreme Court – appears to be looking to avoid class actions. With its Supreme Court increasingly accepting agreements that waive class arbitration, US businesses are using this shift to divert a potential case to arbitration and force the case to be run on an individual basis, rather than face a class action.

However, the appetite for class actions remains, with increased activity, for example, over company websites being inaccessible to the visually impaired and claims related to concussion in sport. In relation to securities, the number of class actions being filed has risen markedly, with 5,200 filed since 1995. Yet fewer than two dozen of these have actually gone all the way to trial.

In Australia, the average settlement of securities class actions is up from £21m to £24m. With a D&O premium

pool of about £160m, it does not take many class actions to cause market losses. Consequently, the market is changing, with brokers reporting a median increase in primary premiums of 89%-122% and some insurers either reducing capacity or pulling out of the market.

EUROPE TAKE ACTION Germany has experienced a shift in political mood, with a desire to embrace some form of class action, largely in the wake of the Volkswagen emissions scandal. German consumers have felt mistreated, having seen class actions and enormous payments in the US following class actions taken against the German company, while they have had nothing.

Compensatory collective redress is available in 19 member states, but in more than half of them it is limited to specific sectors, mainly consumer claims.

Nine countries do not provide the option collectively to claim compensation in massharm situations and only six member states have a proper alternative dispute mechanism focused on mass-harm situations: Belgium, France, Italy, the Netherlands, Spain and the UK. There is, however, a European Commission proposal that goes a step further. Launched in April 2018, the Representative Action Directive aims to ensure stronger consumer protection in the EU, following the cross-border scandals. It would allow group action against trader violations with a broad public impact in domestic and crossborder cases, in various consumer areas such as data protection, financial services, travel and tourism, environment and health.

Crucially, however, under the draft rules representative action could only be brought by eligible entities, such as consumer organisations and certain independent bodies designated by member states. It will, however, face

some hurdles in Ireland, particularly in relation to third-party litigation funding, which is expressly permitted by the directive but remains broadly unlawful in Ireland.

The English legal system, although it recognises group litigation in restricted factual situations, has not traditionally permitted US-style class actions. There is, however, increasing pressure to embrace more collective redress in the consumer area. The Consumer Rights Act 2015 introduced an opt-out collective redress regime for competition claims. This permits a claimant representative to bring an action on behalf of a group of individuals where this follows on from an ‘infringement decision’ or ‘an alleged infringement’ of anticompetitive behaviour prohibited by the Competition Act 1998 or EU law.

In Scotland, the Act bringing in a new ‘group procedure’ became effective in January 2019. This saw the introduction of an opt-out system for the first time in the UK, whereby claimants resident in Scotland will be automatically represented.

Residents outside Scotland would have to opt in.

In the final analysis, despite a shift in opinion towards acceptance of the value of class actions, the legal, judicial and funding systems across Europe continue to work against any major change. Yet with US plaintiff firms looking to grow outside their country, litigation funders eyeing potential returns and a rising number of international cross-border scandals, attempts to force the issue will continue to increase.

DAC Beachcroft’s international insurance report, Informed Insurance, is available at: insurance.dacbeachcroft.com ●

THE ENGLISH LEGAL SYSTEM, ALTHOUGH IT RECOGNISES GROUP LITIGATION IN RESTRICTED FACTUAL SITUATIONS, HAS NOT TRADITIONALLY PERMITTED US-STYLE CLASS ACTIONS

31

Graham Ludlam and Duncan Strachan are partners in the Global Group at international law firm DAC Beachcroft

thejournal.cii.co.uk / The Journal / October - November 2019

30-31_DAC Beechc_Oct-Nov 2019_Cll The Journal 31

25/10/2019 11:01

TA L K 2 1 0 K

Emma Ann Hughes explains how a Talk Money Week challenge aims to help women take charge of their financial futures

32

IT’S GOOD TO TALK MONEY thejournal.cii.co.uk / The Journal / October - November 2019

32-33_IWF_talk210_Oct-Nov 2019_Cll The Journal 32

25/10/2019 11:02

T

he CII set a challenge to the Insuring Women’s Futures (IWF) ambassadors to ‘Talk to 10,000’ during Talk Money Week, which kicks off on Monday 18 November.

The ‘Talk 2 10K’ challenge requires each ambassador to meet and talk through the Moments that Matter in women’s lives with at least 10 women, men, girls or boys, in a bid to improve women’s financial resilience.

But how do you host a financial wellbeing session, get women talking and then taking action to make sure they are not worse off than their male counterparts or past generations?

A recent CII and IWF training event at St Mary’s Axe in London, and a subsequent webinar, detailed how you can hold a female financial wellbeing session to flag steps to become more financially resilient and independent.

Having attended the training event and signed up as an ambassador, here are three top tips on how you can talk about key moments in every girl and woman’s life to inspire them to take action that will make a real difference to their financial security.

KICK OFF WITH A GOAL Make sure you start your session by explaining what the aim of the financial wellbeing session is: to educate and inform your friends, family, colleagues or group about the perils and pitfalls they may encounter throughout life that could cause them to be less well off than men, or their mother’s and grandmother’s generations.

A picture paints a thousand words and provokes many more thoughts, so you could use a short video produced

by IWF and the CII – which can be found at vimeo.com/295824488 – that talks about the impact of events in the lives of women on how much cash they have in their pockets, to get the group talking.

SPARK A DEBATE Ask your group if they recognise themselves, a friend or family member in the stories the video featured.

Sometimes, people can be shy about talking about their own circumstances, so why not share an anecdote about how your finances were affected by a life event and ask the group what they think about what happened to you.

What different decisions could

have been made to achieve a better outcome? The vital part of a wellbeing session is to get people thinking: what are your group’s concerns about money?

NEXT STEPS IWF and the CII have produced a webpage detailing where women can receive financial guidance, find a financial adviser, learn more about their pay rights, benefit entitlements and produce agreements to make sure no-one is worse off simply because they were born a woman.

The aim of each session is that women should leave knowing there are many organisations and resources that can help them take charge of their finances.

The aim of a session is not to leave women with a recommendation – which is why you do not have to be a financial adviser to be an IWF ambassador.

For example, for financial guidance on any life event, your group could visit citizensadvice.org.uk and moneyandpensionsservice.org.uk For help managing their debts, there is the Debt Support Trust at debtsupporttrust.org.uk and the Debt Advice Foundation at debtadvicefoundation.org If any member of your group suspects they are not being paid as much as male colleagues or less is being put into their pension, then Acas gives details on how they can challenge their employer: acas.org.uk/pay If an individual is subject to relationship abuse, going through a divorce and needs to think about child costs, visit the Child Maintenance

Service at www.gov.uk/managechild-maintenance-case or Relate at www.relate.org.uk If they don’t want to put a ring on it but don’t want to end up worse off, Advice Now offers assistance with putting arrangements in place if couples are cohabiting: www. advicenow.org.uk/tags/marriagecivil-partnership-and-cohabitation Additionally, everyone should visit the government’s website, which explains what benefits you are entitled to and what you need to do to make sure you get your full state pension: www.gov.uk But if anyone seeks guidance and still needs help, or knows their needs are complex, then seek financial advice. Websites such as our own Personal Finance Society’s Find an Adviser search engine at thepfs.org/yourmoney/find-anadviser can help your group.

Also, make sure the group members are aware that we want as many women talking about money as possible, and a great way to do that is to get vocal on Twitter, Facebook and LinkedIn. Ambassadors should make sure they share photos of their sessions plus their thoughts and the group should be encouraged to reveal what they learnt during your session on social media.

Show your support for improving women’s financial futures by sharing your female financial wellbeing sessions using the hashtags #femalemoney #InsuringFutures #MomentsThatMatter. Our Twitter handle is @CIIGroup and you can find us on LinkedIn @Chartered Insurance Institute. ●

33

Emma Ann Hughes is communications director of the CII

SHARE YOUR SESSION You can use the hashtags #femalemoney #InsuringFutures #MomentsThatMatter. Our Twitter handle is @CIIGroup and you can find us on LinkedIn @Chartered Insurance Institute.

thejournal.cii.co.uk / The Journal / October - November 2019

32-33_IWF_talk210_Oct-Nov 2019_Cll The Journal 33

25/10/2019 11:02

UNDERWRITING

NAVIGATING CHANGE

34

O

ne building over from the CII’s head office in the centre of London is a small Sainsbury’s Local. Outside this unassuming Lombard Street building there is a small blue plaque on the wall, which marks the former site of the Lloyd’s Coffee House where in the late 1680s, one of the world’s major insurance markets was born.

Nearly 350 years on, we have yet to invent a concept or idea that can replace insurance. While the world changes and the risks facing us all change, insurance stands solid as a way of pooling risk, enabling trade and protecting the irreplaceable.

Underwriting through this time has changed of course and, in many ways, we don’t notice it. Imagine talking to an underwriter from the 1950s about a catastrophe model for instance, or consider the sophistication in underwriting a personal car insurance product now versus even 10 years ago. Whilst we are potentially living through a period where in a decade, the nature of underwriting will change more than in the previous

50 years. Every generation thinks they are living through a new revolution, but with the exponential growth in computing power, in my opinion no profession will see as big a change to the dayto-day role as an insurance underwriter during the next 10 years.

A study by Oxford University rates the insurance underwriter as the fifth most susceptible role to being automated.

However, the notion that underwriters will be replaced by robots is of course fundamentally flawed.

Yes, underwriters will have more time; mundane tasks will be automated and day-to-day collection and production of reporting will cease. The important role underwriters will be able to play in this ecosystem will be different. Going forward, vast quantities of data will be at the disposal of the underwriter – not just generated by the headline-grabbing online

SHUTTERSTOCK

As big data begins to revolutionise the role of the underwriter, Philip Williams looks at how the newly formed Society of Underwriting Professionals can offer guidance

thejournal.cii.co.uk / The Journal / October - November 2019

34-35_Underwriti_Oct-Nov 2019_Cll The Journal 34

25/10/2019 11:03

UNDERWRITING

connected devices, but in the more mundane aspects of risk reporting and risk detail.

For those entering the profession today, this will be second nature. The skills underwriters will learn during their training will be more datafocused, more computer-oriented and less codified. The underwriter’s greatest asset, their judgement, will

be as important as ever. But with portfolio underwriting increasing over case underwriting, this judgement will be levied on different decisions.

For those underwriters that are 20 years into their careers, this is a challenge.

During the 1990s and 2000s, the banking industry saw huge transformation. Within 15 years, the late-night bustle of traders hitting the bars after the bell had rung for the close of the day’s trading had been transformed by machines. The companies with the edge had changed the skillset.

Gone were the extroverted salesmen; in came the quants – mathematically-minded, computer-literate traders

commitment from organisations young and old to develop their people will remain crucial to the success of the industry as a whole. With people changing roles and companies at a significantly higher rate than before, it will be just as important for individuals to place a higher emphasis on their own personal development as it is in the interests of business to develop them. Those individuals will stay close to the businesses that are doing the most in this space, but most importantly, in my opinion, will bring to the profession a human touch.

GUIDING HAND The Society of Underwriting Professionals (SOCUP) is here to help the membership navigate through these choppy waters. In addition to the high-quality development material on relevant subjects, expect some thought-leading material on the issues facing the industry and, importantly, practical takeaways aimed and curated directly for underwriters.

I am delighted that this material will be available through multiple mediums on the Society website: www.socup.org.uk.

The SOCUP board includes a wide cross-section of the insurance profession, across differing sectors, distribution methodologies, lines of business and stages of career.

Part of our role is to ask our members to try to identify impact areas that matter to them, helping provide a place for the profession to reflect on the challenges of this dynamic world.

I am excited and optimistic about the opportunity for underwriters to re-emphasise the benefit of the profession to the public at large during the coming years and am honoured to be appointed to this non-executive director role. ●

35

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

that revolutionised the world of banking. Perhaps the edge this approach will give to insurance companies is not as large as that afforded to the largest investment banks. But the battle we’re already seeing play out in personal lines will undoubtedly affect roles up and down the insurance value chain.

The debate in insurance circles will most likely continue to be how the underwriting profession can continue to inspire public confidence during this changing period. Training, continuing professional development and a

Philip Williams is non-executive director at the Society of Underwriting Professionals

thejournal.cii.co.uk / The Journal / October - November 2019

34-35_Underwriti_Oct-Nov 2019_Cll The Journal 35

25/10/2019 11:03

MOTOR

L 36

oose pets, charging for lifts and making your mum the main driver can all potentially lead to a motor insurance claim being rejected. But rather than looking for excuses in the small print, insurers are taking a much more upfront approach to ensuring they pay as many claims as possible.

The risks that motorists take with their cover were revealed by research by price comparison website MoneySuperMarket earlier this year. It found that nearly 10 million road users risked invalidating their policy by failing to secure their pets properly while driving.

Other common activities that the research found could potentially break the terms of a policy included changing jobs without notifying the insurer (23%), letting others drive their car without the correct insurance (15%) and charging for lifts (13%).

While these activities could potentially invalidate a policy, figures from the Association of British Insurers (ABI) show the number of claims declined are few and far between. According to its latest statistics, 98.4% of motor insurance claims were paid in 2016/2017.

“It is very rare for a claim to be declined,” said Malcolm Tarling, a spokesperson for the ABI. “The terms and conditions on motor insurance policies are very standard across the industry, so there is not much room for ambiguity.”

As an example, when it comes to transporting pets, the Highway Code recommends drivers use a seatbelt harness, pet carrier, dog cage or guard to secure a pet. Although a driver could face an on-the-spot fine of £100 if they are distracted by an unsecured pet, it is not an offence and, as Glenn Edwards, motor underwriting manager at Aviva, explained, would not have any ramifications for insurance. “We always look to try to cover a claim.

In the event of a road traffic accident,

we would cover an injury caused by an unrestrained pet in your car,” he said. “But that does not mean you don’t need to restrain your pet – their safety, and that of all car passengers, should be paramount, so it makes sense to protect them.”

Charging for lifts is also unlikely to see a motorist invalidate their cover.

Shaune Worrall, technical services manager at the British Insurance Brokers’ Association, said this is perfectly acceptable as long as they are not making a profit. “If you charge a passenger to cover the petrol and wear and tear, there wouldn’t be an issue,” he explained. “But if you start using the vehicle for hire and reward, you will need commercial insurance.”

ADVANCES IN TECHNOLOGY HAVE ALSO HELPED THE INSURANCE INDUSTRY REACH THIS NEAR-PERFECT CLAIMS RECORD. BY CROSS-REFERENCING THE INFORMATION PROVIDED ON AN APPLICATION FORM, AN INSURER CAN QUESTION ANY ISSUES AT THIS POINT RATHER THAN AT CLAIM Valet parking is similarly dismissed

by Mr Worrall as a reason why a claim would be rejected. Where a company offers valet parking, he says the onus is on it to take out appropriate business insurance to cover its representatives when they drive other people’s vehicles. “Very few claims are actually thrown out altogether,” he added. “Sometimes there might be some debate over where the vehicle was normally kept but, in most cases, claims are settled without dispute.”

Supporting this, Aviva’s Mr Edwards said the main reason Aviva declines a motor claim is down to something much more straightforward – its value

being less than the excess.

“It is important customers taking an excess understand what costs they would be responsible for in the event of a claim,” he explained. “If the total value is less than the excess, there’s no cover in place.”

TECH TO THE RESCUE Advances in technology have also helped the insurance profession reach this near-perfect claims record.

By cross-referencing the information provided on an application form, an insurer can question any issues at this point rather than at claim. Various databases are available for this: the Driver and Vehicle Licensing Agency, to check motoring convictions; the Motor Insurers’ Bureau’s Claims and Underwriting Exchange, to identify fraud; and mapping services, to check on details such as whether a property has a garage or drive.

Taking this approach helps to iron out misunderstandings but it also catches fraudsters. For example, in 2018 Aviva detected 16,700 fraudulent insurance applications, up 20% on the previous year, with the most common examples being ghost broking, payment fraud and quote manipulation.

If it is not picked up at application, quote manipulation is where a motorist can unwittingly find themselves invalidating their cover.

Fronting, where a young person names a parent as the main driver policy to reduce the premium, can be regarded by the public as gaming the system but, in insurers’ eyes, it’s fraud. “It is something we warn the public about,” said Mr Tarling of the ABI, adding that it may be less common nowadays as a result of telematics. “If someone can use telematics to make insurance more affordable, they may be less inclined to consider fronting.”

While it is possible to invalidate a motor insurance policy, the insurance profession is working hard to ensure this does not happen.

By validating policyholder details at outset, the vast majority of claims can be paid without issue. ●

thejournal.cii.co.uk / The Journal / October - November 2019

36-37_Invalid Ca_Oct-Nov 2019_Cll The Journal 36

25/10/2019 11:03

MOTOR

NO RUFF DEALS Sam Barrett examines how the motor insurance sector has achieved a near-perfect claims payment record

37

MOTOR INSURANCE CLAIMS

GETTY

• 98.4% of motor claims were settled in 2016/2017 • £29m is paid out every day • £2,952 is the average private car claim • £10,347 is the average bodily injury claim • £775m of fraudulent motor claims detected in 2017 Source: ABI

thejournal.cii.co.uk / The Journal / October - November 2019

36-37_Invalid Ca_Oct-Nov 2019_Cll The Journal 37

25/10/2019 11:04

CLAIMS

HOME SWEET HOME? Tim Evershed examines potential liability claims of employees working remotely

T 38

hanks to the evolution of mobile and wireless technology, more employees are working remotely at home, on the move, on trains, in coffee shops or hotels. In fact, the Office for National Statistics predicts that half the UK workforce will be working remotely by the end of 2020.

This change is being driven by businesses looking to realise expense efficiencies and reduce their environmental impact. However, companies that encourage remote working must ensure their employees are still in safe workplaces, or will be liable to face an increasing number of claims. In the UK today, 1.4 million workers are suffering from work-related ill health. Muscular-skeletal disorders (MSDs) represent 41% of all employment ill health, with 156,000 new cases reported last year.

“There have been various medical studies into people using smartphones and laptops, etc – [with] more and more people agile working – and the types of injuries they are getting. They are showing a link between absences from work from MSDs and the use of these devices,” said David Tait, a partner at Clyde & Co. He continued: “Realistically, the setups for working on the move or from home are not going to be nearly as professional as they are in the office space. Something like half a million people are reported as suffering from MSDs and millions of days are lost across the country each year.

“From a civil point of view, we may see more people making claims off the back of this. If somebody develops a

condition and was able to establish that it was through their employment, then they would have a clam against their employer.”

HOME HAZARDS “In most cases, working from home will mean employees will almost invariably be engaged in some form of office work rather than manufacturing or assembly, therefore hazards will involve those normally associated with the office,” according to Andy Miller, loss control technical manager at Allianz Insurance.

“Common risks to consider include the use of display screens and associated equipment, such as printers and furniture, with the need to complete a specific workstation assessment.

“In addition, companies should consider nonphysical challenges such as mental health, which can be detrimentally affected by prolonged

THE LAW SAYS BUSINESSES MUST MITIGATE RISKS AS FAR AS IS REASONABLY PRACTICAL, NOT ELIMINATE THEM

periods of isolation and by failing to maintain a work/life balance.”

Steve Browne, head of casualty, commercial motor and motor trade insurance at AXA Insurance, said the insurance industry can help bring this issue to the attention of businesses of all sizes.

He added: “Most liability insurers will survey bigger risks and offer selfhelp survey tools online that are free, which can allow a small business to go in and do their own risk assessments.

“The law says businesses must mitigate risks as far as is reasonably practical, not eliminate them. employer's liability insurance does not exclude certain risks and this risk is covered, provided the individual doing the work in the home is an employee and not an independent contractor or freelance worker.

“Although, there are always going to be costs that are not covered by an insurance policy when things go wrong. Managing issues around injuries in the workplace could involve a regulatory body and absences put pressure on those who have to cover the work.” ●

thejournal.cii.co.uk / The Journal / October - November 2019

38_Home worker c_Oct-Nov 2019_Cll The Journal 38

25/10/2019 11:04

E D U CAT I O N

George Tsounias offers some tips on how to get involved in inspiring the next generation of professionals

I

n recent months, there has been a marked increase in the number of requests we have been receiving from members as they start to get invited to attend a careers fair, presentation or deliver a Discover Risk workshop.

We understand that making those school connections can often be time consuming and require a certain degree of patience, so it is great to see so many members getting in touch about the scheduled activities that they have planned.

Schools are really keen to hear from local professionals because the careers strategy is very high on the agenda, as they have to provide students with opportunities to explore the wider working world.

We are often asked about the best way to engage with a local school.

Here are some pointers: 1. Check for any existing school contacts through family or friends.

2. Spend some time on the school website and try to identify any upcoming careers fairs or find the careers lead at the school.

3. In the absence of a careers lead, find the contact details of the head of sixth form or assistant head.

39

SCHOOL’S IN THE INSURANCE INSTITUTE OF NEWCASTLE UPON TYNE This month, the CII caught up with Anne Hudson, careers officer from the Insurance Institute of Newcastle upon Tyne, to hear about the great work they have been doing so far this year.

“Combining Discover Risk with careers produced a major step forward in the north east,” she said.

“I have worked with the North East Local Enterprise Partnership (NE LEP) and Newcastle City Council (NCC) to promote careers in insurance. This involved presentations to school careers ambassadors and distribution of CII literature. As a result, many bookings have been made for Discover Risk sessions within schools. Schools are now asking for speakers for their careers days for pupils and parents.

“Working with CII relationship managers, opportunities for sessions within colleges and universities have been planned.

“In addition, I am working with Northumbria University to quantify and qualify training opportunities for insurance jobs and work placements in the north east – for both experienced staff and students.”

If, like Ms Hudson, you would like to share news about your activities as a local institute and share some of your successes, please get in touch.

Do you have a school event coming up? Contact us via volunteer@cii.co.uk to request resources.

George Tsounias is relationship manager of education at the CII

Note: Should you wish to contact a school independently, please contact us so we can provide relevant information to help you.

thejournal.cii.co.uk / The Journal / October - November 2019

39_Education cha_Oct-Nov 2019_Cll The Journal 39

25/10/2019 11:05

TA L E N T

NEW GEN: RISING TO THE CHALLENGE The CII’s Matt Connell provides an update on the ongoing work of the New Generation groups

40

T

his year’s New Generation projects have, more than ever before, seen the programme address the issue that is key to the CII: securing public trust.

The projects stretch from making the sector a more diverse place to work, to building trust in the way insurers use data.

BROKING The broking group has been investigating issues related to public trust specifically in the small and medium-sized enterprises (SME) sector, to see if there are differences between individuals and firms who service this sector compared to the wider profession. Its work is based on a sector-wide survey and in-depth interviews. The group has also drawn on the CII’s public trust index to gain insights from consumer research. Its work will provide a rich insight into what brokers can do to build trust in the profession – and will be a valuable resource for insurance professionals for years to come.

CLAIMS The claims group has researched a specific component of public trust in insurance – perceptions on use of

data. With individuals sharing more personal data than ever before when comparing, buying and renewing products, the group wanted to find out more about how customers believe their data is used by insurers, with a particular emphasis on those who have recently been through the process of making a claim.

Looking beyond legal definitions of good and bad practice, the group looked at the emotional aspects of data handling, asking consumers what they are comfortable with and what they find unsettling about data use. It will then use this information to publish a piece of work that will engage with negative perceptions around data use and explain in plain language how customers’ data can be used for their benefit.

UNDERWRITING The underwriting group has researched how perceptions of the sector have changed in recent years. Members were asked how long they have worked in the sector, recalling how they felt when they started their careers, before comparing how they view the sector now. Covering topics such as learning and development, diversity and inclusion, and wellbeing, the group hopes to publish a report that will help insurers recognise where

they can support their staff more fully throughout their careers.

The work of the underwriting group was hugely topical, given the interest the Financial Conduct Authority (FCA) has taken in the conduct of financial services companies as employers; and the links it has made between issues like harassment and bullying, and poor consumer outcomes. As Nausicaa Delfas, executive director of

thejournal.cii.co.uk / The Journal / October - November 2019

40-41_New Gens 1_Oct-Nov 2019_Cll The Journal 40

25/10/2019 11:05

TA L E N T

THE LONDON MARKET GROUP HAS BEEN LOOKING AT THE VIABILITY OF INTRODUCING AN INTERNSHIP FOR PEOPLE WITH AUTISM IN THE INSURANCE SECTOR, DRAWING ON INSIGHTS FROM THE INSURANCE SECTOR AND FROM CHARITIES LONDON MARKET The London market group’s work has focused on the experiences of one very specific group of potential employees in insurance – people with autism.

There have recently been initiatives to create programmes to support people with autism at global companies like Goldman Sachs and Procter & Gamble.

The London market group has been looking at the viability of introducing an internship for people with autism in the insurance sector, drawing on insights from within the sector and from charities. This is an important and very sensitive area, and the London market group has been working patiently and carefully to produce a set of proposals that are viable and fully reflect the needs of all involved. Part of the group’s work has included a presentation of its plans to the All Party Parliamentary Group for Insurance, cementing the status of the New Gen group among key policymakers as an important and vibrant source of new and challenging thinking.

41

PRACTICAL SOLUTIONS

international at the FCA, has said: “An emerging theme in the last year or so has been non-financial misconduct, such as serious personal misbehaviour, bullying, sexual discrimination or sexual misconduct in the workplace.

This type of serious misbehaviour is toxic to a working environment and can lead to bad outcomes for customers, staff, stakeholders and the firm.”

Much of the commentary about non-financial conduct in the insurance sector has been based on anonymous sources and focused on the worst abuses. The work of the underwriting group aims to produce a more balanced view of the experience of professionals, while continuing to look for areas in which improvements can be made.

During recent years, the New Gen programme has consistently confronted difficult issues and laid out a path for the sector to follow in improving standards and winning public trust. This year has built on this track record, demonstrating the appetite among future leaders in the profession to take on tough ethical challenges and find practical solutions to important problems. ● Dr Matt Connell is director of policy and public affairs at the CII

thejournal.cii.co.uk / The Journal / October - November 2019

40-41_New Gens 1_Oct-Nov 2019_Cll The Journal 41

25/10/2019 11:05

LOCAL INSTITUTES

CREATING CONNECTIONS Past local institute president, Malcolm McCutcheon, explains how, in an age of online networking, the local institutes offer an unmatched opportunity to make real-world relationships 42

I

n the famously sociable profession of insurance, it pays to get out there and meet new people. Furthermore, it is the relationships you build and maintain throughout your career that can give you opportunities further down the line and provide support wherever your career takes you.

Malcolm McCutcheon began his career in Glasgow in the late 1980s, but after 10 years took up a position in Essex. It was there he first got involved with the Chelmsford and South Essex Local Institute.

“At that time, it had been struggling to attract new and younger members and several of its council were on the point of retiring, so it needed an injection of energy and enthusiasm,” says Mr McCutcheon.

“We began by bringing several younger members onto the committee and revitalising the events programme. We also started going out to schools.”

As education officer, Mr McCutcheon started a schools programme about insurance, highlighting the opportunities it offers. After a year as president in 2008/2009, he focused more on organisational roles, putting on

learning and social events.

In 2011, Mr McCutcheon moved back to Glasgow, but the network he had built up around him during his career enabled him to quickly re-establish himself back home. “When I moved, I made tremendous connections that helped me in so many ways,” he explains. “Local institutes go a million miles to expand your network, far further than you could do in the normal course of work.”

Mr McCutcheon returned to the Glasgow Institute, where he has been involved in improving the quality and broadening the range of speakers, looking beyond the membership for ideas and inspiration.

Mr McCutcheon believes local institute events are also a sure way to enhance your profile – and that is important too. “Insurance is like the smallest village in the country,” he says. “Everyone knows everyone else and the people you meet are important. You never know when you might need someone, either because you are doing some business that may involve them or because you need some advice about a subject that might be their area.”

The relationships that begin at your local institute often lead to career conversations too, so you are meeting people who can help to shape your future.

“There are 10,000 people working in insurance in Glasgow; how else are you going to make yourself known to them for business and career advantages?” asks Mr McCutcheon.

Getting on the network through the local institute gets you seen and recognised.

One cannot deny that physical meetings and word-of-mouth introductions put the local institute experience in a totally different league to the comparative remoteness of LinkedIn. For more information, visit: cii.co.uk/fivebigwords ●

THE RELATIONSHIPS THAT BEGIN AT YOUR LOCAL INSTITUTE OFTEN LEAD TO CAREER CONVERSATIONS TOO, SO YOU ARE MEETING PEOPLE WHO CAN HELP TO SHAPE YOUR FUTURE

TARGETED EVENTS One group that he feels needs special attention is the young. “Insurance is less often conducted in big offices full of people these days,” he says.

“You might find yourself working in a place where there aren’t many people your own age, which can be isolating – so targeted events help with that, creating supportive connections for people.”

thejournal.cii.co.uk / The Journal / October - November 2019

42_local Institu_Oct-Nov 2019_Cll The Journal 42

25/10/2019 11:06

DIVERSITY AND INCLUSION

MAKING AN IMPACT Tali Shlomo reflects on the continuing success of the Dive In festival and the CII’s part in itt

T

here is no denying that more organisations are talking about the value of having a diverse and inclusive workforce than ever before, and the scale of this year’s Dive In festival speaks volumes.

The benefits are increasingly clear – diversity enables individuals and organisations to remain agile and relevant while retaining their identity, and allows businesses to benefit from the diversity of thought and experiences everyone has to offer.

The Dive In festival took place in September 2019, marking its fifth year. Happening in 30-plus countries with more than 140 events worldwide, it is a truly global movement in the insurance profession, designed to support inclusive workplace cultures.

The festival – an ‘Inclusion at Lloyd’s’ initiative – was a huge success and the CII is proud to have continued to be involved in the programme.

The festival is a wonderful example of how our united profession continues to collaborate and unite as we evolve our inclusion conversations to actions that make a positive impact.

CII EVENTS The CII actively hosted seven events – in Scotland, Cardiff and Ipswich in the UK, plus our international regions Dubai, Hong Kong, Bangladesh and the Kingdom of Saudi Arabia.

Our programme included unlocking talent by utilising inclusive coaching conversations; breaking down the notion of male and female roles, with inspirational speakers sharing their career journeys and providing

nt; the practical tips to implement; opportunities we have to unlock talent with age diversity; and creating an inclusive work place for our LBGT+ colleagues and stakeholders.

We learned from the events the power of inclusive coaching conversations supported by a mentoring and sponsorship programme. The events also highlighted aims to break down the notion of gender-specific roles, as we continue to evolve our strategies to narrow the gender pay gap, shift bias and empower our colleagues to achieve their best.

We heard from inspirational speakers sharing their resilience, passion and determination to break through their personal glass ceiling, and business leaders inspiring organisations to take the lead, deliver progressive processes and revisit their approach.

We witnessed the power of collaboration and the impact we are making as a united profession to evolve our culture to welcome everyone, support individuals and encourage employees to bring their authentic self to work.

It is remarkable the work our market inclusion networks are achieving – Insurance Families Network, the LBGT network LINK, Gender Inclusion Network, and the Insurance Cultural Awareness Network.

Finally, I must again recoginse my colleagues at the CII for their drive and passion to make a difference –

43

a massive thank you to the CII LBGT+ advocates, CII open community and CII wellbeing champions.

I would invite members to continue the dialogue, continue to implement activities and review processes, challenge bias where it impacts judgements made, and continue to collaborate and unite as we make an impact. ● Tali Shlomo is people engagement director of the CII

thejournal.cii.co.uk / The Journal / October - November 2019

43_Dive In event_Oct-Nov 2019_Cll The Journal 43

25/10/2019 11:51

ETHICS

With AI already playing a large role in insurtech, Melissa Collett highlights the work the profession is doing to ensure it is a force for good

44

THE ETHICS OF

AI J

udging from recent developments in insurtech, a future where artiďŹ cial intelligence (AI) can think and act like human beings has arrived. AI is already being deployed by insurance startups and incumbents alike to transform the way we interact with insurance and risk.

thejournal.cii.co.uk / The Journal / October - November 2019

44-45_Cente for_Oct-Nov 2019_Cll The Journal 44

25/10/2019 11:51

ETHICS

There is much debate around whether AI in insurance is a force for good or could lead to negative outcomes for customers. For instance, AI could be used to make dramatically safer roads and make more accurate cancer diagnoses. Or it could lead to widespread unemployment as work tasks are increasingly done by robots.

CII’S CODE OF DIGITAL ETHICS Ensuring ethical considerations are borne in mind when adopting and developing AI for insurance is key. That is why in 2018, the CII formed a Digital Ethics Forum, consisting of experts in digital insurance, to produce guidance for professionals on how ethical standards should apply in a digital age.

Published in July 2019, Digital Ethics: A Companion to the Code of Ethics, is the first joint industry guidance on this topic between the CII, the Association of British Insurers and the British Insurance Brokers’ Association.

The Digital Ethics Forum also produced the Digital Ethics Companion – A Practical Guide, to look at examples of how the principles could apply in practice. It offers examples on how to deploy AI and data responsibly, including abiding by the spirit of the law and not just the letter, and anticipating unintended consequences when using data.

In addition to the Digital Ethics Forum, the CII has sought to engage with key stakeholders around the issues of ethics and AI in insurance, in particular the new Centre for Data Ethics and Innovation (CDEI). This is an independent advisory body set up by the UK government to identify measures needed to maximise the benefits of AI and data-driven technology for our society and economy. The CII gave input into a CDEI paper entitled AI and Personal Insurance. Published in September 2019, it looks at the key ethical issues around AI in insurance and suggests measures that could be taken to mitigate ethical risks.

AREAS OF CHANGE According to the paper, the key areas where AI could affect insurance are onboarding, pricing and claims management: ● Onboarding could be affected by speeding up the ability to provide quotes; ● Pricing could be affected by making more precise and personalised risk assessments; and ● Claims management could be affected by identifying fraudulent behaviour (or potential behaviour).

In addition, AI could be used to advise customers on how to avoid potential risks. For instance, some insurance companies are already using fitness trackers or smart devices to steer policyholder behaviour and alert them to potential risks to their health and in the home. This could fundamentally change the nature of insurance from rectifying damage to preventing it from occurring.

DOWNSIDES OF AI While AI could be a boon for policyholders, with increasing automation leading to a reduction of premiums and less fraud, as well as opening up insurance to new groups previously classed as risky (such as younger drivers, through the use of telematics), there are those that fear AI could lead to customer harm and unfair discrimination. For instance, a widely publicised investigation

by The Sun newspaper found price discrimination, fuelled by AI, against applicants with ethnic minority names. Another intermediary was forced to drop its intention to underwrite using public profiles on Facebook, after a newspaper exposé created a public backlash.

Critics point to three key areas for consumer detriment. Firstly, the

IKON

ULTIMATELY, MORE TRANSPARENCY IS NEEDED TO AVOID CUSTOMER DATA BEING USED IN A WAY THAT FEELS ‘CREEPY’ TO CUSTOMERS AND REDUCES TRUST

collection and sharing of large data troves could impinge on privacy if done without the express consent of the customer. Secondly, hyperpersonalised risk assessments could leave some individuals uninsurable by revealing previously unseen indicators of risk. And thirdly, new forms of nudging could occur where insurers alter the behaviour of customers in a way that could be viewed as intrusive.

RESPONSIBLE USE OF AI The challenge for the profession will be to find common ground on what constitutes ethical use of AI. The CDEI cited the CII’s digital code as a step in this direction. The CDEI has also called for more public engagement on acceptable use of data, as well as potential government intervention to ensure people have adequate access to insurance. It suggests the following measures are worthy of consideration by insurers: undertake data discrimination audits; review thirdparty data suppliers; and make data privacy notices more accessible. It also suggests that in addition to adhering to data protection standards, insurers should give customers the power to port risk profiles and establish clear lines of accountability for data and pricing.

Ultimately, more transparency is needed to avoid customer data being used in a way that feels ‘creepy’ to customers and reduces trust. For example, Aviva recently launched a Customer Data Charter and Axa has a Data Privacy Advisory Panel, both of which should help. As the fourthlargest insurance market in the world, UK firms have the power to influence the terms by which insurers across the world engage in AI and other datadriven technology; and far more than just UK customers stand to benefit.

So, before the robots take over, let’s pause consider how we can make them more human and ethical. ●

45

Melissa Collett is the professional standards director at the CII and a founder of the CII’s Digital Ethics Forum

thejournal.cii.co.uk / The Journal / October - November 2019

44-45_Cente for_Oct-Nov 2019_Cll The Journal 45

25/10/2019 11:52

ST U DY R O O M : D I G I TA L R I S K

STUDY ROOM

AN EYE ON AI Duncan Minty provides a window into the FCA’s thinking on artificial intelligence

46

A

round five years ago, the UK Financial Conduct Authority (FCA) realised that it needed to really get to grips with big data and artificial intelligence (AI). It had some data scientists working in what was to become the Behavioural Economics and Data Science Unit (BDU). Their work had produced some eye-catching results, described as “the regulatory equivalent of the leap from black and white to glorious technicolour”. But how was the FCA to scale this up?

The FCA’s response was clever. It began building a partnership with the Alan Turing Institute (ATI), the UK’s national institute for data science and artificial intelligence.

This provided the FCA with access to top data scientists from across 13 UK universities. And the FCA then used that partnership to attract top talent to its growing BDU team, with the

best data scientist recruits being given a Visiting Fellow position at the ATI. The FCA then went on to explore a wide range of financial conduct issues with the BDU’s new expertise. Two examples were models to predict the probability and location of an adviser mis-selling financial products and the pricing of personal lines insurance products.

This data science capability is surprising many insurance professionals, used to a more prosaic form of engagement with the regulator. There would usually be little sign there of algorithmic expertise.

Yet, is that surprising? Policyholders do not have contact with insurers’ data scientists. Why should that regulatory expertise be handled differently?

What many insurers experienced though were calls for big datasets, particularly in relation to the personal lines pricing review. The regulator’s new algorithmic models needed data – and this was the call for feeding time.

The FCA/ATI partnership has

obviously proved fruitful, as in July 2019, the two organisations went public about their partnership, at a conference about the policy and scientific implications of ‘AI Ethics in Financial Services’.

A joint programme of work was announced, but perhaps of equal importance, a signal was sent to the market that the regulator was taking data and ethics seriously and that boards should do so too.

This is what the FCA’s Christopher Woolard had to say: “If firms are deploying AI and machine learning, they need to ensure they have a solid understanding of the technology and the governance around it. This is true of any new product or service but will be especially pertinent when considering ethical questions around data. We want to see boards asking themselves, ‘What is the worst thing that can go wrong?’ and providing mitigations against those risks.”

thejournal.cii.co.uk / The Journal / October - November 2019

46-47_Study Room_Oct-Nov 2019_Cll The Journal 46

25/10/2019 11:52

ST U DY R O O M : D I G I TA L R I S K

MARKET IMPACT So, what can insurance markets expect from all this? Certainly, a focus on the transparency and explainability of the artificial intelligence tools being used by firms. Guidance on this will be published in 2020 and firms should expect to see it presented firmly within the context of the Senior Managers & Certification Regime.

The guidance is expected to cover both corporate and social accountability, as well as explainability to boards, customers and the significant stakeholders in between. On paper, this is all pretty straightforward.

The challenge for senior management function holders is to put it into practise and crank out the outcomes.

Insurance professionals have sometimes complained about the FCA being big on requirements, but short on advice on how to deliver them.

AI ethics is not going to be different.

However, a window into the FCA’s thinking could come from some of the

academic papers on AI accountability and explainability written by ATI people such as Luciano Floridi, Sandra Wachter, Chris Russell and Brent Mittelstadt. These papers are detailed, but influential.

One further point emphasised by the FCA was around how artificial intelligence might be used (inadvertently or otherwise) to facilitate anti-competitive behaviour by firms. So, while the FCA will firmly support collaboration to address, say, digital anti-money laundering projects at the market level, it will expect to see the data architecture protecting against anti-competitive behaviours. The ATI’s expertise will inform that FCA scrutiny.

We know that AI is going to be big in insurance. We should expect it to be big in the regulation of insurance too. ●

47

Duncan Minty is ethics consultant at Duncan Minty consultancy

IF FIRMS ARE DEPLOYING AI AND MACHINE LEARNING, THEY NEED TO ENSURE THEY HAVE A SOLID UNDERSTANDING OF THE TECHNOLOGY AND THE GOVERNANCE AROUND IT

CONTROLLING DIGITAL RISK Four things insurance firms should be doing: ● Have a clear and effective governance structure for your digital projects, products and services; ● Know the ethical risks that arise from how the

firm is using data and analytics; ● Control for those risks through a mix of existing

and new policies and procedures; those controls are working.

ISTOCK

● Have outcomes evidence to show how well

thejournal.cii.co.uk / The Journal / October - November 2019

46-47_Study Room_Oct-Nov 2019_Cll The Journal 47

25/10/2019 11:52

To keep up with regulation you need to stay fresh Complete 15 hours of identiďŹ ed CPD training on BrokerAssess every year to help your staff stay ahead of IDD compliance legislation. Slice it up into manageable sessions and away they go.

Start your 14-day free trial at brokerassess.co.uk or contact our customer service team on 020 8530 0996 or email brokerassess@cii.co.uk

BrokerAssess Catering for your every training need.

CII.10.2019.048.indd 48

25/10/2019 11:58

Q&A STUDY ROOM

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

Answers are at the bottom

QUESTION 1

QUESTION 4

QUESTION 8

What is the health and safety obligation placed upon employers in terms of assessing workstations used by home-based workers?

At what point does curtailment cover under a travel insurance policy commence?

A The point the insured leaves home to begin their journey b The time the premium is paid C The point the insured cuts short their holiday D The time of policy issue

Which development in technology is helping insurers offer more competitive motor premiums for certain drivers?

A Automated vehicles b CCTV c Drones d Telematics devices

QUESTION 5

QUESTION 9

How does the FCA expect organisations to treat customers?

A Fair treatment of customers is at the heart of their business models b Customers are central to business strategy c Larger profits mean better customer care d Customers feature in their business and operational strategies

The Senior Manager & Certification Regime is designed to do what?

A Hold senior individuals to account for the financial performance of the firm b Make clear the role of the board and hold the board collectively accountable for the decisions they make c Hold senior individuals accountable for the roles and responsibilities they carry out for the firm d Hold senior individuals accountable for maintaining and assessing their own fitness and propriety on an annual basis

A Home-based workers are required to carry out their own risk assessment and provide a report for assessment b Assessments for home-based workers are the same as for office-based workers c Assessments of home-based workers are required only if requested by the employee d Assessments of home-based workers are not required as the risk is not within the employer’s control

QUESTION 2 Which of these are the main benefit of an annual travel policy?

A Cover is provided for several trips per year b It is a more economic option than a single policy per holiday c The sums insured are higher on each section d There is no excess applicable

QUESTION 3 Why does the duration of a holiday affect the travel insurance premium?

A The longer the holiday, the higher the cost of the holiday and the greater the risk b Long holiday durations imply long-haul travel, which is considered as a higher risk c Long holiday durations imply higher cost holidays, which are considered a greater risk d The longer the holiday, the greater the risk of cancellation

QUESTION 6 Which of these details are linked by the MID (Motor Insurance Database)?

A Adverse policy terms, claims and declinature b Vehicle registration numbers and insurance details c Third party personal injury claims d Vehicle registration numbers and claims

QUESTION 7 When referring to motor insurance, what is a green card?

A A certificate confirming that the insured has comprehensive cover on a worldwide basis b A document confirming that the insured has cover to drive other cars c A document evidencing a vehicle’s environmental credentials d An international certificate of motor Insurance

49

QUESTION 10 What is a proprietary company?

A A subsidiary of a parent company set up to look after its insurance needs b A large, international insurer with a major presence in the London market c A company owned by shareholders d A company owned by its policyholders

YOUR SCORE » 1–3 POOR 4–6 GOOD

7–8 VERY GOOD 9-10 EXCELLENT

ANSWERS 1B. Employers must analyse each individual workstation and assess and reduce the health and safety risks from display screen equipment. 2A. Annual policies will usually offer a more competitive premium than separate single trip policies for

families who take several holidays per year. 3A. The longer the holiday, it is likely the cost will be higher and the greater the risk of something happening.

4A. At the point the insured leaves home to commence their journey and applies until the homebound

journey has been completed.

5A. The FCA requires that all firms must be able to show consistently that fair treatment of customers is at the heart of their business model. 6B. This database links the registration numbers of vehicles with their insurance details.

7D. A green card is an International Certificate of Motor Insurance and there is no charge for issuing one. 8D. Insurers are increasingly offering telematics devices which record their driving behaviour, in return for more attractive premiums.

9C. SM&CR holds senior individuals accountable for the roles and responsibilities they carry out for the firm. 10C. Proprietary or stock companies are owned by their shareholders who receive dividends.

thejournal.cii.co.uk / The Journal / October - November 2019

49_QandA_Oct-Nov 2019_Cll The Journal 49

25/10/2019 11:53

CII BLOG

ALEX DOOLER

TOO YOUNG TO SPECIALISE? Alex Dooler analyses the risks of specialising too early in your career

S 50

pecialisation is often seen as a positive for one’s career. The more specialised your knowledge, the more value you can add.

But specialise too soon and you risk limiting your future career options and being blinkered in your vision. Specialise too late and you may lose the advantage of time and experience.

The Range – a New York Times bestselling book by David Epstein – argues that early hyper-specialisation could limit your career.

In it, he argues that through sampling broad experiences in your early years, you will better understand your own strengths and ultimately succeed in the long run. In short, specialising too early pigeonholes you.

Through gathering a range of studies on elite athletes, he found that in almost every sport there was a ‘sampling period’ in which athletes played a variety of sports. In doing so, they learned about their own strengths and interests. Those who delayed specialisation were often found to be better than their early-specialised counterparts.

This has important implications for young people starting out in the insurance market.

Experience across a broad range of careers and sectors will undoubtedly inform you of your strengths and what you enjoy. If you know what you’re good at, you can better succeed at it.

BROAD EXPERIENCE

IN THE BUSINESS OF MEASURING RISK, A BROAD TAPESTRY OF LIFE EXPERIENCE IS AN UNDERRATED ASSET

In the business of measuring risk, a broad tapestry of life experience is an underrated asset.

This particularly resonated with me, because I have been a beneficiary of broad experience. As an insurance underwriter turned financial journalist at Debtwire, my time analysing financials has helped me enormously in the world of journalism.

Chasing scoops and interrogating financials is a lot easier when you have worked on the other side. And it has also allowed me to take on more responsibility through having different skills to those around me.

This is especially important as technology creates disruption across the industry. With a broad set of experiences, you will be better able to adapt to changing job responsibilities.

And technological disruption is nothing to be sniffed at. Indeed, one set of economists – the Oxford Martin Programme – predicted a 99% probability that insurance underwriters will cease to exist by 2033.

Gaining a broad range of experiences across different areas is a surefire way of learning what you love and what you’re good at. But it will also help to insure you against the risk of digital disruption and inform the risk appraisal process through a rich tapestry of life experience. ● Alex Dooler is a financial journalist at Debtwire

In the co coming weeks, we will be completing a crucial phase of our work on Insuring Women’s Futures. There will be guidance for members on building diversity into product governance and customer communications, and on building guid fin nancial wellbeing into flexible working policies. We will also be discussing our work at a special hearing of the IInsurance All Party Parliamentary Group.

We are putting the finishing touches to an important piece of work with Scope on disability and insurance, which sets out practical ways in which the profession can be more open to people with disabilities, while making it easier for disabled people to find employment in the wider economy.

The FCA’s new Senior Managers and Certification Regime comes into force on 9 December, and the FCA is finalising how it will supervise firms under the new regime, based on challenging what Andrew Bailey calls “any organisation that prioritises being within the rules over doing the right thing”. It is planning a consultation on its approach to a duty of care and a paper on Organisational Culture – which the CII will be contributing to – in the first half of 2020. As the FCA moves to enforcing principles as well as rules, these developments will be key.

Finally, 18-22 November will be the Money Advice Service’s Talk Money Talk Pensions Week and we will be rraising a series of key issues for consumers, from the protection gap in travel, home and life insurance, to the need to ssave now for retirement. We are using 19 November for the launch day of our Talk 2 10K financial wellbeing event.

I am happy to say that our profession has a strong story to tell – especially with the fantastic work we have all been doing in recent years. ● Sian Fisher is CEO of the CII

ILLUSTRATIONS: LUKE WALLER

LOOKING AHEAD

thejournal.cii.co.uk / The Journal / October - November 2019

50_CII blog_Sian_Oct-Nov 2019_Cll The Journal 50

25/10/2019 11:53

&OR DETAILS ON THE POSITIONS BELOW AND OTHERS

IN 'ENERAL &INANCIAL 3ERVICES )NSURANCE

ACCROSS THE 5+ ,ONDON AND )NTERNATIONALLY PLEASE VISIT

WWW IPSGROUP CO UK s #OMMERCIAL !CCOUNT (ANDLER

s .ON ,IFE !NALYST ),3

Up to ÂŁ34,000 + Bonus & BeneďŹ ts – City of London Our client is seeking an ambitious commercial Insurance Account Handler; This role is ideal for someone who would like the opportunity to develop their skills within a rapidly growing broker, taking over a commercial portfolio. Experience using Acturis is essential.

Contact: Bow.Fanso@ipsgroup.co.uk - London Ref:CII140341BF

Up to £60,000 Base Salary + Bonus – City of London An rare opportunity has arisen with one of the leading Investment Managers who purely focus on ILS. They are currently searching for an Individual with at least 1 year experience in catastrophe reinsurance this can be within a Broker or Lloyd’s Syndicate. The ideal candidate have experience of using either R, Python or SQL. Contact: Gary.Ahern@ipsgroup.co.uk - London Ref:CII1139850GA

s !NALYST -) 0LANNING MONTH CONTRACT ÂŁ54,000 – London A London Market Analyst is required to assist an Insurer them with all aspects of Syndicate business planning and analysis. You will also be required to provide analytical support to the Underwriting teams, assist with oversight of the Peer review process and provide ad-hoc support where required for the MI. Contact: Carl.CrossďŹ eld@ipsgroup.co.uk - London Ref:CII140364CC

s #ATASTROPHE !NALYST To ÂŁ45,000 Base Salary + Bonus & BeneďŹ ts – City of London A Lloyd’s Syndicate are searching for a Catastrophe Analyst. They want a technically strong candidate who has over 1 years of experience working within Catastrophe Models.

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

Contact: Gary.Ahern@ipsgroup.co.uk - London Ref:CII138250GA

s 3ENIOR -ANAGER &INANCIAL 2ISK Up to ÂŁ130,000 Base Salary + Bonus – City of London This is a high proďŹ le new role with one of the world’s largest insurance and reinsurance groups and will have accountability for ensuring the effective management of ďŹ nancial risks. In addition to demonstrable technical risk management expertise, you will need experience in leading high performing teams to successful risk management outcomes, excellent analytical skills and strong stakeholder management ability. The FIA qualiďŹ cation would be advantageous.

Contact: Jeremy.Cross@ipsgroup.co.uk - London Ref:CII139568JCC

s "USINESS 3UPPORT -ANAGER 5NDERWRITING To ÂŁ75,000 + BeneďŹ ts – City of London Autonomous role to take ownership of underwriting operational support across the syndicate, mentoring a team of UA’s throughout the business, driving any training needs or workow management. With oversight for data quality and outsource management, leading recommendations for operation process and systems change in relation to business efďŹ ciency and regulatory requirements. Working with the Head of Underwriting Management, there’s genuine opportunity to evolve the role an make it your own.

Contact: Alison.Taylor@ipsgroup.co.uk - London Ref:CII140343AT

s 3ENIOR #OMPLIANCE /Fl CER 'IBRALTAR Competitive Salary & BeneďŹ ts – Gibraltar Our client is a well known insurance group with interest at Lloyd’s. They wish to hire and experienced compliance ofďŹ cer for their Gibraltar ofďŹ ce. Acting as the primary liaison with the local regulatory authorities (GFSC) you will also support the other international platforms. Ideally degree educated and ACII you will need a minimum of 5 years relevant insurance experience.

Contact: Colum.Lovett@ipsgroup.co.uk - London Ref:CII140219CL

s )NSURANCE 4ECHNICIAN up to ÂŁ18,000 + BeneďŹ ts – Manchester Great opportunity to start your insurance career with a London Market insurer providing administrative support to and offering a professional and efďŹ cient service. The role will have a focus on Data Entry, servicing clients, meeting deadlines and general administrational duties.

Contact: Mark.Fancourt@ipsgroup.co.uk - Birmingham Ref:CII140235MF

s *UNIOR %NERGY 2ISKS !CCOUNT (ANDLER

s 3ENIOR "ORDEREAUX !NALYST To ÂŁ40,000 + BeneďŹ ts – City of London Large Syndicate Group is looking to strengthen their team with an experienced bordereaux processing specialist, who is keen to take more responsibility in terms of analysing and discussing with underwriting teams. A strong communicator, you will need to be resilient, committed and want to take ownership for delivery as well as enjoy engaging with others in internal committee meetings and externally with coverholders.

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

up to ÂŁ23,000 + BeneďŹ ts – Birmingham Fantastic opportunity to join the world’s largest insurance broker. Specialist role focusing on Power & Energy risks. 2+ years insurance experience required, commercial broking experience is highly desired. Full support towards CII and tailored training program for the successful candidate.

Contact: Mark.Fancourt@ipsgroup.co.uk - Birmingham Ref:CII140369MF

s 4RADE #REDIT #LIENT !DVISOR

s 7ORDINGS #OUNSEL To ÂŁ85,000 + Bonus & Package – City of London High proďŹ le Lloyd’s Syndicate are seeking a Lawyer with strong experience on Insurance Coverage to join their team as a Wordings Counsel. You will provide counsel to Underwriters on Coverage, draft new Wordings and actively contribute to the development of new products, working across all classes of business written.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII140300TS

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

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII139766TS

up to ÂŁ27,000 BeneďŹ ts – Birmingham New opportunity at one of Birmingham’s newest brokers. Specialist role focusing on Credit Insurance risks. Involves servicing own book of and will involve client facing interaction.

Commercial broking experience required. Full support towards CII, full training provided.

Good attitude key.

Contact: Mark.Fancourt@ipsgroup.co.uk - Birmingham Ref:CII140235MF

s 0ROPERTY #LAIMS 3TRATEGY -ANAGER ÂŁ50,000 - ÂŁ65,000 + BeneďŹ ts – Midlands A leading Insurer has an exciting new opening in their highly regarded property claims division to join them as Property Claims Strategy Manager. As a Property Claims Strategy Manager you will be responsible for setting strategy and driving change for the domestic property claims department. You will not have direct reports in this position, but you will be responsible for the overall development of the claims department.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII140267RC

s 3ENIOR 2EINSURANCE 4ECHNICIAN To £75,000 + Bonus + Package – City of London Working for this well regarded Reinsurance Manager, you will work on all aspects of outwards reinsurance operations and recoveries, support on the Reinsurance Purchase and contribute to the improvement of systems. Seeking current experience working in outwards reinsurance recoveries for a Lloyd’s Syndicate, and capability to engage with senior stakeholders internally and within Brokers and Reinsurers.

Contact: Tim.Southworth@ipsgroup.co.uk - London Ref:CII140179TS

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

CII.10.2019.051.indd 51

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

s 3ENIOR 3CHEMES 5NDERWRITER Up to ÂŁ65,000 + BeneďŹ ts – Birmingham A highly regarded Insurer with a market leading reputation has a key new opening in their Birmingham OfďŹ ce to join them as a Senior Schemes Underwriter focusing on the management and development of their existing portfolio of schemes business.

Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII139966RC

777 )03'2/50 #/ 5+

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

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

25/10/2019 11:58

Conquer curiosity 2020 qualiďŹ cations brochure cii.co.uk/brochure

Available now

cii.co.uk CII.10.2019.052.indd 52

25/10/2019 11:58