The Journal CII - June/July 2019 by Redactive Media Group

thejournal.cii.co.uk June â&#x20AC;&#x201C; July 2019

Battle lines New initiatives in the fight against fraud

Sustainability challenge Environmental issues facing insurers

What a liability Risk transfer options for product recall

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JOULE PRICING Insurers get to grips with green energy risks

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J U N E - J U LY 2 0 1 9

C O N T E N TS NEWS

28-29 International markets The rise and fall of South Africa’s Intermediary Guarantee Facility

5 President’s letter Jonathan Clark’s ﬁnal missive as his CII presidency draws to a close

30-31 Renewable energy The growth of green energy and insurance implications

6 -11 News UK and international news from the CII

34-35 Home Highlighting the gap in home contents cover

12-13 Regional news News from the local institutes 22 Regulatory radar The latest legislation updates from the UK and Europe

36-37 Chartered How one ﬁrm’s Chartered Network supports and encourages its members

FEATURES

40 Mental health Explaining how insurance professionals can become mental health ﬁrst aiders

14-17 BIBA 2019 Major talking points from this year’s conference 18-20 Hot Topic – Sustainability A look at increasing environmental, social and governance issues facing insurers 21 Climate change A new report asks insurers to get to grips with the impact of climate change

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24-25 Fraud Combatting the rising trend in fraudulent claims

42 Local Institutes Becoming more engaged with your local institute can boost your career

STUDY ROOM 44-46 Study room: Product liability Key issues for product recall insurers 48 Q&A The big ten questions to test your knowledge

27 Regulation FCA tells insurers to deliver a change in culture

50 CII blog The evolving demographics of the modern workplace

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

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

Sian Fisher Fisher Chief executive: executive: Sian 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 Getty

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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.

Publisher: Redactive Media Group Level 5, 78 Chamber Street London E1 8BL Tel: (020) 7880 6200 For sales and advertising please contact us on cii-sales@redactive.co.uk or 020 78807880 76617661 020 ISSN 0957 4883 © 2016 Chartered Insurance Institute. Average total net circulation more than 82,000

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PROJECT POLICIES

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 thejournal.cii.co.uk / The Journal / October - November 2018

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

AN HONOUR AND A PLEASURE In his last president’s letter, Jonathan Clark reﬂects on what has been achieved under his tenure

TRUE COMMUNITY

ow time ﬂies! It feels like only yesterday I was writing my ﬁrst missive for The Journal, setting out my theme for the year to ‘develop a united profession’ and at the end of my tenure I am hugely proud of what has been achieved. It has been an honour for me to act as the 108th president of the CII. During the past 12 months, I have travelled the country visiting various CII institutes, attending all kinds of interesting and diverse events, and witnessing the tremendous work our members do every day to promote the standards and professionalism of our sector. It has also been fantastic to see the new generation of presidents now coming into the fold – Ipswich, Exeter, Manchester and Liverpool just some examples of institutes boasting young ambassadors who’ve clearly got a long future in the profession and who are looking to make a positive difference.

My presidential theme was taken from the CII core vision and with that, I have aimed to help us continue to build a true community of professionals. It is important to remind ourselves what being a professional means today – whether it be continued learning or the right behaviours, empathy and being ethical in all we do. To that end, I have championed a renewed focus on the CII’s efforts to promote the profession and to ensure clients’ and customers’ interests are always at the heart of what we do. I have also kept a keen eye on my predecessors’ themes – John Moore on Chartered and Inga Beale on developing new talent for the profession. I am sure they will be encouraged by the review of Chartered status completed in the year and by the success of the Aspire programme during this period. Working together, we should not forget to train, teach, mentor, inform and educate our new talent and, in the process, we can help foster the trust in our profession that we all want to see. I have been very fortunate to have served as president during a period when the CII is modernising itself, with a very clear idea of the need to change to better serve the public. There is still work to be done, but the key elements are deﬁnitely now in place to continue to build public trust in insurance through our engaged membership. Finally, I would like to wish my successor, Nick Turner, the very best of luck and I know that the role is in safe hands. Thank you all for your support and I wish you all the best in your future endeavours. ●

I HAVE BEEN VERY FORTUNATE TO HAVE SERVED AS PRESIDENT DURING A PERIOD WHEN THE CII IS MODERNISING ITSELF, WITH A VERY CLEAR IDEA OF THE NEED TO CHANGE TO BETTER SERVE THE PUBLIC

Jonathan Clark is president of the CII

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NEWS

FROM THE CII TWITTERATI »

@ S hay n eH R ay Delighted to be @TheCityUK conference today manning the Chartered Body Alliance on behalf of @CIIGroup. Make sure you pop along to the stand to hear about our work on standards, professionalism and trust. #TheCityUK

@ B l u e ston e I n s Proud to conﬁrm we have had our @CIIGroup Chartered status renewed for the fourth year in a row! We are committed to providing our clients with industry leading service. So why not speak to one of our experts today? #cii #chartered #insurance

@Tom S tore r _I ns A real privilege to attend the @MMC_Global Rising Professionals’ Gala Dinner as a guest of the @CIIGroup last night. What a fantastic event! Loads of money raised for charity. Well done to all of the organisers. #MMCRP19

TA L E N T

NEW GEN 2019 APPLICATIONS OPEN

The CII is seeking rising stars to join the professional body’s ﬂagship talent programme: the New Generation Group. The 2019/2020 class will be made up of 40 promising professionals split into four groups – claims, underwriting, broking and the London market. Members of the four New Generation Groups will get to network with other rising stars from the profession, rub shoulders with key Financial Conduct Authority personnel, meet members of parliament and learn how to handle the media. Each group will also be asked to work together on a project they believe could make a diﬀerence to the insurance profession and

present it to the CII’s board. Previous groups have delivered projects that have challenged the insurance profession on serious issues that impact consumers, from claims handling to best practice with vulnerable customers. To apply to join the CII’s New Generation Group, all applicants need to do is send in their CVs plus a few lines about why they consider themselves rising stars in the profession. They will also need to conﬁrm that they have line manager approval to take part in the group’s activities. The closing date for applications is 9 August 2019. For more information and to apply, visit: www.cii.co.uk/new-generation-programme

TECHNOLOGY

Artiﬁcial intelligence (AI) currently being used by insurance companies has failed to remove gender bias from the profession’s claims, underwriting and marketing processes. A CII report has identiﬁed that insurers have more to do to address gender biases. The report reveals that the datasets used to train the algorithms that support AI systems are rooted in outdated gender concepts. Algorithms learn by being trained on historic data – but the report notes that more and more of that data is now

unstructured, coming from text, audio, video and sensors. Yet the report warns that embedded in that historic data are decisions based on historic biases, particularly around gender. The report concludes that insurance ﬁrms need to prepare a structured response to this issue, starting with visible leadership on tackling gender bias in AI. To read the report, please visit: www.cii.co.uk/82803

ISTOCK

INSURERS TOLD TO TACKLE GENDER BIAS

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NEWS

@martinbamford The ﬁre marks that used to be on display up the staircase in Aldermanbury is one of the things I always associate with @CIIGroup. Fantastic to see them cataloged in this way insurancehistory.cii.co.uk/ﬁre-marks

@AndrewGActive Enjoyed talking about a career in ﬁnancial planning this afternoon with the Y10 students @KEVIMorpeth @ActiveFinancial @DiscRisk @CIIGroup #discoverfortunes #TheClearAdvantage

@gpn01 Today’s #ciiprofessionalfocus audience at #cii #glasgow Hearing about #blockchain and #cryptocurrency in #insurance #distributedledgertechnology @distlytics @CIIGroup

#CIIGroup Twitter

16,733 Followers and counting...

H E R I TA G E APPOINTMENTS

CII LAUNCHES ‘OUR HISTORY’ WEBSITE The CII has launched ‘Our History’, a website dedicated to bringing to life the heritage of the organisation and the evolution of the insurance profession through the years. The Our History website – insurancehistory.cii.co.uk – covers the history of the Institute’s Aldermanbury building, including a 360-degree virtual tour of the Insurance Hall and displaying the unique stained-glass windows of the historic building. The CII’s collection of more than 1,500 Fire Marks, which were formerly on display in the staircase of the Aldermanbury building, can be viewed on the site.

There are also digitalised versions of hundreds of insurance-related documents, dating back as far as 1669, plus rare, nolonger-in-print books, which give valuable insight into past insurance processes. The original 1912 Charter of the CII can also be found on the site. Sian Fisher, chief executive of the CII, said: “We want everyone to be able to appreciate the heritage of the insurance profession and now everybody from around the world can learn more about the history of the Aldermanbury building, insurance and the CII as an institution.” To ﬁnd out more, visit: cii.co.uk/aboutus/initiatives/our-history-website

BROKING

SIB LAUNCHES INTERNAL AUDIT GOOD PRACTICE GUIDE In response to members’ requests to provide a summary of good practice, the CII in association with PKF Littlejohn has issued the Society of Insurance Broking’s (SIB) understanding of the regulator’s rules and current stance in relation to internal audit good practice. Outlining the importance of eﬀective governance in risk management and accountable oversight of internal controls, the guide seeks to explain the ‘three lines of defence’ model and makes a series of recommendations on areas of improvement.

Liz Foster, non-executive director of the SIB, said: “Brokers will welcome this Good Practice Guide, which will serve as a reminder to review their approach to internal audit and also provide a model against which to map their existing internal controls.” To ﬁnd out more, visit: www.sib.org.uk

FTADVISER EDITOR JOINS CII Emma Ann Hughes has joined the CII as communications director. An NCTJqualified and award-winning journalist, Ms Hughes worked for the Financial Times for 16 years. She joined Financial Adviser as a reporter in 2003. She came up with the concept for, developed and launched FTAdviser’s CPD Tracker, which greatly increased market engagement. In recent years she has hosted events, webinars, podcasts and edited FTAdviser and Financial Adviser, both of which were named Trade Publication of the Year under her editorship. As communications director of the CII, Ms Hughes is in charge of raising the profile of the professional body. She is responsible for the CII’s press team, social media, internal communications and member magazines. Ms Hughes said: “I am excited to join the world’s largest professional body for insurance and financial planning, and look forward to engaging with the CII’s membership and key stakeholders to support the institute’s manifesto commitments to become a modern, relevant and diverse professional body, to better meet the needs of the public and members alike.”

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NEWS

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

A WORLD OF RISK

The CII has published a new special report, titled A World Of Risk. The report’s purpose is to showcase the inspiring work that’s underway, across the world, to build a trusted international insurance profession. It also aims to highlight the crucial role of CII-aﬃliated institutes around the world and promote engagement and collaboration across borders, as well as looking to recognise that a trusted international profession depends upon the contribution of a vast number of individuals and organisations. The report includes contributions from the CII’s international aﬃliated institutes

and experts, employers, regulators and educators from across the profession, as well as country spotlights on Ghana and China’s Greater Bay Area. During the weeks and months ahead, the CII will be using the publication to increase engagement with our affiliates, opinion formers and other stakeholders around the world. In addition, we will be offering affiliated institutes the opportunity to promote dualbranded digital versions. Hard copies of the report will be available from July. To read and download the report, visit: cii.co.uk/aworldofrisk

CONSUMER

CLARITY ON BUSINESS INTERRUPTION POLICIES 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. For example, some insurers were found to have stopped using the term ‘gross profit’ and instead refer to ‘insurable profit’ or to ‘insurance profit’.

During the past 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. To read the updated PDF, visit: bit.ly/2MNegxE

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

BANGLADESH

CII MEET WITH DHAKA FINANCE MINISTRY AND REGULATOR In May, CII director of engagement, Keith Richards, along with the Professional Advancement Bangladesh Limited (PABL), the CII’s education partner in Bangladesh, visited the ﬁnance ministry in Dhaka. The meeting was held to discuss the work the CII and PABL are doing in Bangladesh, both for the insurance regulator and the industry overall. The ﬁnance ministry has been very supportive of CII and PABL initiatives and has requested they continue to work closely with the regulator and the local institute in Bangladesh to enhance the professional standards of the

Keith Richards with representatives of the ﬁnance ministry in Dhaka

Bangladesh Insurance Industry. The CII also met with the Insurance Development and Regulatory Authority of Bangladesh (IDRA) to continue the ongoing discussions that the CII/ PABL have been having with the regulator since last year. Mr Richards and CII regional director for South Asia, Sainesh Dar, along with the PABL team, met with IDRA member, Gokul Chand Das.

The CII and PABL have jointly submitted proposals to the IDRA outlining areas for support of a reform and development project which the Government and regulator in Bangladesh are currently undertaking. The IDRA has also issued a circular to the Insurance Industry in Bangladesh proposing ACII qualiﬁcations to be pursued by the senior management of insurance companies.

INDIA

UNLOCKING TALENT

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

UK CHARTERED MISSION The CII took part in a mission to China and Hong Kong in May, along with other UK professional bodies as part of the ‘Knowledge is GREAT’ campaign from the Department for International Trade.

Keith Richards represented the CII, developing and promoting partnership accreditation links with universities, polytechnics, colleges and employers in the region.

The CII in Mumbai organised a human resources development roundtable discussion for HR and learning and development heads of the insurance industry in India. Tali Shlomo, CII people engagement director, and Sainesh Dar, presented some of the challenges faced by the insurance industry in the areas of skills shortage, talent gap, talent mobility and succession gap. The presentation was followed by debate exploring innovative interventions to support new talent across the profession.

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

SINGAPORE

SINGAPORE COLLEGE OF INSURANCE GRADUATION

The Singapore College of Insurance’s (SCI) Insurance Management Associate Programme (iMAP)/International Insurance Programme (IIP) closing award ceremony was held in London in June. More than 20 students of the SCI graduated at the event, which marked the completion of their ACII qualifications with a two-week study programme, combining comprehensive curriculum plenary sessions and practical hands-on workshops delivered by a diverse panel of London experts. The SCI is a not-for-proﬁt professional training and education body that aims to raise technical competencies and expand the pool of professionally qualiﬁed practitioners, to support Singapore’s growth

Karine Kam (centre) with Sian Fisher, CII CEO, Ed Gooda, programme director and graduates

as an international ﬁnancial hub. Karine Kam, CEO of the SCI, said: “The programme is an amazing opportunity for these young students to be based in London and learn from top experts who have so much experience to share. Insurance is a globalised business – wherever they go, they will understand it is about risk, consumers, data, proﬁling and trust. “I tell them to never stop learning, stay humble and never be afraid to ask questions. Their theory has given them the ‘what’ and now they are learning the ‘why’.” Graduate and CII goodwill ambassador,

Jeremy Chia, said: “I really liked the structured learning of the programme. It is very unique, you do not get it in any other industry in Singapore – so it was a fantastic way to fast-track my career. “Through iMAP we do rotations so we are exposed to diﬀerent lines, which is great experience. For me, the one that stood out was technology. I am now pursuing my post-graduate masters in information technology, specialising in ﬁnancial technology. With AI, driverless cars [and] blockchain, it is a very exciting time to be in insurance.”

ASIA

ONLINE RECOGNITION OF PRIOR LEARNING The Chartered Insurance Institute Hong Kong (CII HK) has upgraded the prior learning application process from paper-based to online. Candidates can now apply recognition of prior learning online via the CII website, where they may be eligible to claim exemptions for relevant exams and qualifications obtained through other professional bodies or universities. Subject to the published qualification completion requirements, these can be used to help candidates achieve CII qualifications more quickly, with the online service aimed at improving candidates’ user experience via even faster application-processing time. To find out more, visit: cii.co.uk/prior-learning

HONG KONG

CII EXAMS CAN NOW BE TAKEN AT HOME The CII HK has launched a new initiative, known as ‘remote invigilation’, to allow professionals to take exams from any location with a secure internet connection – even from the comfort of their own home. Candidates who decide to take their exam remotely will be connected to a live invigilator who,

supported by AI-based behaviour analysis technology, will ensure a fair and eﬀective process. It can save candidates the time and trouble of travelling to an exam centre. The service is available across six non-UK examination units: AWP, AWB, AWF, W01, W04, WH1, WCE, WUE. For details, visit: cii.co.uk/ri

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

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

NEW LEARNING UNITS FOR INTERNATIONAL STUDENTS The CII has launched four new learning units for claims and underwriting professionals. The new units are particularly suitable for non-UK insurance practitioners beginning their career or seeking to build on existing knowledge through formal study. The new units are: ● WCE – Insurance claims handling (non-UK) ● WCA – Insurance claims handling (Arabic) ● WUE – Insurance underwriting (non-UK)

WUA – Insurance underwriting (Arabic). The new units on claims cover basic claims handling processes including notification, assessment and settlement. The new units on underwriting cover the role of underwriting, including identification, assessment plus acceptance of risk and rating. The units sit under the pathway of the Certificate in Insurance qualification. To apply or for more information, please visit: cii.co.uk/cert-insurance ●

11 HONG KONG

HONG KONG

FUTURE INSURANCE LEADERS NETWORKING EVENT

CIIHK SPONSORS LLOYD’S DAY

The CII HK hosted a ‘Dialogue with CEOs’ evening drinks event in April, as part of the Future Insurance Leaders initiative. More than 90 young professionals came along to network with industry practitioners, learn more about the market and hear from a number of prominent speakers.

The CII HK sponsored the ‘Meet the Market’ section of the Lloyd’s Day Hong Kong event in May. The event explored Lloyd’s’ recent development and the global insurance market. The CIIHK also took the opportunity to network with more than 200 industry professionals from the broking, risk management, coverholder underwriters, and Lloyd’s managing agent community in Hong Kong and the wider Asia-Paciﬁc region.

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REGIONAL NEWS

11 J U LY

PRACTICAL WORKSHOP – SUPERVISOR TRAINING → 9:00 am – 5:00 pm The Insurance Institute of Newcastle Upon Tyne www.cii.co.uk/newcastle

12 J U LY

ADVANCED BUSINESS INTERRUPTION → 9:30 am – 4:30 pm The Insurance Institute of Reading www.cii.co.uk/reading

J U LY

HARROGATE LECTURE: RENEWABLE ENERGY → 12:15 pm – 2:00 pm The Insurance Institute of Leeds www.cii.co.uk/leeds

REGIONAL

PROFESSIONAL FOCUS ROLLS OUT ACROSS THE UK Following on from the success of the CII’s Professional Focus conferences last summer, the Institute has now held its latest round of events. These free conferences, which support the local institute offering, enable the CII to offer topical, centralised CPD to its members throughout the UK. Members gain more than five hours of CPD by attending.

At the seven conferences, which took place in various locations across the UK, members heard from some of the biggest industry names on a diverse range of hot topics. From terrorism to telematics, blockchain to drones, the agenda delivered fascinating information to support our members’ professional development. → For more details, visit: ciiprofessionalfocus.co.uk

LONDON REGIONAL

REACHING FOR THE STARS

The Insurance Institute of London (IIL) Young Members’ Committee held its annual charity quiz night in April at Steam Bar and Restaurant – hosted by quizmaster, Jon Hancock, performance management director of Lloyd’s. The event raised much-needed funds for Starlight Children’s Foundation. Starlight, based in Hammersmith, brighten the lives of seriously ill children by granting wishes of a lifetime, and providing fun, laughter and entertainment to children in

hospitals and hospices across the UK. Guests dug deep to raise more than £3,600 for the charity through raﬄe ticket sales, donations and an incredible live auction, which alone raised a staggering £1,600.

DIVERSITY DIVE IN EVENTS Dive In is helping insurance get ﬁt for the future, highlighting the business case for diverse and inclusive workplaces, and providing practical ideas and inspiration for how to bring about positive change. The CII will be hosting several Dive In events during September, in conjunction with local institutes across the UK – including Cardiﬀ, Ipswich and Edinburgh. The events will give members an overview of some of the positive work being rolled out by the CII and the local institute network. Booking for all events will open at the start of July. → For more information on Dive In, visit: www.diveinfestival.com

→ Full details of future IIL Young Members’ Committee events can be found at: iilondon.co.uk. To get involved in the activities of the Young Members’ Committee, please contact Gemma Warren: gemma.warren@cii.co.uk

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REGIONAL NEWS

17 J U LY

DRIVERLESS CARS → 12:15 pm – 1:30 pm The Insurance Institute of Southampton www.cii.co.uk/southampton

24 J U LY

2019 EVOLUTION OF THE MOTOR MARKET → 12:00 pm – 1:45 pm The Insurance Institute of Northampton www.cii.co.uk/northampton

22 AUGUST

THE SALISBURY NOVICHOK POISONING → 8:30 am – 9:45 pm The Insurance Institute of Cheltenham and Gloucester www.cii.co.uk/cheltenham

BIRMINGHAM

VOLUNTEERS HOPE TO ASSIST THOSE WITH DEMENTIA The Birmingham Insurance Institute was joined by the Insurance Charities and Alzheimer’s Society at its recent meeting to hear about the launch of an exciting new partnership. The new initiative is being piloted in the Birmingham region and provides unique volunteering roles that give the insurance industry the opportunity to give back to their local community. There are three diﬀerent roles on oﬀer: ● Keeping in Touch telephone volunteer – Keeping in Touch calls are a vital way of providing continued support to people with dementia and their families and carers. Through short calls, the volunteer checks in to see if someone requires further assistance on a regular basis.

● Side by Side telephone volunteer – This provides someone living with dementia with companionship and conversation. Through regular contact, people living with dementia can stay connected and are better informed of how and where to access services and support. ● Side by Side face-to-face volunteer – This role enables people living with dementia to keep doing the things they love. The volunteer helps someone stay connected to their local community through staying active and engaged in social and recreational activities. → To ﬁnd out more and apply to be a volunteer, visit: theinsurancecharities.org.uk/ dementia or if you have any questions email: insurancecharitiesvo@alzheimers.org.uk

@Sussex_cii Thanks to Andrew Reeves & Richard Keightley of Hawkins for sharing their insights into water ingress and ﬂooding – forensic investigations and prospects for recovery. A useful seminar for @sussex_cii with some interesting case studies

GUILDFORD

YOUNG LEADERS PROGRAMME LAUNCH

The Insurance Institute of Guildford recently launched its Young Leaders Programme. The programme is a series of ﬁve speciﬁcally designed training sessions, delivered during the course of the year and covering a variety of topical subjects.

The programme also offers networking and social activities to candidates to develop complete career confidence. The launch evening took place at Brooklands Museum, Weybridge, and all 10 finalists including their line managers,

together with other professionals from the Guildford area, were in attendance. The Insurance Institute of Guildford would like to thank all of those who applied and extend special congratulations to the ﬁnalists: Luke Bishop, Jamie Barham, Dan Coleman, Jenni Currell, Olivia Jukes, Grace Korten,Ashley Lawrence, Ben Moore, Nancy Morley and Aaron Wilding. → For more information, visit: www.cii.co.uk/guildford

@NewcastleCII Five-a-side football competition – Monday 9 July 2018. For more information and to register your team, check out our website

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BIBA 2019

LEADING LIGHTS

his year’s British Insurance Brokers’ Association (BIBA) Conference saw more than 8,000 delegates attend the ﬂagship event, with 5,000-plus registered brokers and 200 stands representing the insurance profession. There were also a host of headlinegrabbing keynote speakers, panel debates, interactive seminars and fringe sessions, all aimed at discussing the latest issues and opportunities facing the industry. So, what did we learn from this year’s conference?

DUAL PRICING IS ON EVERY INSURER’S RADAR

As The Journal reported earlier this year, following the super-complaint by the Citizens Advice Bureau last September, ﬁve markets, including household insurance, are now in the spotlight for the way they treat loyal customers. Research by the Financial Conduct Authority (FCA) found that customers who had renewed their home insurance with the same company for ﬁve years paid on average 70% more than new customers. The issue was discussed in-depth at the ‘Ask the Insurer’ session, by a panel including Jon Dye, chief

GETTY

The theme of this year’s BIBA Conference was ‘Leading the Way’. Luke Holloway looks at four of the key take-aways from the event

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BIBA 2019

executive of Allianz Insurance; Tulsi Naidu, chief executive officer of Zurich UK; and Rob Townend, managing director of Aviva. Ms Naidu said: “We are defined by these examples. We are defined by the story of the 75-year-old that has been with one firm for a long time and suffers because of it. It impacts on us as an industry. “We [Zurich] are making sure we are communicating actively to customers and ensuring they are thoughtful about the choices they are making. I would urge everybody to think really hard about the duty of care we owe to customers as individual businesses.” Mr Townsend added: “At Aviva, we are absolutely behind resolving this renewal pricing issue. We’ve launched a subscription product called Aviva Plus, which has a price promise around new business price never being lower than renewal price, which is trying to break that cycle. It is a big issue and it is not just the regulatory impact but also the consumer view, it is not helping us as an industry and we have got to do something about it.” However, Mr Dye stressed that it is not as straightforward an issue as it might first appear and dual pricing could be a difficult matter for the regulator to deal with. He highlighted that many industries offer a discount for new business and, if insurance were to get the point where it was no longer allowed to offer new business discounts, that would penalise those consumers who annually shop around. He said: “Right at the other end of the spectrum, there is a whole group of consumers that are benefiting massively from the current market dynamic – because the new business discount is there, they switch every year. “For every elderly customer who has paid more than they should have done, there will be a young working family, taking out cover year after year and getting a stunningly good price. It is going to be a tough thing to regulate because there are consequences at both ends of the spectrum.”

(L-R) Andrew Flintoﬀ, Steve White, Professor Green, Graeme Trudgill, Katie Piper, Professor Byron, Huw Edwards

NEW BIBA REPORT ON TERRORISM COVER

At the conference, BIBA announced the launch of a new guide, produced in partnership with Pool Re, aimed at raising the importance of terrorism insurance, particularly for small and mediumsized enterprises (SMEs). BIBA has also been working with Pool Re, HM Treasury and Members of Parliament to produce the CounterTerrorism and Border Security Act 2019, which provides reinsurance cover to insurers to protect businesses that suffer losses as a result of acts of terrorism – even in the event of there being no actual physical damage to their property. BIBA’s executive director, Graeme Trudgill, said of the report: “There is a need to encourage more businesses to buy terrorism cover; currently fewer than 3% of SMEs take up any cover at all. This guide explains the need for terrorism cover for businesses; what cover is available and how to arrange it; extensions including cyber insurance; resilience; claims; and other policies. “We hope this guide can help to improve the understanding and take-

up of important terrorism insurance protection for UK businesses.” Minister of state for security and economic crime, Rt Hon Ben Wallace MP, stated in his introduction to the report: “As part of our strategy, we are working to better integrate with the private sector to protect our economic infrastructure, improve safety, security and resilience. This new guide on terrorism insurance will further our joint aims of improving resilience within UK businesses and its citizens.” He concludes: “We know that UK insurance brokers, with their close relations to businesses, are well placed to help improve the ﬁnancial resilience of SMEs in the face of potential attacks.”

TACKLING MENTAL HEALTH ISSUES IN THE WORKPLACE

BBC broadcaster and BIBA 2019 host, Huw Edwards, said that bosses have become very good at talking about doing things to address mental health issues, but when it comes to introducing policies or changing culture in the workplace, “there is a wide spectrum of activities going on.”

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During a panel session, the rapper, singer and songwriter, Professor Green, said he would like to see companies be legally obliged to provide support for their members of staff who might be suffering from mental illness. Also on the panel was cricketer and new Top Gear presenter Andrew ‘Freddie’ Flintoff. Mr Flintoff said it is important to create a culture in the workplace where people feel comfortable talking about their problems and depression is recognised as an illness that can happen to anyone.

the mother-of-two’s face and leaving her blind in one eye. In the aftermath of the attack, Ms Piper received therapy to deal with her condition but once she had children and was responsible for someone else, she told the gathered insurance brokers, she was hit by a new kind of anxiety for them. Reﬂecting on what lessons the insurance profession should take from her experiences, Ms Piper said it is vital that employers understand that mental health work is ongoing. She said: “It isn’t like ﬂu where

Andrew Flintoﬀ and Katie Piper

IT IS ABOUT YOUR WORKPLACE MAKING CLEAR THAT THERE WON’T BE A PUNISHMENT FOR ADMITTING YOU HAVE AN ISSUE AND THAT IT IS ONGOING.

Katie Piper

Speaking about depression, Mr Flintoff said: “People think depression is feeling sad but when it comes over, it is strange. It is like the shutters of a shop coming over. I just couldn’t connect with the world. “Leaders have a responsibility to create an environment where people don’t just talk about what they did last night but about how they are feeling. To do that, there needs to be an element of trust.” Philanthropist and former model, Katie Piper, also spoke on the panel, describing how she was diagnosed with post-traumatic stress disorder after she was attacked with acid by her ex-boyfriend, causing major damage to

She said that when it comes to action, employers need to take language like “admitting mental health issues” out of any literature they have regarding the policies they have for helping staff. She said businesses should invest in mental health first-aid teams and if they can see a significant number of workers experiencing stress, they should take a look again at working practices. Professor Byron said: “Put your money where your mouth is. If you want to be inclusive, think about what Freddie Flintoff and Katie Piper Professor Green, Freddie Flintoff and Katie Piper are talking about.”

you take medication and soon get better. I have learnt when I see that pattern or trigger, to try to use my coping mechanisms. But I am not immune to the lows. “It is about your workplace making clear that there won’t be a punishment for admitting you have an issue and that it is ongoing.” Professor Green observed that for employers to stop seeing mental health as an issue to be dealt with is key and therefore bosses need to recognise that individuals, who have a mental health issue and tackle it, are showing resilience. Professor Tanya Byron, a psychologist, chaired the BIBA debate.

AI IS HERE AND NOW

Steve White, chief executive of BIBA, used his address to highlight to delegates that “we are living in an era of profound societal and business change”, and explained that it is no longer sufficient for the sector to seek the same old skills it has sought for a generation. He said that because people’s lives and businesses are increasingly dominated by technology, there is a need for the sector to be able to draw from a younger, tech-savvy talent pool who can energise and influence incumbents. Mr White said: “The development and use of artificial intelligence (AI) in the insurance sector has been spoken about for a while now, but there are clear signs that it is going to have an effect in our space, much sooner than we might have previously thought. “It can support brokers to focus efforts in serving the customer better and offering a smoother insurance experience.” He continued: “An AI-enabled broker will be able to more easily identify leads, needs and product; will have answers at his or her fingertips; will be able to provide better services; and reduce time spent on manual tasks. “AI is, and will continue to be, a positive change for us, improving services and not just the underlying product. We must be the champions of that change.”●

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BIBA 2019

CII AT BIBA 2019 The CII’s stand at BIBA delivered a view of the future via augmented reality

he theme of the British Insurance Brokers’ Association (BIBA) Conference 2019 was ‘Leading the Way’, and the CII put itself at the forefront of the event with its stand based around ‘FutureProoﬁng your Business’. Via the vehicle of augmented reality, the CII invited delegates to step into the future using a hightech photobooth where their normal surroundings were transformed through the view of tablets and smartphones. The CII’s Society of Insurance Broking (SIB) hosted the stand, showcasing initiatives on building

public trust, good practice and a varied and high-quality selection of continuing professional development. The CII also spoke to visitors about developing and retaining talent in their business with Chartered status, Broker Assess eLearning and Aspire Apprenticeships programmes. Chartered broker TEn Insurance Services visited the stand on day one and the ﬁrm’s director, Dawn Derbyshire, said: “Our visit to the CII stand this year at BIBA exceeded expectations. We were told in detail about the Chartered ethos, which signalled there has been huge development within the CII and to me, ensuring our business remains Chartered is vital.

“This progress gives me conﬁdence that the Chartered ethos will ensure the ethics and values, along with client-centricity, demonstrate our commitment and recognition for maintaining the highest professional standards.”

FRINGE SUCCESS SIB also hosted the closing fringe event of the conference – ‘Trust in Insurance’ – with guest panel including Liz Foster, non-executive managing director of SIB; Graeme Trudgill, executive director of BIBA; Peter Blanc, CEO of Aston Lark; James Ramirez, director of Aria Insurance; and Steve Jenkins, executive director of development at the CII. Discussion centred around building public trust in insurance and was followed by a Q&A session, where the panel and audience debated matters such as dual pricing, technology disruptors, underinsurance, roboadvisers and the future of broking. The CII also hosted its annual preBIBA drinks reception at Impossible bar, where CEO Sian Fisher and CII president Jonathan Clark welcomed guests and delegates for an evening of networking, themed cocktails and prize giveaways. ●

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H OT TO P I C : S U STA I N A B I L I T Y

decade ago, if you had asked anyone in the insurance profession what ESG meant, you may well have received a blank look. Today however, there is far greater understanding of the environmental, social and governance (ESG) issues facing business and the insurance profession alike. According to preliminary estimates from Swiss Re, global insured losses in 2018 are around US$79 billion (£62.9bn), higher than the annual average of the last 10 years. This year has started with two cyclones battering the east coast of Africa and decimating swathes of Mozambique – the ﬁrst time in recorded history that two such cyclones have hit in one season. The Caribbean hurricane

season lies ahead, while in the UK the Environment Agency has warned entire coastal and river communities may have to be abandoned in the face of the effects of climate change. So, no wonder there is a drive from insurers to build a sustainable future, both in response to climate change, but also in terms of providing a better social environment. The UN has been pushing this agenda in earnest since 2012 and back in February, more than 200 insurance industry leaders and key stakeholders from across the globe gathered in Munich to raise the insurance industry’s ambition in tackling sustainability challenges such as climate change, social inequality, ageing populationsd major health risks. At the international event, the ﬁrst-ever insurance industry guide

titled, “Insuring for sustainable development: Raising the industry’s ambition”, was launched. The guide shows how insurers can develop a systematic approach to managing ESG risks such as climate change, environmental degradation, protected sites and species, human rights and corruption. It focuses on non-life insurance and includes heat maps indicating the level of potential ESG risk across lines of business and economic sectors – from agriculture, chemicals, defence, energy, healthcare and technology; to infrastructure, manufacturing, mining, real estate and transport. Oliver Bäte, CEO of the Allianz Group, said: “Driving a low-carbon and inclusive economy to secure our future only will succeed if all players are truly committed and create measurable contributions.”

200 INSURANCE LEADERS GATHERED IN FEBRUARY TO DISCUSS TACKLING SUSTAINABILITY CHALLENGES

Liz Booth examines ever-increasing environmental, social and governance issues facing insurers

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H OT TO P I C : S U STA I N A B I L I T Y

Christiana Figueres, Convenor of Mission 2020, added: “The latest Intergovernmental Panel on Climate Change (IPCC) report shows that there’s a world of a difference – in terms of adverse economic, social and environmental impacts – between a world with an average temperature increase of 2 degrees since preindustrial levels, and one with 1.5 degrees. “As risk managers, insurers and investors, no industry has the capacity to keep us safe other than the insurance industry.”

THE AFRICA EXAMPLE One of the key initiatives from the insurance profession is to encourage ESG principles in areas most likely to be negatively impacted by climate change.

In recent months, the United Nations (UN) has been involved with two major events on the continent of Africa. Firstly, in Egypt, the insurance industry has agreed a pioneering initiative to develop a national sustainable insurance strategy and action plan – described as a “roadmap” – by 2020. This aims to harness the triple role of the Egyptian insurance industry as risk managers, insurers and investors for economic, social and environmental sustainability. And then in May, at an event hosted by Continental Re, the ﬁrst African reinsurer to sign the Principles of Sustainable Insurance (PSI), leading Nigerian insurers agreed to engage with local government authorities in Lagos to explore the development

of a “city sustainable insurance roadmap”— a strategy and action plan to help Lagos become resilient and sustainable. With more than 21 million inhabitants, the bustling megacity of Lagos is the economic, financial and cultural heart of Nigeria, Africa’s largest economy and most populous country. Lagos is vulnerable to sustainability risks such as flooding, sea-level rise, coastal erosion, disease outbreak and infrastructure failure. As part of the need to develop better data and catastrophe risk models and enhance climate risk management, participants also agreed to look into opportunities to develop flood maps for the capital cities of Lagos and Accra in West Africa, and for the Southeast African countries of Mozambique and Mauritius. ●

SUSTAINABLE £62.9bn FUTURE

ESTIMATED GLOBAL INSURED LOSSES IN 2018

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H OT TO P I C : S U STA I N A B I L I T Y

THE PRINCIPLES FOR SUSTAINABLE INSURANCE

initiative between the UN and the insurance industry – the PSI Initiative. More than 120 organisations worldwide have adopted the four Principles for Sustainable Insurance, including insurers representing more than 25% of world premium volume and US$14 trillion (£11.14 tr) in assets under management. The principles are part of the insurance industry criteria of the Dow Jones Sustainability Indices and FTSE4Good.

Launched at the 2012 UN Conference on Sustainable Development, the UNEP FI Principles for Sustainable Insurance serve as a global framework for the insurance industry to address environmental, social and governance risks and opportunities. Endorsed by the UN Secretary-General, the principles have led to the largest collaborative

Source: UN PSI

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THE FOUR PRINCIPLES

We will embed in our decision-making environmental, social and governance issues relevant to our insurance business. Possible actions: Company strategy ● Establish a company strategy at the board and executive management levels to identify, assess, manage and monitor ESG issues in business operations. ● Dialogue with company owners on the relevance of ESG issues to company strategy. ● Integrate ESG issues into recruitment, training and employee engagement programmes. Risk management and underwriting ● Establish processes to identify and assess ESG issues inherent in the portfolio and be aware of potential ESG-related consequences of the company’s transactions. ● Integrate ESG issues into risk management, underwriting and capital adequacy decisionmaking processes, including research, models, analytics, tools and metrics. Product and service development ● Develop products and services which reduce risk, have a positive impact on ESG issues and encourage better risk management. ● Develop or support literacy programmes on risk, insurance and ESG issues. Claims management ● Respond to clients quickly, fairly, sensitively and transparently at all times and make sure claims processes are clearly explained and understood. ● Integrate ESG issues into repairs, replacements and other claims services. Sales and marketing ● Educate sales and marketing staﬀ on ESG issues relevant to products and services and integrate key messages responsibly into strategies and campaigns. ● Make sure product and service coverage, beneﬁts and costs are relevant and clearly explained and understood. Investment management Integrate ESG issues into investment decision-making and ownership practices.

We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions. Possible actions: Clients and suppliers ● Dialogue with clients and suppliers on the beneﬁts of managing ESG issues and the company’s expectations on ESG issues.

● Provide clients and suppliers with information and tools that

may help them manage ESG issues. ● Integrate ESG issues into tender and selection processes

for suppliers. ● Encourage clients and suppliers to disclose ESG issues and to

use relevant disclosure or reporting framework. Insurers, reinsurers and intermediaries ● Promote the adoption of the Principles. Support the inclusion of ESG issues in professional education and ethical standards in the insurance industry.

We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues. Possible actions: Governments, regulators and other policymakers ● Support prudential policy, regulatory and legal frameworks that enable risk reduction, innovation and better management of ESG issues. ● Dialogue with governments and regulators to develop integrated risk management approaches and risk transfer solutions. Other key stakeholders ● Dialogue with intergovernmental and non-governmental organisations to support sustainable development by providing risk management and risk transfer expertise. ● Dialogue with business and industry associations to better understand and manage ESG issues across industries and geographies. ● Dialogue with academia and the scientiﬁc community to foster research and educational programmes on ESG issues in the context of the insurance business. ● Dialogue with media to promote public awareness of ESG issues and good risk management.

We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the principles. Possible actions: ● Assess, measure and monitor the company’s progress in managing ESG issues and proactively and regularly disclose this information publicly. ● Participate in relevant disclosure or reporting frameworks. ● Dialogue with clients, regulators, rating agencies and other stakeholders to gain mutual understanding on the value of disclosure through the principles.

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C L I M AT E C H A N G E

Prudential Regulation Authority (PRA) working group has pulled together ways for the general insurance profession in the UK to get to grips with the impact of climate change increasing risk in the coming decades. In an 85-page report, aimed at practitioners working with or at general insurance firms, the group outlines a framework for practitioners to use to assess financial impacts to the liability side of the firm’s balance sheet caused by future climate change. The framework, contained in the report titled, A framework for assessing financial impacts of physical climate change: A practitioner’s aide for the General Insurance Sector, aims to be a starting point for firms to assess the impacts in the context of their business decisions and disclosure requirements. The framework has six stages: 1) Identify business decision(s). A physical climate change study would typically aim to inform a business decision or activity. This stage of the framework will decide the time horizon and metrics that need to be considered. 2) Define materiality. This stage enables the firm to focus on the business areas where the physical risk from climate change could have a material impact on business decisions. 3) Conduct background research. The firm will need to review existing scientific publications to understand better how climate change could influence the relevant areas identified. The likely outcome is a range of projected changes in frequencies or intensities for specific perils. 4) Assess available tools. A decision will need to be made on which catastrophe tool(s) will provide the most suitable analysis. 5) Calculate impact. This stage involves using the tools selected to assess the financial impact from the projected changes to the perils in question. Key considerations could include the appropriate communication

of both the output and the uncertainty in the results. 6) Reporting and action. Output from the use of the framework needs to be communicated to decision makers in a manner that can inform the business decision(s) in question, highlighting the limitations and uncertainty related to the analysis. The report, which was published in May, also sets out recommendations for how the catastrophe analytics industry can contribute further, suggesting that it can play an important role in interpreting existing scientific studies and, combined with existing tools, assess the financial impacts from physical climate change while making recommendations for improving both future research and catastrophe tools development. David Rule, executive director of insurance supervision at the PRA, said: “Climate change, and society’s response to it, presents financial risks to insurers. While these risks will crystallise in full in the

coming decades, they are already becoming apparent. “The PRA expects insurers to take a strategic approach to addressing the risks from climate change, and from my recent discussions, many insurers are keen to make progress in developing a strategic approach. He continued: “I encourage firms and practitioners to read this report alongside the PRA’s supervisory statement 3/19 that sets out expectations for how banks and insurers should approach the financial risks from climate change, including that the response is led by the board, that it is embedded within existing financial risk management practice, that it uses (long-term) scenario analysis to inform strategy setting and risk assessment, and that it includes disclosure.” To read the report, visit: bankofengland.co.uk ● Emma Ann Hughes is communications director of the CII

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FUTURE IMPACT

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

1 2

FCA CONTINUES FOCUS ON DUAL PRICING

The UK Financial Conduct Authority (FCA) published its business plan in April, repeating its promise to look at “how ﬁrms charge for home and motor insurance, to tackle the fact that longstanding customers pay much higher prices than new customers”. Karina McTeague, director of gernal insurance and alistss at the FCA, emphasised tthis in conduct specialists B Insurance Brokers’ her speech to the British onferrence in May. She Association conference ssue of duel pricingg said that the issue ated through “is well illustrated C the results of the CII’s dex, which Public Trust index, d thee has highlighted yaltyy impact that loyalty ng pricing is having on public trustt in the industry”. The results of the FCA’s workk on nce general insurance ces pricing practices hed this sum ummer. will be published summer. The CII

PARLIAMENTARY DIMENSION ON CONSUMER ACCESS

FCA WON’T TOLERATE TOXIC BEHAVIOUR

The FCA has underlined the significance of diversity and inclusion, not only as an important objective in itself but as a marker of a healthy culture within a firm. Nausicaa Delfas, the FCA’s executive director of international, said: “We look at how a firm’s culture is shaped by drivers such as incentives and p, remuneration, training, leadership, ose, governance arrangements, purpose, diversity and inclusion. tyy is “A culture that pursues diversity p riingg pi one… that is openminded and aspiring to improve.” Ms Delfas also stressed that a fifirm’s rm’s employmentt practices, while not directly regulated by the FCA, were an issue of importance and concern to the regulator. She said: “An emerging theme in the last year or so has been non-financial takes a look at what’s misconduct, such as serious misbehaviour, bullying, new on the policy and public personal new sexual discrimination or sexual misconduct in the workplace. affairs front this month This type of serious misbehaviour is toxic to a working environment and can lead to bad outcomes for customers, staff, stakeholders and the firm. “In our view, tolerance of this sort of misconduct would be a clear example of a driver of unhealthy culture. This area clearly requires management attention and a broader change in the firm’s mindset.”

WHAT’S ON THE RADAR?

The FCA business plan highlighted the issue of access to insurance for people with pre-existing medical conditions. The plan stated: “It can be harder for consumers with specific insurance needs to find or get cover, especially when using mass market distribution channels.” The FCA went on to state that it was “working to ensure consistent signposting for consumers when accessing travel insurance”. It will “require firms to direct consumers to providers that may be more appropriate to deal with the consumer’s condition”, through a signposting service. It will consult on this new requirement in 2019. Scottish National Party MP, Hannah Bardell, followed this commitment up in May with a question to the Chancellor, asking what steps he was taking “to ensure that insurance companies do not unfairly discriminate against consumers with… historical and… current mental health conditions”.

l ld This parliamentary dimension could open up new avenues of activity overr g,, and above the work the FCA is doing, for example by increasing the measures insurance ﬁrms have to take under the broad principles of the Equalities Act. This could include more prescriptive guidance around what ﬁrms have to do to demonstrate that y. they are underwriting fairly.

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THE GLOBAL STUDENT MARKET IS BIG BUSINESS

ur international business is dedicated to serving the needs of expatriate communities around the world, many of whom are working offshore. However, we recognise that for a good many of these people, their first experience of living abroad is as international students. Some gain their qualifications and head back home, but a good proportion see the education piece as just the first step to employment and, eventually, residency and even citizenship in their adopted homeland. The United Kingdom alone attracts more than 90,000 foreign, fee-paying students of all ages to its shores every y year. It is more than a cottage-industry, it iss a major earner for the country and for the education n sector in particular. Knowing this, in 2016 we e introduced our Global Student travel insurance nsurance product which is aimed squarely uarely y at this inbound market. The policy is an in-bound travell insurance plan but with some added features which h are of specific interest to this audience. This includes coverage for the student’s medical expenses; property and cash as well as travel interruption. But we also cover their liability as tenants as well as funding unexpected ted emergency returns home (to to perhaps visit a sick relative) and, critically, itically, we will reimburse non-refundable student fees where a student is unable to complete ete their studies due to a claimable event. And unlike a traditional travel insurance contract, if a student requires medical al treatment, we will seek to provide it for them in the e UK rather than seeking to repatriate them home as a first course of action – unless it makes sense to do so.

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The policy is very much a niche proposition, but it is a significant niche and the key for HCI is knowing that many of these student clients will remain in the UK post-graduation and seek to find work and settle here. Those who do and who have started their journey with HCI can then be transitioned onto one of our medical plans. We offer five annual and two short-term options. The premium for the Global Student plan is only £420 per year for an individual, or £780 for a family and the online purchasing process is as simple as buying a travel policy – because no one wants to be completing insurance applications when there is fresher’s week to plan and new places to see! We are pleased with the Global Student Travel Plan and feel both price and benefit structure will be attractive to students and their parents who are often the on ones who drive these sales. Indeed, whils whilst the students themselves often feel b bullet-proof; the real win helpin to reduce the worry is helping that aall parents feel when their child children leave home. W our personal With aap approach and step by step gu guidance throughout any claim we hope that should illness sstrike, or an unexpected accident o occur we will help prevent that illness or accident becoming a crisis. All information can be found at: hciistudent.com, while all information on our hcistudent.com, ran ange of iPMI Plans, Life Lif and Travel can be found range att: www.healthcareinternational.com www.healthcareint at: or feel frree to call us on 0207 590 5 8800 ● free

HealthCare International (HCI) is a mana managing general agency who focus exclusively on expatriate mar markets, selling a range of medical, travel and life products. London based and with more than 15 years’ experience we are experts in this specialist ﬁeld.

25/06/2019 18:22

FRAUD

atest statistics show that normally honest people are still exaggerating an insurance claim without too much hesitation. Cifas, the UK’s fraud prevention service with more than 450 members, recently released new ﬁgures showing a marked increase in the number of individuals committing insurance fraud with false claims. Between 2017 and 2018, there has been a nationwide increase of 27% in fraudulent insurance claims.

According to Cifas data: • Fraudulent claims in household insurance have increased by 52%, with claimants aged 31-40 the biggest culprits; • Fraudulent claims in motor insurance have increased by 45%, with 21-30-year-olds making up the largest group; • While fronting insurance recorded by Cifas members is on the decline overall, the share of millennials (21-30-year-olds) committing the offence increased by 18% in 2018.

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The ﬁgures also reveal household insurance fraud and motor insurance fraud as the two biggest causes of false claims – with a 52% and 45% increase respectively. Meanwhile, there is an overall decrease in another form of insurance fraud: fronting an insurance policy. Fronting is when a driver claims they are the main user of a vehicle that is actually driven by a young driver or other high-risk motorist to receive lower premiums: for example, by parents for their children. Cifas members reported more than 300 cases of fronting in 2018, with the data showing an 18% increase in the proportion of those aged 21 to 30 conducting this type of fraudulent activity. Cifas sheds light on the daily temptations consumers face to commit fraud: the lies, exaggerations, deceptions

and “seemingly” harmless opportunities to make some quick cash or get a better deal that are actually criminal acts. Chief executive oﬃcer of Cifas, Mike Haley, said: “False insurance claim fraud and fronting insurance policies fraud are often seen as an easy way to make a bit of money without hurting anyone. Yet the idea that fraud is a victimless crime is completely false. “As the rise of false claims in household and motor insurance shows, many people are seemingly unaware of the risks they’re running and the consequences it can have by committing everyday fraud.

81% INCREASE IN GHOST BROKING INVESTIGATIONS SINCE 2015 “While the overall downturn in fronting insurance policies is a positive sign, the fact that young people are increasingly more likely to commit that type of fraud highlights the need for continuing education. More needs to be done to raise awareness about the harm of fraud and ﬁnancial crime.” While Cifas found young people are more likely to commit fraud, other statistics show that young people are among the least likely group to spot fraud. Figures from Equifax show young people are signiﬁcantly less likely to monitor their bank balances, exposing them to risks from fraud. The survey, conducted online with Opinium, showed that 74% take basic precautions such as locking their door before leaving home, but less than a third (32%) regularly change their passwords and less than half (42%) are careful about sharing personal details on social media.

AUTOMATED SOLUTION One example of how to combat fraud comes from Horwich Farrelly, which has launched what it claims to be the first fully automated fraud investigation solution. Designed to give motor insurers a cost-effective way to specifically tackle vehicle-data related fraud and drive down the cost of motor claims, ‘Car Wash’ applies technology and novel algorithms to streamline the process. Horwich Farrelly claims, for cases the firm concluded in 2018, ‘Car Wash’ saved the insurance industry more than £2.4 million. ‘Car Wash’ compares claims against a wide range of data from a variety of sources to reveal a series of ‘red flags’ that enable further investigation of those deemed most likely to be fraudulent. The system considers more than 30 potential indicators of fraud, including MOT history, mileage data, road tax records, change of keeper dates and car adverts – as well as Horwich Farrelly’s own historical fraud data – within an insurer’s database of claims. If potential fraud, including suspected staged incidents and fraud rings, are found then the system highlights these automatically. Since first being piloted in January 2018, Horwich Farrelly has run more than 50,000 claims through ‘Car Wash’ and the results have been both impressive and – for some – surprising, particularly in claims were no other evidence of fraud was predicted. More than 4,500 fraud matches have been detected by the system to date. Rick Preston, head of Horwich Farrelly’s Intelligence Team, believes the technology could be a gamechanger for the industry, particularly in credit hire claims, which many observers see as a potential growing market for unscrupulous behaviours. ●

£336m ‘CRASH FOR CASH’ COSTS THE INSURANCE INDUSTRY PER YEAR

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FRAUD

FALSE INSURANCE CLAIM FRAUD AND FRONTING INSURANCE POLICIES FRAUD ARE OFTEN SEEN AS AN EASY WAY TO MAKE A BIT OF MONEY WITHOUT HURTING ANYONE. YET THE IDEA THAT FRAUD IS A VICTIMLESS CRIME IS COMPLETELY FALSE

KEEPING PACE WITH

S R E T S D U A R F lent insurance As the value of UK fraudu ok at what the claims increase 27%, we lo ess the problem profession is doing to addr

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With your involvement, you can make a difference. The CIIâ&#x20AC;&#x2122;s network of 56 local Institutes creates opportunities to get involved, make an impact and inspire others.

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

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25/06/2019 11:07

R E G U L AT I O N

CULTURE CLUB The FCA reveals what it expects from the insurance profession

he UK Financial Conduct Authority (FCA) has told insurance professionals to deliver “a change in culture” to meet regulatory requirements. At the British Insurance Brokers Association (BIBA) annual conference in May, the trade body’s head of compliance and training, David Sparkes, pointed out the insurance sector’s frustrations with the senior manager and certification regime. When discussing the Senior Managers and Certification Regime (SMCR) – which came into force for all insurance and reinsurance firms regulated by the FCA and Prudential Regulation Authority on 10 December 2018 and will come into force for solo-regulated firms on 9 December 2019 – Mr Sparkes questioned whether, for one-man band insurance brokers, the SMCR meant they were now having to waste their time in creating a ridiculous document stating, “I am responsible for everything.” Since the end of 2018, senior managers at insurers, reinsurers, the Society of Lloyd’s and managing agents have needed to have a ‘statement of responsibilities’ that clearly states what they are responsible and accountable for. But in response to Mr Sparkes’

question Karina McTeague, director of general insurance and conduct specialists at the FCA, said the new regulatory requirements for the profession should be seen as an opportunity rather than just more red tape to deal with. Ms McTeague said: “My wish is the insurance sector takes a step change with the senior managers and certiﬁcation regime.”

CLEARLY DEFINED

THIS CLARITY ISN’T JUST ABOUT REGULATORY REQUIREMENTS. IT IS ABOUT BETTER BUSINESS

As well as forcing insurance provider and broker bosses to have clearly deﬁned responsibilities, the SMCR aims to make sure ﬁrms clearly understand and can demonstrate where responsibility lies across the business. Ms McTeague said it will “embed a healthy culture” in the insurance profession. She said the insurance profession needs to do several things to satisfy the City watchdog and meet the requirements of the SMCR. Insurers, reinsurers and brokers must:

Set the tone of the business from the top by having a clearly articulated purpose. Make sure the words match the actions taken by those working in the business.

Bosses should encourage and reward behaviours they want to see rather than incentivise the sale of a particular product, in a bid to avoid a repeat of the payment protection insurance mis-selling scandal.

Create a working environment that encourages people to speak up because employees should be guardians of the values of the company they work for.

Create a culture where those who speak out are listened to and action is taken because speaking up only works if there is listening in response. She claimed, while there was some initial resistance when the senior managers and certiﬁcation regime was ﬁrst introduced to the banking sector several years ago, the FCA has had feedback from board members stating they appreciate having greater clarity of their responsibilities. Ms McTeague said: “This clarity isn’t just about regulatory requirements. It is about better business. Don’t treat this [the SMCR] as a project. Think beyond the implementation date and regularly get together everyone in your business who is going to make this business as usual. “This is about setting base standards. Everyone needs to know what these standards are.” ● Emma Ann Hughes is communications director of the CII

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

S 28

outh Africa’s shortterm (or general) insurance marketplace is dominated by traditional insurers that distribute their policies via intermediaries. In time, a unique arrangement has evolved involving intermediaries – and more recently premium collection agencies – collecting insurance premiums from policyholders on behalf of the insurer. The history of premium collection provides unique insights into the interplay between regulators and insurance market operators – and the rise and fall of institutions – as stakeholders seek to mitigate the risks inherent in day-to-day insurance operations. The law governing premium collection was introduced under section 20 bis of the Insurance Act of 1943, in around 1966. It required that intermediaries who collected premium on behalf of insurers be duly appointed by the insurer to remit payments; furnish security in favour of the South African Insurance Association (on behalf of the insurance companies); and pay over premium on expiry of 60 days (subsequently reduced to 15 days) after the end of the month during which the premium was received. Section 20 bis was amended many times through the years, before being replaced by section 45 of the Short-term Insurance Act of 1998.

The legislated holding period meant that collecting intermediaries held signiﬁcant amounts of insurer capital. This risk was partly offset by the legal requirement that intermediaries take out a guarantee totalling 30% of their annual premium collections. That guarantee had to be issued by an insurance company created by the insurance industry, or a registered commercial bank, or the Land Bank. Local insurers duly established and licensed an insurer called the Intermediaries Guarantee Facility (IGF) to provide cost-effective guarantees to the premium-collecting intermediary market. IGF was owned by about 21 local insurers who operated it on a not-forproﬁt basis, with 100% of its exposure reinsured among the participating insurers. The maximum guarantee was capped at ZAR20m (approx. £1.1m) and raised as appropriate through time, eventually reaching a cap of ZAR100m.

TEST CASE The legal position of premium ownership was tested by the courts in a matter brought by the joint liquidators of AA Mutual Insurance Association against Price Forbes (an insurance intermediary) and Premier Milling Company (the policyholder) in the late 1980s. Premier had paid the insurance premium due

on a contract works and public liability insurance policy to Price Forbes, just days before AA Mutual’s short-term insurance business was placed under ﬁnal liquidation. The liquidators petitioned the courts to compel the intermediary to transfer this premium to the insurer as a matter of law. The matter, subsequently upheld on appeal, was decided in favour of the liquidators. Against this backdrop, IGF can be viewed as a market-driven response to the question: ‘What happens if an intermediary goes belly up while holding an insurer’s premium?’ Barry Scott, ex-CEO at the South African Insurance Association, says the IGF was born of a need to control or regulate the premiumcollection environment. The IGF performed without major incident for decades, with only one signiﬁcant guarantee claim of about ZAR8m in the late 1990s. “There was a longheld misconception that the IGF guarantees protected consumers, but it had no consumer aspect at all – its primary function was to protect the insurers’ premium,” says Mr Scott. This fact did not escape South Africa’s prudential and market conduct regulators and forms the basis for how the IGF story ends.

ZAR100m IS THE CURRENT CAP ON IGF GUARANTEES, WHICH IT IS ESTIMATED AROUND 40 INTERMEDIARIES WERE COLLECTING PREMIUMS OVER AND ABOVE

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

The premium collection environment has seen major changes in recent years. The ﬁrst is that intermediaries outgrew the guarantee facilities that the IGF was capable of offering. Mr Scott estimates that some 40 intermediaries were collecting premiums that required guarantees in excess of the IGF’s ZAR100m cap; a cap that could not be further increased due to capacity constraints. The second is the arrival of specialist premium collection agencies that were soon facilitating premium collections for insurers on behalf of hundreds of intermediary clients. Around 2016, the regulators started questioning the need for section 45. The Financial Sector Conduct Authority felt that premium collection was an “insurer ﬁnancial soundness” issue, best dealt with under the Solvency Assessment and Management (SAM) regime (the local equivalent of European Solvency II). Section 45 was subsequently repealed as part of the shift to a ‘twin peaks’ regulatory framework. Another important

development was the inability of the IGF, a licensed insurer, to meet SAM prudential requirements. After initially granting the IGF an exemption from the SAM ﬁnancial soundness requirements, the regulator decided to pull the plug and IGF guarantees were terminated from 31 March 2019 in a managed process. There is no longer a legislated requirement for a credit intermediary to hold a guarantee – instead, the authorities expect insurers and the market to manage the relevant credit risk – insurers must take control of their capital, cash and data. Intermediaries have been negotiating the premiumcollection issue, including any requirements for capital guarantees,

with each of their insurance carriers. “The industry has been selfregulating to ﬁnd a solution to the operational and legislative requirements of the premium-collection environment for a number of years,” says Mr Scott, who presently heads up Fulcrum Collections. “Fulcrum grew because the industry recognised us as a better solution than having thousands of intermediaries collecting and holding premium.” He adds that eﬃcient premium collection has become a volume business that requires heavy investment in people, systems and technology. ● Gareth Stokes is managing director of Stokes Media in Johannesburg, South Africa

THERE WAS A LONG-HELD MISCONCEPTION THAT THE IGF GUARANTEES PROTECTED CONSUMERS, BUT IT HAD NO CONSUMER ASPECT AT ALL – ITS PRIMARY FUNCTION WAS TO PROTECT THE INSURERS’ PREMIUM

COLLECTION CONUNDRUM GETTY

Gareth Stokes examines the rise and fall of South Africa’s Intermediary Guarantee Facility

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25/06/2019 18:35

RENEWABLE ENERGY

JOULE PRICING GETTY

How insurers are beginning to assess the risks of green energy businesses

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RENEWABLE ENERGY

t is predicted that half of the world’s energy will be from renewable sources by 2050 according to research from BloombergNEF while May 2019 saw the UK go seven consecutive days without burning coal to generate power for the ﬁrst time in more than 130 years. This is a fast-moving sector with wind turbines the size of The Shard in London set to come online within the next decade. There are plenty of opportunities for insurers wanting to demonstrate their green credentials and increase their book of green business. Potential insureds not only include the contractors, owners or operators of the renewable energy plant but also spin off businesses such as solar panel servicing or wind turbine blade repairs. Inevitably, claims arising from manufacturing defects, negligent installation or weather events will follow.

PRE-RISK ISSUES While the technology for wind turbines and solar panels is rigorously tested, the locations where they are installed can be remote, often with limited historic data of top wind speeds and storm frequency. Accordingly, plants may encounter conditions that were not anticipated, and parts may not operate as designed. As with all losses, it is necessary for claims handlers to determine the most likely cause of the loss and when this occurred. The leading-edge of wind turbines, for example, are susceptible to corrosion so damage caused by wear and tear would be excluded whereas lightning damage would be covered. For remote onshore and offshore locations, greater use of remotely controlled robotics (such as drones) assists investigators undertaking preliminary inspections of the damage as well as effecting repairs more safely, quickly and cheaply. We recommend an assessment of the condition monitoring systems in place to remotely detect faults at the underwriting stage. These systems vary in sophistication (and cost) with the latest software providing the most detailed data in real time.

COVERAGE AND CLAIMS The insured may elect, or be required under the terms of the policy, to pursue the manufacturer itself ﬁrst before making a claim, particularly if the part is still under warranty. In these circumstances, insurers may wish to overlook a late notiﬁcation point to encourage insureds to take a pro-active approach thereby reducing costs. This needs to be weighed against the advantages of early intervention by claims handlers, loss adjusters and experts which can reduce insurers’ outlay in the long-run.

IT IS PREDICTED THAT HALF OF THE WORLD’S ENERGY WILL BE FROM RENEWABLE SOURCES BY 2050 Manufacturers are offering extended warranties to provide increased comfort to purchasers of new products. Where the insured is the manufacturer of the faulty/defective part, an extended warranty is likely to fall outside the scope of its public liability policy. This issue arose in the Supreme Court case of MT Højgaard A/S v E.On Climate & Renewables UK Robin Rigg East Limited [2017] where the contractor warranted that the foundations would last for 20 years. The insurance market providing cover for these warranties is growing. There may also be business interruption issues. In relation to wind farms, where remedial works

are being carried out to one turbine, others may need to be shut down to avoid turbine loading. The question for claims handlers is whether the reduced productivity of a non-damaged turbine falls within the scope of cover. For those insureds that transmit electricity to the grid, penalties can be imposed where a loss has interrupted transmission. Underwriters will need to consider whether these penalties fall within their deﬁnition of business interruption. Discussions with the insured (or their broker) will improve underwriters’ understanding of the model in place to ensure that there is appropriate cover. Where there are reinsurers, it is important that the reinsurance policy dovetails with the underlying policy particularly in cases where bespoke cover is sought. Replacement parts may not be readily available and new and existing versions may be incompatible. In these situations, we have seen insurers work creatively with insureds to ﬁnd an appropriate remedy. Regular surveys by engineers will assist underwriters in understanding the risks that face the renewable energy plant. The implications for insurers of the growth in renewable energy will be explored further in DAC Beachcroft’s thought leadership report, due out in September. To receive the report, email: ykhatri@dacbeachcroft.com ●

Denise Eastlake is a senior associate in the global insurance practice at law ﬁrm DAC Beachcroft.

CONSTRUCTION ALL RISKS The construction all risks (CAR) policy is likely to include all parties involved in the ﬁnancing, supply, installation and commissioning of the project to avoid the risk of costly litigation and disruptions to the project. This can therefore limit recovery opportunities unless an entirely separate third party is involved. Even where the party at fault is a named insured, the contract terms should still be carefully reviewed to assess whether a recovery action is available. Often CAR policies will restrict cover for an insured to its on-site activities enabling claims where the negligence occurs oﬀ-site. In Haberdashers’ Aske’s Federation Trust Ltd v Lakehouse Contracts Ltd [2018], cover extended to ‘subcontractors of any tier’. However, there was also an express term in the subcontract requiring the subcontractor to maintain its own insurance. It was therefore determined that the parties had agreed that any loss caused by the subcontractor was to be borne by it and not by the project policy enabling a recovery action against the subcontractor.

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25/06/2019 18:36

DISCOVER THE WORLD OF INSURANCE

H E R I TA G E

HISTORY IN THE MAKING Investment needed for London insurance museum to take-off

pace rescues are not just the stuff of science ﬁction. They are also part of insurance history. NASA Mission STS-49 launched on 7 May 1992. The aim of this mission was the rescue of Intelsat 603, which was orbiting earth in the wrong place. The space shuttle Endeavour was despatched to correct the orbit, with the mission insured at Lloyd’s for hundreds of millions of dollars. Space rescue cover was born. This is just one of the fascinating stories that we hope will be told at the Insurance Museum, which could be based in the City of London’s insurance heartland. With seed funding provided by the CII, market support is already growing for the Insurance Museum, but we are still looking for further expressions of support before it can be created. The Association of British Insurers, the International Underwriting Association, numerous City of London Aldermen, the Lloyd’s Three Rooms Club and some of the larger corporate entities are also supporting the launch. As Sue Langley, City of London Alderman, told us: “We have an amazing history and we need to tell the story. The Insurance Museum is something we should do, for the good of everyone we work with and for our future.”

THE SPIRIT OF INSURANCE We are looking to create a dedicated facility that will tell the story of insurance from the ancients to the present day, through to the future of risk transfer. The Insurance Museum aims to capture the spirit of insurance – its social good – through the theme of what it enables, demonstrate the evolution of the profession, educate and build public awareness and ultimately trust in the profession, supporting the CII’s Royal Charter. It will also aim to promote the diversity of the insurance profession and attract new talent, as well as reveal the evolution of insurance from around the world, with the UK making up a signiﬁcant part of that story. A working group, the Insurance Museum Initiative (or ‘I’m in’ for short), is liaising with market audiences to canvass feedback and input for the museum concept and has been encouraged by the huge support for the project. The trigger for creating a permanent museum was the CII’s move from Aldermanbury to its new central London oﬃce in Lombard Street. With the move of the CII’s museum artefacts, the question was raised whether something more could be done to engage audiences with the valuable heritage story of insurance. Ultimately, the museum will be home to much more than the CII’s

collection, with curated artefacts and stories from around the world to engage audiences with the incredible history of insurance. Project supporter and insurance mediator, Terry Renouf, said: “Imagine a venue that tells tales of piracy, kidnap and ransom, space travel, the Titanic, aircraft, shipwrecks, rebuilding San Francisco, The Beatles, David Beckham, Dolly Parton, Ken Dodd and James Dean. All of this could be amongst the exhibits at the Insurance Museum.” CII past president, Reg Brown, who is helping lead the project, said: “We are now focusing on fundraising for the phase-one delivery of a ‘pop-up’ museum in the heart of the city, as this will enable the physical creation and perfection of the museum concept. “The pop-up museum will create the opportunity to develop and test content with key audience groups, while also providing a base camp for operations and fundraising events. Our phase-one fundraising target is £3m.” ● Dr Adrian Leonard is an insurance historian and associate director of the Centre for Financial History, University of Cambridge

ARE YOU IN? Are you interested in creating a museum and willing to invest in creating one? Say ‘I’m in’ by visiting the Insurance Museum campaign website at: insurancemuseum.uk or e-mail Insurance Museum project manager Jonathan Squirrell at: info@insurancemuseum.uk

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EXPERTISE IS EVERYTHING

IN A HARDENING PI MARKET

rofessional indemnity In order to achieve this, syndicates (PI) market conditions are segmenting their portfolios much have been favourable like a traffic light system, identifying for more than a decade, business to protect – green; business with an abundance of to improve, increase rates, amend capacity, falling rates and coverage and structure – amber; straightforward renewal processes. and business to lose – red, where Since the Lloyd’s Performance Review the performance is so poor it cannot in the second half of 2018, the London be returned to profit. The latter of and international PI markets have the three allows syndicates to make implemented, and continue to enforce, capacity available for more attractive a significant change in approach. business. As part of the Performance Review, Lloyd’s demanded that syndicates take IMPACT ON YOUR CLIENTS action to address continuing losses on Increasingly, PI renewals are taking their non-US PI portfolios, identified longer, experiencing unexpected across the market as the secondpremium increases or restructures such worst-performing class of business. as lower limits, higher deductibles and Novae, Channel, Brit, Aspen, reduced coverage. Each renewal, no Hamilton, Chaucer and Pioneer have matter how ‘good’ a risk, is subject to all, during the past 18 months, exited this new, in-depth approach from the non-US PI market, with other the market. major players exiting We are seeing price rises ranging individual segments such as design and HOW INSURERS ARE NOW construction PI. SEGMENTING THEIR PORTFOLIOS With no sign of new market entrants to replace these departures, there is a continued impact BUSINESS TO LOSE on availability and cost of capacity. Syndicates BUSINESS TO IMPROVE, who continue to INCREASE RATES, AMEND underwrite nonCOVERAGE AND STRUCTURE US PI now have a strict mandate to re-engineer their BUSINESS TO PROTECT portfolios, with a focus on profit as opposed to growth.

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from 10% to 50%, depending on risk proﬁle, with challenging loss records or higher risk-exposure accounts being hit the hardest and proving the most diﬃcult. In addition, risks presented to underwriters at the last minute are being viewed in a poor light, so it is imperative that proposal forms are submitted well in advance of renewal dates, to ensure the optimum time to negotiate the most favourable terms from the market.

THE RIGHT BROKER PARTNER With the market in such a state of flux, policyholders should expect some turbulence when renewing their PI. It is no longer a buyer’s market, nor a given that insurers will be in a position to offer the same coverage, limit or premium as seen in previous years. Now is when the benefits of using a broker to navigate this tough market will be felt the most. Finding the right wholesale partner can save you and your clients time, hassle and money. However, not every wholesale broker has access to all PI insurers or expertise across each PI segment, so it is imperative that you find one that works with a broad range of the market. With all the signs that capacity is likely to be in shorter supply, you might find fewer insurers being available or in a position to offer cover for your clients. Therefore, having more choice could be crucial. ● For more information, please contact Conor Geraghty 020 7031 2508 or conor.geraghty@miller-insurance.com www.miller-insurance.com

25/06/2019 18:48

HOME

CRACK IN THE WALL Martin Friel highlights the huge gap in cover as a reported £50bn worth of home contents remains uninsured in the UK 34

ersonal lines insurers have been struggling for some time now due to falling premiums, the dominance of aggregators and the emergence of new, tech-driven entrants. These factors have meant that growth and proﬁt in personal lines is hard to come by. Any access to new markets and growth would, you would have thought, be leapt on by incumbents. Which is why it is something of a

shock to discover that, according to Direct Line, around £50bn worth of home contents is sitting uninsured. Direct Line’s research found that 43% of the 17 million adults living in rented accommodation in the UK do not own any contents insurance, with more than a third of these believing that their contents are covered by their landlord’s policy or their parent’s home policy. In addition, some say they simply cannot afford insurance but the Association of British Insurers (ABI) argues that contents insurance has never been more affordable, with competition driving the average premium down to £127 a year – just £2.40 a week.

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HOME

WHY AREN’T PEOPLE BUYING? Laura Hughes, manager of general insurance policy at the ABI, argues that non and underinsurance are tough issues with no easy solution. “It’s hard for insurers to make the point [that contents insurance is valuable] when someone isn’t in touch with them about buying a product,” she says. She adds that insurers have been making efforts to provide cover for people with low value possessions or allowing people to insure individual items in an attempt to tailor polices to needs and lifestyles.

UNWITTINGLY UNDERINSURED Periodically, the press gives the industry a bit of a kicking about individuals who have bought contents insurance but have been unwittingly underinsured. In other words, they have underestimated the value of their contents and what really sticks in the throat of consumers and the press alike is the application of ‘average’. “To any consumer the concept of average doesn’t make sense,” says James Daley, managing director of consumer advocate group, Fairer Finance. “They just can’t get their heads around it.” He argues that the idea of having the value of a claim reduced by a commensurate percentage of the perceived underinsurance is not explained anywhere in the purchase journey and, he claims, is often not even mentioned in policy documents. The ABI’s Ms Hughes points out that getting the right level of cover often depends on insurers asking the right questions but to do so would require a longer question set, something that is at odds with the growing desire among consumers for a simple and speedy purchase process. She says insurers are offering online calculators and apps designed to help

43%

OF THE 17 MILLION ADULTS LIVING IN RENTED ACCOMMODATION IN THE UK DO NOT OWN ANY CONTENTS INSURANCE with the inventory of contents but does point out, quite convincingly, that the onus is on the consumer to ensure they have the right cover. Branko Bjelobaba, a compliance consultant, agrees the responsibility ultimately lies with the buyer but argues that what is simple and straightforward for an insurance professional, could be beyond the average consumer. “Expecting people to physically value replacement and costs is hard and if you are dealing with vulnerable people, that becomes even more problematic,” says Mr Bjelobaba. He claims that if the industry knows there is a problem with underinsurance, then it has a collective responsibility to act. This is a tough but somewhat

neglected issue in insurance. On one side, there is a potentially huge market for insurers waiting to be exploited. Education would seem to be the answer here and individual insurers and, more broadly, the ABI, with its Insurance Experiments consumer campaign, are making a tangible effort. But much of the consumer perception of insurance comes down to trust. With so many stories in the press about people falling foul of ‘average’, it is no wonder many do not see the value in buying cover. If Direct Line’s research is taken at face value, there is a £50bn market out there, but before anyone makes a move, the industry needs to look again at ways to prevent underinsurance happening in the ﬁrst place and how it treats underinsurance at the point of claim. For insurers to convince the owners of that £50bn worth of contents that they need to be insured, they have to be convinced that the policy they take out is worth the paper it is written on and that is not, at present, something most consumers would bank on. ●

UNDERINSURANCE IN NUMBERS DIRECT LINE • One in seven renters (15%) have had contents insurance in the past but more than a quarter (28%) have never had it. • Half of 18 to 34-year-olds living in rented accommodation (50%) have not insured their contents. • One third of people over the age of 55 have their contents insured (32%). ABI • The value of possessions owned by all UK households now totals nearly £1 trillion. • Average amount of stuﬀ owned, at £35,000, is worth more than the average annual UK salary of £27,000. • More than a quarter of households – 7.5 million – have no contents insurance, leaving possessions worth more than £266 billion unprotected and at risk.

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25/06/2019 18:47

CHARTERED

PROFESSIONALISM WINS THROUGH

n its 20th anniversary year, Willis Towers Watson Networks is very proud to be a Chartered insurance broker network and knows what it takes to achieve this. The network continues to support and encourage its Network Members to attain similar recognition in their own right and enjoy the pride and beneﬁts that come from such attainment. Recognition of achievement is a powerful motivator for an individual, which instils pride and beneﬁts for all. When a company achieves, the effect is multiplied by the team within. From a Blue Peter badge through to achieving Chartered status, the actual award is the

GETTY

Willis Towers Watson Network’s Sara Fardon explains how Networks Chartered status supports and encourages its Network Members to attain similar recognition in their own right

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25/06/2019 18:54

CHARTERED

culmination of a journey that required led professional advice effort, dedication and expertise to gain for clients. They will seek that status. The pride that comes with reassurance and comfort the attainment creates a great positive that the advice they are vibe, both in the individual and within receiving is appropriate the wider company. for their business. In our fast-paced, increasingly Cost – while still very regulated environment, the important – will be more Dan Maloney, managing director, demonstration of expertise is a key a secondary concern. Champion Insurance Brokers differentiator that clients seek when Brokers that are not looking for advice. The badge of adapting and embracing honour that shouts ‘Chartered’ is this change will simply not prosper in continuing professional development an obvious signpost of expertise in the future, but those who do invest in (CPD) courses via various mediums, both the individual and company the skills and ongoing development of including traditional classroom and elevates you in the client’s their staff will. learning, webinars, podcasts and other mind straight away. And if having regional and national events. The LEADING THE WAY Chartered accreditation ever becomes benefits are that training can fit around Willis Towers Watson Networks the minimum requirement to be able work commitments and the quality was the first UK network to attain to give advice to clients, then if you of such work is enhanced by these Chartered insurance broker status. have not already been investing in ongoing training opportunities. Having done this gives a unique your staff and your business, you may A win-win situation. insight into what it has taken to not be able to remain in the game, no The increasing use of technology get there and the benefits this matter how experienced you are. within our profession is also changing achievement creates. The Insurance Distribution Directive the way we run and develop our own Willis Towers Watson Networks and Senior Managers & Certification businesses in all aspects of working – earned its Chartered standard in 2011 Regime both put training and from delivery of risk advice to clients and remains a staunch advocate of the development at the heart of ongoing and general interaction with them, highest professional standards in our success. If a broker is not investing to how we learn and develop staff profession. It encourages and supports in their staff, how can they deliver skillsets and knowledge to meet the its Network Members in many staff the best advice to their clients? Times needs of the customer. Willis Towers development opportunities, including change, skillsets need to be relevant Watson Networks has invested in achieving Chartered insurance broker and access to training has changed emerging technologies (such as status, which to date has been attained dramatically. We are now in the era of MyAlexsys, MyBroker, MyAcquire, by about 20% of its membership. webinars, podcasts and vlogs, small MyLearning), and has combined these Facilitating access to training and bitesize chunks of learning that can innovations with relevant, accessible development is a cornerstone of Willis be done anywhere, any time. The training to give its network members Towers Watson Networks’ proposition more formal classroom style still has a key advantage in winning and and is provided by its own business its place, but when time is money, retaining business. school. This delivers qualifying engagement with mobile 24/7 learning As regulation continues to bear provision is growing down on our profession, creating exponentially. unique selling points and pushing The CII’s own your expertise in a crowded and research report, The ever-more knowledgeable client Future of Commercial marketplace needs as much help as Insurance Broking, you can give it. The security and peace highlighted the of mind that a client receives from changes the broker knowing their adviser is at the top of of today will need to their profession is key to both winning Alan Richardson, director, undertake to be the and retaining business. ● Collingwood Richardson & Company successful broker of 2027. There will be Sara Fardon is managing director of a greater focus on risk managementWillis Towers Watson Networks

CHARTERED STATUS DEMONSTRATES OUR COMMITMENT TO BEING AT THE FOREFRONT OF OUR PROFESSION – A LEADER NOT A FOLLOWER – ENSURING WE KNOW WHAT BEST MEETS OUR CLIENTS’ NEEDS.

CHARTERED STATUS IS THE DEMONSTRATION THAT WE INVEST IN OUR STAFF TO ENSURE THEY HAVE THE KNOWLEDGE AND TOOLS TO DELIVER THE BEST CLIENT ADVICE THEY CAN.

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25/06/2019 18:55

CHARTERED INSURANCE INSTITUTE

CALL TO ARMS Emma Ann Hughes investigates the inspiration and process behind the CII’s Coat of Arms

longside the historic artefacts on display at the he CII’s London head office,, there is now a new object ct set to capture the attention ion of members. The entrance hall of the Lombard Street et office now features a new wooden carving ng of the body’s historic Coat of Arms. The Coat of Arms was produced by William Barsley, who five years ago retrained with the City and Guilds of London Art School so he could leave his office desk job at the United Nations in Rome to become a professional woodcarver. Mr Barsley, who at the time of The Journal going to press was spending his nights carving at the Houses of Parliament, said the carving of the CII’s Coat of Arms took him roughly one month. th. Around 60% of the time it took Mr Barsley to produce the Coat of Arms was spent carving Quebec pinewood, with the other 40% spent on painting and gilding the fish scales, helmet, crown and arm with a combination of gold, caplin and palladium metal leaf. He gilded the Coat of Arms using the traditional method of water gilding, in which layers of gesso (made from rabbit skin glue and whiting) are built up before e applying the metal leaf. Mr Barsley said: “As with most of my work, this piece was bespoke, so I had never carved this particular design before. e. For me, this is what adds real excitementt to the process.

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CHARTERED INSURANCE INSTITUTE

“I therefore usually make a one-toone model in clay before starting to carve the wood, to ensure any scale or design issues are fully resolved. On this particular piece, one fun challenge was jointing the sword onto the armoured hand and ensuring it lined up perfectly.”

PLAYFUL HERALDRY When the CII rebranded in 2017, the Institute’s Coat of Arms was updated to deliver a distinctive and contemporary illustration of the body’s rich heritage. So, what does Mr Barsley hope visitors to the CII’s oﬃces will take away from looking at his new carving of our historic Coat of Arms, alongside the many insurance artefacts on display in Lombard Street? He said: “My hope is that the Coat of Arms I have carved for the CII portrays the history and quality of the institution, as well as celebrating the playful side of heraldry through the heraldic beasts.” Mr Barsley also revealed that the fact he has carved the Coat of Arms is also likely to be a source of pride to his family, as he believes his grandfather John Plumer achieved one of the quickest acceptances as a Lloyd’s broker. He said: “It was a great connection to have made the CII Coat of Arms. I am sure he (my grandfather) would have been happy.” You can see more of Mr Barsley’s work by visiting: www.williambarsley.com and you can view the Coat of Arms at the CII’s Lombard Street oﬃces. ●

Emma Ann Hughes is communications director of the CII

COAT OF ARMS SYMBOLIC MEANING Sword a and hand: The hand grasping the blade of the sword of o St Paul’s, rather than the hilt, is symbolic of the wea weapon being neutralised. This is aligned to the fundamental purpose of insurance being to mitigate fundam harm an and hurt.

symbolises the Institute’s role as a professional body responsible for career guidance, education and the award of qualiﬁcations, which demonstrate the principles that govern insurance and ﬁnancial planning practice.

Suppor Supporters: The unicorn and lion (termed ‘supporters’) represent the national role that the ‘support CII plays; plays the royal lion of England and the unicorn of Scotland. Both creatures are depicted with ﬁsh tails. Scotland

Fire, wheat and anchor: The CII’s shield of arms illustrates the main original classes of insurance: ﬁre (ﬂame), life (wheatsheaf) and marine (anchor). The horizontal chain symbolises the fourth main class of accident insurance and more generally the security provided by insurance.

Book: The T open book between supporters

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M E N T A L H E A LT H

WORKPLACE WONDERS

With employers across the UK acting now to create mentally healthy businesses, Lucy Hine explains how you can get involved by becoming a mental health ﬁrst aider

fter reading in a recent issue of The Journal about the CII partnering with Mind to produce the Guide to Thriving at Work report, I wondered how I could be a part of such a positive platform and help to promote discussions surrounding mental health in the workplace. I provide training courses accredited by the Royal Society for Public Health and endorsed by Mental Health First Aid (MHFA) England for organisations of all size and sector. MHFA England is currently the only provider of licensed Mental Health First Aid Instructor training in England and independent instructors like me deliver the courses across the country. Around 1,800 MHFA England qualified instructors have trained more than 360,000 people to date including many across the insurance and financial services professions. Grounded in research and rigorously tested, MHFA England courses are developed by experts with input from people with lived experience of mental health issues. Following a debate held in parliament in January on legislative change around MHFA in the workplace, a cross-party group of MPs overwhelmingly backed a motion to introduce legislation to put mental and physical first aid on an equal footing through first-aid regulations. The government has made some

MENTAL HEALTH AT WORK: THE BUSINESS COST

videos created by people with mental health issues.

HOT TOPIC £3.1 bn £10.6 bn

Reduced productivity Sickness absence Staﬀ turnover

£21.2 bn

Source: Centre for Mental Health, 2017

clear commitments to achieving parity of esteem for mental health, a vision that MHFA England, Have A Word and many other mental health organisations share. Updating the current ﬁrst-aid regulations to include mental health would move us one step closer to achieving this equality and we believe that it really is a case of when, not if, this change in law will happen. From a personal perspective, providing training courses for organisations gives me huge satisfaction and through feedback I am often told that the course has not only changed people’s perception of mental ill health, but also changed their way of thinking forever. These moments of realisation are created during group discussions, activities and watching real, lived experience

Employers across the UK are acting now to support the wellbeing of their people and create mentally healthy businesses. Stress, anxiety and depression are the biggest cause of sickness absence, and mental ill health is responsible for 91 million working days lost every year. MHFA training courses teach people to spot the symptoms of mental health issues, offer initial help and guide a person towards support. Training courses will not teach you to be a therapist, but will teach people to listen, reassure and respond, even in a crisis – and even potentially stop a crisis from happening. Have A Word training courses are created with options to suit a range of timescales and budgets, from mental health awareness sessions to a full Mental Health First Aider qualiﬁcation. They are all designed to beneﬁt employees, line managers, HR professionals, occupational health workers and senior leaders alike – to help all your people meet the challenges of the workplace head on. For further information, visit: www.haveaword.org or email Lucy Hine: lucy@haveaword.org To download the CII/Mind report, visit: www.cii.co.uk/69898 ● Lucy Hine is a MHFA instructor at Have A Word

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Things change year-on-year. With the ever-evolving nature of retail investment, it’s hard to keep up to speed with new developments. The ‘Regulated Retail Investment Adviser Re-evaluation’ is a practical way to assess your current knowledge in ﬁve key areas: Financial planning principles, standards and skills; Investment principles and risks; Personal taxation; Financial protection planning, and Pensions and retirement planning. You can take the test at any time in the year, so why not incorporate it into your professional development review? It helps identify your strengths and areas you can improve on. On passing the test you can evidence your skills for your appraisal and gain 35 hours of CPD.

Annual Review Rejuvenation Register to test and maintain your knowledge at cii.co.uk/RAR

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LOCAL INSTITUTES

We ﬁnd out how becoming more actively engaged with your local institute can boost your career and your conﬁdence

POSITIVE INFLUENCE

uccessful people often surround themselves with successful people — and you can do the same by going to your local institute, where you can beneﬁt from the insight, expertise and experience of others. It is natural to look for direction and to consult more experienced people, and it is equally natural to then want to pass that experience on. So why not go that extra step and actively seek out inﬂuencers and create a structure for sharing experience more widely? Sian Williams runs a women’s forum from Chelmsford in Essex. But she wasn’t always so active. “Like most people, I did the exams early and paid my CII subscription, but nothing else,” recalled Ms Williams, who is currently an agent for NFU Mutual and past president of the South Essex local institute. “It wasn’t until I was recommended to sit on the Insurance Institute of London (IIL) property committee that I started to realise how much impact local institute events have on people’s careers.” Local institute committee members orchestrate the majority of each

institute’s events. It requires energy, enthusiasm and imagination, but those who do it say it is highly rewarding. “What you’re also doing g is building your own conﬁdence,” said Ms Williams. “You might not even know the people you are approaching to give a presentation, but it’s amazing what people will agree to.”

BIG ADVANTAGE While working in London, Ms Williams joined a women’s group organised by the Worshipful Company of Insurers. “It was an amazing network that introduced you to senior women in insurance who would share with you all their experience and insight. It can be a big advantage to your career.” Ms Williams continued: “I was involved with the South Essex institute and was invited to become its president. One of the things you can do as president is to set out a theme or a goal you want to achieve during your presidential year. I decided that I would like to set up a similar women’s forum. “It is understandably diﬃcult if you are out on a limb in a tiny broker

in Burnham-on-Crouch to really get exposed to the same bright light as workers 30 minutes down the train line l in the city.” Ms Williams’ events cover c a wealth of topics, not n just about insurance, but b business more generally, g personal resilience, r building careers and a entrepreneurship. The forum recently welcomed w Sam White, CEO C of Pukka Insure; Michaela Waine, ﬁnalist of The Apprentice; ex-opera singer, Susan Heaton-Wright, who spoke about using your voice to make an impact; and Emma Stroud, business coach and stand-up comedian who discussed public speaking. Ms Williams journey is just one of many inspiring stories being told up and down the UK. They are the stories of people whose lives have been transformed, often because they did something different or met someone who changed the way they looked at things. Imagine what they could do for you. For more information, visit: cii.co.uk/ﬁvebigwords ●

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TA L E N T

LIGHT BULB MOMENT The CII’s Vivine Cameron reveals how a CII event sparked a law student to embark on an insurance career

he number of entry level personnel joining the insurance profession is declining, according to studies in recent years. To meaningfully buck this trend, the CII works in partnership with universities, the London Market Group, London insurance life ambassadors and local institutes across the UK. In November 2018, the CII education partnerships executive and a panel of insurance professionals delivered a seminar on career opportunities in law, risk and personal ﬁnance at Southampton University Law School. The seminar introduced the scope of insurance as a profession and the roles and opportunities available to consider, affording students the chance to interact with the panel and ask questions about their personal career journeys. In particular, the seminar placed focus on the importance of a legal professional’s role – contract wording, compliance, and regulation, internal counsel and contract writing – to insurance. This provided law students the chance to consider an alternative career route beyond training to be a solicitor or barrister, which can be extremely competitive.

As a result of attending the seminar, ﬁnal year law student Luke Rose, has now secured work experience placements at Sirius International and Lloyd’s this summer. Mr Rose said: “I met with Mark Williams, of Sirius International, a managing agent at Lloyd’s, who gave part of the talk, connected with him on LinkedIn and asked for his business card. I then scheduled to meet him and Denise Dillon, an oversight framework manager at Lloyd’s, along with other professionals in insurance. These meetings included a tour of Lloyd’s,

INTERESTED IN JOINING AN EMPLOYER PANEL? The CII are scheduling careers and employability visits at the start of the academic year 2019/20 and will also be collaborating with London Market Group – London Insurance Life in respect of growing knowledge of the profession and career opportunities at entry level both regionally and across the UK. The CII also actively welcome the support of local institutes for planned events. To ﬁnd out more, contact: EducationPartnershipCoordinator@cii.co.uk

allowing me to ask many questions to various individuals working in claims and broking. “Without the talk [from the CII], I would not have considered insurance as a career and wouldn’t have made all these connections.”

INSURANCE ON THE RADAR Mr Rose’s story is just one of many examples of how working with universities and local institutes helps students consider insurance as a career option and this is so important in dealing with the declining numbers of entry level personnel. It is extremely rewarding to see students have a “light bulb” moment and consider a career not previously on their radar. This is testament to, and validation of, the hard work so many contribute towards this kind of result. The CII would like to thank Professor James Davey, Professor Johanna Hjalmarsson and Jan Steele of the Southampton Law School for working with us; and the employer panel comprising a cross section of the profession representing underwriters, brokers and lawyers who took part in the seminar. ● Vivine Cameron is education partnerships executive at the CII

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STUDY ROOM: PRODUCT LIABILITY

STUDY ROOM

TOTAL RECALL With the number of products failing safety tests on the rise, Tim Evershed examines the risk mitigation products on offer

he number of products failing safety testing across all sectors has been steadily increasing during the past decade, according to research from consumer champion Which?. Last year, more than 2,000 issues were flagged on dangerous nonfood products, an increase of 34% on the 1,542 identified back in 2008. Once identified, action taken to ensure that these products will not pose a risk to consumers can include recalls, warnings or stopping products from entering the country. However, the consumer group warns that the consumer enforcement system is ill equipped to handle such a volume of unsafe products.

Which? says the system needs a signiﬁcant overhaul to ensure that people are effectively protected from harm. It is also concerned that the UK could lose access to the European Safety Gate, a rapid warning system through which 31 European countries warn each other of products with serious safety problems, following Brexit. “With more products than ever before being declared unsafe, it is clear that an already failing consumer enforcement system needs a major shake-up to ensure that people aren’t left at risk from dangerous products in their homes,” said Caroline Normand, director of advocacy at Which?. This year has seen recall notices on products including Honda airbags and Star Wars stormtrooper outﬁts for children. And it is toys and motor

GETTY

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STUDY ROOM: PRODUCT LIABILITY

vehicles that were issued with the highest numbers of safety notices last year, with 655 and 419 respectively.

KEY CONCERNS These rising numbers, as well as worries around the impact of reduced regulatory oversight, raise a number of issues that will concern product liability and product recall insurers. “A number of factors are driving this increase, but a key concern is the lack of a robust, proactive enforcement regime to stop dangerous products reaching the market in the first place. Primary responsibility sits with the trading standards departments of local authorities, which are increasingly underfunded and overstretched,” said Kate Wellington, professional standards committee director at the CII. “Perhaps most concerning is the prevalence of dangerous products that are used by children, particularly toys and even car seats. Consumers can let us know about products they have found to be unsafe by using the reporting tool on our website,” she added. In total, 176 products in the electrical appliances category were flagged as unsafe last year, while more than 200 items in the clothing, textiles and fashion sector failed to past testing. According to Which?, 180 products on the alert system last year were listed as a fire risk, 248 an electric shock threat and 397 a choke hazard.

176 DIFFERENT ELECTRICAL APPLIANCE PRODUCTS WERE FLAGGED AS UNSAFE LAST YEAR

“With trends suggesting that dangerous products are becoming ever-more prevalent and, with a regulatory regime that is failing to ensure dangerous products are removed from people's homes, there is a real risk of serious harm on a mass scale,” said Ms Wellington. She continued: “This could lead to a rapid rise in product liability claims – including group claims – by consumers or even retailers. In the same way that we have seen an explosion in cladding claims following the Grenfell Tower fire, fatal fires caused by faulty white goods or electronics could have the same impact. “When a product safety issue comes to light, insurers are in a powerful position to ensure that insureds are incentivised to remove dangerous products from people's homes as quickly and comprehensively as possible. The interests of consumers and insurers are closely aligned, given the potentially serious consequences of a faulty product causing widespread financial or physical harm.”

COVERING THE RISKS The risks stemming from a product recall are substantial and can be financially devastating to a company. Product recall insurance, along with contaminated products insurance, helps protect industries including food and drink, automotive and pharmaceuticals. Without it, many companies have been forced into bankruptcy. “Recalls are increasing rapidly both in terms of number of recalls and, probably more importantly for the market, severity. In terms of severity, it is washing machines that are fire hazards, or automotive. We are seeing a statistical increase that’s bringing enquiries into the market,” said Ian Harrison, leader of the global recall practice at broker Lockton. Mr Harrison said the increase is driven by both increased consumer awareness of their rights and more rigorous, scientific testing of →

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STUDY ROOM: PRODUCT LIABILITY

products than happened in the past, which leads to more products failing. “The big challenge in consumer products for us is the fact that often we’re dealing with people who are importing stuff from Asia, so they’re not making it themselves. It is hard to get a lead on the quality control information on the initial manufacturing sites,” he continues. However, Mr Harrison said the product recall market has remained robust despite the increase in incidents. “We’re seeing some rate increases but not on the [same] scale as in some other lines of business. Because it is short tail, insurers are quite interested in being involved in the recall market,” he continued. “Product recall provides pretty deep coverage – it is balance sheet protection, not just the physical costs of a recall. It is the loss of sales, the damage to the brand in terms of lost revenue because people don’t want to buy your brand. The crisis costs [are covered] in terms of a PR consultant and a consultant on how to manage the recall with authority.”

SUPPLY CHAIN RISKS The rise in international supply chains comes hand in hand with product safety issues, agreed Stephen Turner, a legal director in the product liability, safety and recall practice at DAC Beachcroft.

THE ABILITY TO AUDIT THE SUPPLY CHAIN IS VERY IMPORTANT. HAVING INSURERS INSIST UPON SEEING THIS UPFRONT BEFORE THEY WRITE THE BUSINESS AND SEEING IT AGAIN IN RENEWAL – HOW IT IS GOING IN PRACTICE, HOW THE CLAIMS EXPERIENCE IS – IS VERY IMPORTANT Mr Turner said it is key for manufacturers and importers to know their supply chains, so issues are picked up at an early stage. “They need to build good quality control into their supply chains [and] embed expert testing into that process, with good traceability and good communications down the supply chain,” added Mr Turner. He continued: “If you put all that together and get that right, then not only do you reduce the risk of some supplier at the base of the chain doing something unauthorised and cutting corners, but you have better visibility if something does go wrong. “Identify who is involved in the supply chain and write [it] into a contract with intermediaries to set out clear speciﬁcations and standards, so everyone knows what standards they need to meet, what standards they should attain. Build in appropriate testing at a particular point in the process. “Also, having the ability to audit the supply chain is very important. Having insurers insist upon seeing this

upfront before they write the business and seeing it again in renewal – how it is going in practice, how the claims experience is – is very important.”

CODE OF PRACTICE Mr Turner also highlighted the new Code of Practice for Product Recalls, which was issued by the Oﬃce for Product Safety and Standards last year, and every business should adopt. “What this tries to do is really emphasise the importance of preparation and prevention. Essentially, a recall plan that has senior level buy-in within the business means you’re much more prepared,” said Mr Turner. “One of the key things for underwriters is to almost have the Code of Practice on one side of their screens while they’re going through the underwriting process with a new business. The discipline of the underwriting process and asking the right questions should go hand in hand with businesses planning for the worst and trying to avoid the worst happening.”●

SAFETY IN NUMBERS Rising number of product safety alerts

Number of motor vehicle safety alerts

2300

450

Number of safety alerts

2200 2100 2000 1900 1800 1700

400 350 300 250 200

1600

150

1500

100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: European Commission, Safety Gate

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CHARTERED INSURANCE INSTITUTE

CALLING ALL QUALIFIED TRAINERS! The CII is reviewing how it supports people working in insurance throughout the Middle East and needs help from practitioners who know this unique sector of the global market

he CII assessment and learning solutions teams are looking to bring together a group of experts from across the insurance and financial services spectrum who have the technical knowledge and the experience or desire to train others. We are particularly interested in those who can speak Arabic and fluent English. We are looking for CII, minimum Level 4-qualified, experienced individuals who can demonstrate and evidence a minimum of five years industry experience. You also need to speak and write fluent English and/or Arabic. It does not matter which area of insurance and financial services you work in, or what role. If you want to be involved in a project that we really hope will make a difference to everyone working in your sector, we want to hear from you. You would be provided with

the materials to run technical or qualification courses for students ranging from one to five days at a time, so please check if you need your employer’s approval. We will also provide support and guidance on how to deliver the best learning experience for your delegates. This is a fantastic opportunity to develop your skillset and even use your work as an expert practitioner to form part of a personal development plan. We are all set up with Skype to make communicating as easy as possible. What we are ideally looking for is seasoned industry professionals who have a track record in delivering financial training in a positive motivational manner to our students.

questions you might have. You can get things started by contacting us via email, with a professional overview of yourself and attaching your CV with full qualiﬁcations and details of any relevant training you have delivered before. Please email us at: face-to-facetraining@cii.co.uk ● We look forward to hearing from you!

WHAT TO DO NEXT If what you have read has piqued your interest and you think ‘that’s me’, then please get in touch and we will give you more details and answer any

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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 5

QUESTION 8

Which of these, if any, can buy terrorism cover that includes damage arising from nuclear, chemical and biological attack?

To what extent does a D&O policy typically provide cover for claims alleging fraudulent acts? A It depends on the circumstances of the fraudulent act b It will cover all defence costs and court awards c It will cover defence costs incurred in successfully defending such allegations d It will provide no cover as fraudulent acts are excluded

Which of these is the typical basis of an environmental insurance policy? A Causation basis b Claims made and reported c Claims made/discovery basis d Claims occurring

A A corporate entity b A private individual c A householder d No one

QUESTION 2

When should the screening of commercial property insurance claims for fraud take place? A When the claim is initially notiﬁed b When a claim settlement oﬀer is made c At all stages throughout the life of the claim d When the claim is actually settled

QUESTION 3 Where terrorism cover is bought back, on what basis is cover generally provided? A According to the individual insurer's definition of terrorism b According to the UK government's definition of terrorism c According to the ABI's definition of terrorism d According to Pool Re's definition of terrorism

QUESTION 4 On what basis is terrorism cover now offered by property insurers? A On a fire and explosion only basis b On an ‘all risks’ basis C On a specified perils basis D Either on an ‘all risks’ basis or on a specified perils basis

QUESTION 6 Why are money claims among the most common areas of fraud in travel insurance? A Because they are typically high frequency losses b Due to the diﬃculty in proving or disproving a loss c International travel has led to an increase in traveller muggings d Travellers always take insuﬃcient measures to protect their money

QUESTION 7 Which of these will provide independent scrutiny and advice on environmental policy when the Environment Bill 2019 becomes law? A The Environmental Agency b The Environmental Conduct Authority c The Oﬃce for Environmental Protection d The Treasury

QUESTION 9 Under a home contents insurance policy, what happens to your client's sum insured after a claim has been paid? A It is reduced by the amount of the claim paid b It is maintained only if additional premium is paid c It is maintained without charge by the insurer until next renewal d It is increased by 20% to take into account the increased value of the replacement goods

QUESTION 10 Which of these statements deﬁnes an uninsured peril? A One that is excluded by the policy b One that is not mentioned as being covered nor excluded in the policy wording c One that would never be considered in handling a claim d One that is an optional extra cover when aﬀecting a policy

YOUR SCORE » 1–3 POOR 4–6 GOOD

7–8 VERY GOOD 9-10 EXCELLENT

ANSWERS 1A. Terrorism cover is only available to corporate entities. 2C. At all stages throughout the life of the claim. 3D. When buying back terrorism cover, cover is generally provided in line with the Pool Re deﬁnition.

4B. Terrorism cover is generally oﬀered on an 'all risks' basis, including chemical and biological acts of terrorism. 5C. D&O policies will not cover fraudulent directors but will cover the costs of successfully defending such allegations.

6B. Money claims under travel insurance policies can be subject to fraud due to the diﬃculty in proving or disproving a loss. 7C. The Environment Bill 2019 intends to create a new framework for environmental governance, establishing the Oﬃce for

Environmental Protection. 8C. Environmental insurance is arranged on a claims made/ discovery basis. 9C. Typically, the sum insured will not be reduced after a claim is paid.

10B. An uninsured peril is one that is not mentioned in the policy as being covered or excluded.

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&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 #OMPLIANCE /Fl CER

s 2ISK !NALYST

To ÂŁ80,000 + Bonus + BeneďŹ ts - City of London You will be responsible for Compliance for the Healthcare division of this major Global Insurance Group, reporting to the Chief Compliance OfďŹ cer. You will work at a senior level in the Group, provide high level compliance direction for the Healthcare and other General Insurance operations. Current experience in working in Compliance for a UK based Insurance ďŹ rm is required. Contact: Tim.Southworth@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139362TS

s 2ISK !NALYST n 0ROGRESSIVE TO 2-

s 3ENIOR #LAIMS !DJUSTER n 5+ ,IABILITY To ÂŁ65,000 + Package - City of London Seeking an experienced Liability claims specialist to manage the Claims on this established UK Commercial Combined account. Whilst the book is Property and Casualty, the more complex losses this role will focus on are EL & PL. Current experience handling UK Liability claims is required, ideally including oversight of TPAs. Contact: Tim.Southworth@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139124TS

s 3ENIOR !CCOUNT %XECUTIVE #OMMERCIAL ÂŁ55,000 - ÂŁ85,000 + bonus + beneďŹ ts - South East This is an opportunity in a highly regarded and expanding national insurance broking house. You will be responsible or your own portfolio of c30 to 40 commercial and corporate general insurance clients, servicing, renewing and developing new business. Brokerage (or fee) range is anticipated to be between ÂŁ10,000 and ÂŁ50,000 per client. Contact: Christopher.Dickman@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139195CD

s 4ERRORISM %XPOSURE !NALYST To ÂŁ45,000 Base Salary + Bonus and BeneďŹ ts - City of London A Lloydâ&#x20AC;&#x2122;s Syndicate are looking for an Exposure Analyst to focus on the Terrorism book of business. They want a technically strong candidate who has over 3 years of experience working within Exposure/ Catastrophe Analysis. Experience of using RMS or AIR is a requirement and knowledge of VBA, SQL and GIS would be advantageous. Contact: Gary.Ahern@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139432GA

s 0RICING -ANAGER (.7 To ÂŁ120,000 Base Salary + Bonus and BeneďŹ ts - City of London A Global Insurer seeks an experienced Pricing Individual to help lead and grow the HNW Pricing function. You will be reporting into the Head of European opportunities and be a vital member of the senior leadership team. The role will have 4 direct reports and there will be the opportunity to grow the team further. Contact: Gary.Ahern@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139436GA

s 2EINSURANCE 0URCHASING -ANAGER -ONTH CONTRACT

To ÂŁ75,000 - London A Global Insurer requires an experienced London Market Reinsurance Purchaser to join them on a contract basis. You will be required to assist the Head of Reinsurance with the Reinsurance purchasing, managing the performance framework, regulatory returns and the Counter party security. Contact: Carl.CrossďŹ eld@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139394CR

s 5NDERWRITING /PERATIONS !NALYST 4EMP TO 0ERM To ÂŁ25,000 + beneďŹ ts - London A London Market Insurer has an immediate requirement for an experienced Underwriting Assistant or Operations Technician to join their vibrant Underwriting Operations team. You will be required to support with the processing of risk data, provide oversight of weekly renewal statistics and communicate regularly with the Risk capture team. Contact: Carl.CrossďŹ eld@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139324CR

s 2EINSURANCE !CCOUNTS 4ECHNICIAN

ÂŁ35,000 - ÂŁ45,000 depending on experience - City of London Leading global Re-insurer require a reinsurance accounting technician, excellent opportunity for an experienced reinsurance technician wishing to further their career within the reinsurance industry. Working within a small team with responsibility for a portfolio of cedant accounts, you will ensure accounts are booked and paid in a timely manner with associated analysis and tasks as descried below. Contact: Mark.Brady@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII138644MB

s 3ENIOR #OMMERCIAL $ / 5NDERWRITER To ÂŁ100,000 + beneďŹ ts - City of London Working for a well established insurer, you will handle new and existing business and help ensure the continued proďŹ table growth for this portfolio. This is an open market portfolio of international (non US business), you will handle both new and renewal business, develop relationships with London market brokers. The majority of the business introduced is large programmes which can be written across either company or syndicate stamp. Contact: Dana.Hill@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139400DH

s "USINESS $EVELOPMENT -ANAGER

To ÂŁ70,000 + beneďŹ ts - Home Based (South East) Working for a Major, Award Winning technology based broker, you will focus on broadening relationships that they have with strategic partners such as banks, retailers, afďŹ nity groups and trade associations. You will be able to demonstrate a track record in pipelining and generating new b2B business and then maintain the relationship. Whilst the role is based in London our client is very pro home working. Contact: Dana.Hill@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139399DH ,ONDON London@ipsgroup.co.uk Tel: 020 7481 8111 -ANCHESTER manchester@ipsgroup.co.uk Tel: 0161 233 8222

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

ÂŁ45,000 â&#x20AC;&#x201C; ÂŁ50,000 + BeneďŹ ts â&#x20AC;&#x201C; City of London Seeking a Risk Analyst to join a leading Lloydâ&#x20AC;&#x2122;s Managing Agency. The responsibilities include working on the Risk Framework, monitoring and reporting, reviewing risk policy, collating data and assisting with development of the stress testing program, solvency 11 and the ORSA report. Ideally looking for a person with previous experience working in a dedicated risk team and preferably with time spent at a multi-line insurer. Contact: James.Dick@ipsgroup.co.uk - London Ref:CII138299JD c. ÂŁ45,000 + BeneďŹ ts - City of London Fast track Risk Management career for an innovative and driven individual with the statistical analytics combined with stakeholder engagement capabilities to work at the highest level. Partnering with the Head of Risk in this new syndicate you will have the opportunity to contribute to the full design and implementation of the risk register and framework whilst leading operational risk controls initiatives, ďŹ nancial risk analysis and risk exposure strategies. Previous experience in Risk Management ESSENTIAL. Contact: Alison.Taylor@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139429AT

s 5NDERWRITING !SSISTANT Up to ÂŁ35,000 - City of London Experienced Underwriting Assistant required for International Property & Casualty Underwriting book for a reputable London Market ďŹ rm. Providing technical support to the P&C teams, this role will best suit an experienced candidate who is looking to manage their own workload and take ownership for deadlines and delivery. Contact: Alison.Taylor@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139416AT

s #OMMERCIAL !CCOUNT $EVELOPMENT %XECUTIVE Up to ÂŁ40,000 + bonus - Hertfordshire This business development opportunity exists in a long established Commercial Insurance broker. You will be responsible for meeting clients and prospective clients face to face, building relationships and cross selling additional insurance coverages where appropriate. Candidates will need to possess good commercial insurance business development and sales experience. Contact: Bow.Fanso@ipsgroup.co.uk â&#x20AC;&#x201C; London Ref:CII139235BF

s 2EAL %STATE !CCOUNT (ANDLER

Up to ÂŁ35,000 - Birmingham Fantastic opportunity for a career hungry Account Handler to join an expanding insurance broker based in Birmingham as a Real Estate & Construction Account Handler. You will attend events, conferences and dinners using a soft sell approach being the â&#x20AC;&#x153;go toâ&#x20AC;? for Real Estate Insurance. Contact: Mark.Fancourt@ipsgroup.co.uk â&#x20AC;&#x201C; Birmingham Ref:CII139140MF

s 0UBLIC 3ECTOR AND %DUCATION !CCOUNT (ANDLER

To ÂŁ30,000 - Manchester Fantastic opportunity with a global commercial insurance broker. 5+ years Commercial Account Handling experience essential, cross commercial risk experience and strong technical knowledge, administration and negotiation skills required. Youâ&#x20AC;&#x2122;ll look after a book of clients, negotiate premiums with underwriters, process adjustments and prepare client documentation. Contact: Mark.Fancourt@ipsgroup.co.uk â&#x20AC;&#x201C; Birmingham Ref:CII139288MF

s &INANCIAL ,INES !CCOUNT (ANDLER

To ÂŁ26,000 - Birmingham New opportunity with global leader. Cyber & D&O experience would be preferred, although cross commercial experience will also be considered. Great opportunity to take your insurance career to the next level. Fantastic opportunity to work on London market risks in Birmingham! Contact: Mark.Fancourt@ipsgroup.co.uk â&#x20AC;&#x201C; Birmingham Ref:CII139414MF

s #LAIMS (ANDLER

Up to ÂŁ26,000 - Belfast One of the worldsâ&#x20AC;&#x2122; largest claims management companies are currently looking for experienced Property Claims Handlers to join their busy ofďŹ ce in Belfast. As an Environmental Claims Handler, you will be proactively handling claims and will manage a caseload of 60-70 Environmental claims from cradle to grave across the UK. Contact: Blayne.Kelly@ipsgroup.co.uk â&#x20AC;&#x201C; Birmingham Ref:CII139234BK

s +EY !CCOUNT $IRECTOR 4ECH &OCUS

ÂŁ50,000 - ÂŁ70,000 + BeneďŹ ts - Crewe with National travel My client a highly regarded Insurance business who focus on the technology side of insurance speciďŹ cally telematics have grown substantially since inception. They have a large network of Insurer and Broker clients across the UK and Ireland. They have a key new opening to join them as a Key Account Director working out of their Crewe ofďŹ ce. Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII139377RC

s $EVELOPMENT 5NDERWRITER ÂŁ45,000 - ÂŁ60,000 + Car + BeneďŹ ts - Home Based covering Midlands A highly regarded Insurer has an opportunity for a Development Underwriter to assist with expanding their business through a positive period of development and growth for the business. This role is a home based position combined with time spent visiting brokersâ&#x20AC;&#x2122; across the Midlands and occasional time in the Birmingham OfďŹ ce. Contact: Richard.Coleman@ipsgroup.co.uk - Birmingham Ref:CII139051RC

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

25/06/2019 11:07

CII BLOG

ALEX DOOLER

ECOSYSTEM OF GENERATIONS Alex Dooler offers his take on how to get the best out of the evolving demographics of the workplace

E 50

ric switches on his camera. “Thank God it’s Monday!” he thunders to his 800,000 online subscribers. Eric Thomas is a motivational speaker who has amassed a huge following of tech-savvy millennials. He has tapped into a changing culture that sees young people ever-hungrier and more ambitious for success. Hashtags such as #Hustle and #ThankGodItsMonday are becoming a regular sight for those joining the ranks of the corporate world. Evidence presented by the Harvard Business Review shines a light on this changing dynamic. Despite many lazy caricatures, millennials and other young workers are actually workaholics. Studies show that many young workers are keener to be seen as “work martyrs” and are also less likely to use their holiday entitlement. High employee turnover in this generation may also be indicative of an ambitious impatience for success. Is this reflective of unique characteristics of millennials themselves, or rather just natural, youthful enthusiasm? That is up for debate, but it highlights the diversity of generations that exist in the modern workplace. If you go to the heart of London’s insurance market, you will find five different generations: traditionals (those born 1930-45); baby boomers (1946-64); Generation X (1965-1976); millennials (1977-1994); and Generation Y (after 1994). With this comes different perspectives on diversity, work culture, problem solving and risk appetite. But how do we bridge the gap to best allow these generations to cooperate? One cannot assume that

such a dense cross-section of diversity can work together harmoniously and effectively. Pipelines of communication need to be made between generations. Depending on the issue, this will require varying approaches. On the bigger issues, we have strong institutions to facilitate this. DXC Digital Minds enables a multigenerational discussion about the technological implementation in our profession. The Dive In Festival provides a framework and impetus for discussion around diversity and inclusion.

COMMUNICATION CHANNELS

HIGH EMPLOYEE TURNOVER IN THIS GENERATION MAY ALSO BE INDICATIVE OF AN AMBITIOUS IMPATIENCE FOR SUCCESS

Regarding more localised issues among team members though, differences can persist. Teams can be lumped together without a real opportunity for them to communicate their inter-generational perceptions. Daily issues such as hot-desking, ﬂexible work, job longevity or communication channels are often not up for debate. How can companies provide a forum for these discussions? AIG has led the way with its recent launch of its UK generations employee resource group. It has provided a platform for the company’s diverse workforce to voice their differences in a structured setting. Expert lectures have been offered to explain these differences and how best to react to them. The insurance sector has become home to a dense ecosystem of generations. With this comes a spectrum of perceptions about how we work. Diverse teams and employees must therefore champion open communication to address the resulting differences. ● Alex Dooler is graduate surety underwriter at AIG

◊ THE NEW CLASS Each new generation brings youthful enthusiasm and millennials are certainly no diﬀerent

◊ LISTEN UP Open communication across generations will encourage diversity of thought

◊ A RAISED PLATFORM Firms can encourage diﬀerent viewpoints by highlighting the matter and providing a forum for discussion

ILLUSTRATION: LUKE WALLER

THREE THINGS TO TAKE AWAY

thejournal.cii.co.uk / The Journal / June - July 2019

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PROJECT POLICIES

Manage your subscriptions today at cii.co.uk/preferences thejournal.cii.co.uk / The Journal / October - November 2018

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25/06/2019 18:27

Calling Future Insurance Heroes

The CII is seeking the best new talent in insurance to join its ďŹ&#x201A;agship talent programme â&#x20AC;&#x201C; the New Generation Group.

Could you have what it takes?

40 promising professionals from claims, underwriting, broking and the London market will get to network with other rising stars from the profession, rub shoulders with key Financial Conduct Authority personnel, meet members of parliament, learn how to handle the media and work together to improve the profession as a whole.

Closing date is 9 August 2019 Find out more at: cii.co.uk/new-generation-programme

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