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John Stewart

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    The European Insurance and Occupational Pensions Authority (EIOPA) has published an Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment. 

    Persistent low interest rates affect insurers in different ways. On the liabilities side, they lead to an increase in firms’ obligations in today’s terms and, consequently, to a deterioration of their financial position.

    On the assets side, low interest rates have an adverse impact on investment results and increase the reinvestment risk of assets.

    This problem is even more pronounced where guaranteed rates of returns have been offered to policyholders. In the case of short term insurance business, lower returns reduce the financial margin available to offset adverse combined ratios.

    Furthermore, low interest rates may encourage other business model changes such as alterations in asset allocations in a “search for yield”, which may create new risks on the asset side of the balance sheet.

    The impact of the current period of low interest rates has been felt in several European jurisdictions, where National Supervisory Authorities (NSAs) and companies have already taken a range of different measures to deal with the issue.

    EIOPA recommends a coordinated supervisory response to the prolonged low interest rate environment. NSAs should actively assess the potential scope and scale of the risks arising in this environment, paying special attention to those insurers identified as facing greater exposure. NSAs are invited to report progress in these areas to EIOPA as well as to notify any supervisory action planed or about to be taken.

    NSAs should also engage with insurers to explore private sector measures to address the impact of persistent low interest rates. In this context, insurers should carefully consider the impact their solutions may have on consumers. Consumers should be treated in a fair and equitable manner.

    EIOPA in turn will coordinate an exercise to quantify the scale and scope of the risk arising from a prolonged low interest rate environment. A separate Appendix to the Opinion presents the list of concrete tasks to be jointly undertaken by the NSAs and EIOPA.

    The text of the Opinion can be viewed on EIOPA website (Link: https://eiopa.europa.eu/publications/eiopa-opinions/index.html ).

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    Octagon Insurance Company has become the latest organisation to sign up as a member of the Insurance Fraud Bureau (IFB), bolstering the industry’s collective fight against organised fraud.

    With over 180,000 policyholders on its books and handling 25,000 claims a year, Octagon Insurance (a provider of car and van insurance) will supply a vital new source of data for the IFB to iterrogate and identify cross-industry, organised fraud patterns.

    Ben Fletcher, on his first day in post as new IFB Director, said: “The IFB’s strength is built on the power of the collective and welcoming Octagon as a new customer further enriches the volume and quality of data we can convert into fraud intelligence on behalf of the industry.

    “With access to 130 million cross-industry insurance records, the IFB commands a unique position to identify organised crime patterns. Working alongside our customers and law enforcement agencies, our job is to take out those criminal gangs who repeatedly target our industry, costing our businesses hundreds of millions of pounds every year.”

    The IFB was formed in 2006 to spearhead the collective fight against organised insurance fraud. Since its inception, the IFB has overseen more than 700 arrests, securing almost 200 years in prison for organised fraudsters.

    Claire Hazlehurst, Underwriting Director of Octagon Insurance, said: “Octagon is 100% committed to fighting insurance fraud. By joining the IFB, we will share our knowledge and experience of insurance fraud with other insurers which in turn will help to detect and reduce fraud. The end result being cheaper motor insurance premiums for customers and lower costs for the insurance industry as a whole.”

    With a primary focus on the ‘crash for cash’ phenomenon, the IFB is currently managing 44 live police operations valued in excess of £66 million in potential losses to the industry. The IFB’s projected growth could see that portfolio increase to £160 million by 2014.

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    Arc Legal has been appointed by Rent4sure to provide a range of comprehensive Managing Agents and Residential Landlord Legal Expenses and Rent Protection Insurance schemes. The schemes will also see the launch of a unique online claims reporting system.

    The online claims service, the first comprehensive online claim system in the Residential Landlord Legal Expenses market, has been developed by Rent4sure to enable Letting Agents to submit claims directly to Arc Legal.  The system will streamline the claims process by pre-populating claims forms with relevant data held by Rent4sure, saving Letting Agents time and enabling them to offer a more responsive service to their landlords.

    Commenting on the online claims system, Rent4sure said: “We know that dealing with a claim is never easy so we wanted to find a way to reduce the time and improve the accuracy when making a claim. Our online claims system makes the process straightforward, transparent and easy to navigate while losing none of the necessary attention to detail regardless of the complexity of the claim.

    “As a result, agents feel in control with access to all the relevant information and documents online, which helps them communicate effectively with all parties involved.”

    Commenting on the selection of Arc Legal, Rent4sure said: “Arc Legal has a successful track record in this sector with bespoke products and an proven claims service. As a result, they are the right partner to support our ambitious plans to grow in this market.”

    Richard Finan, Director of Arc Legal, said: “This sector continues to be an important part of our business. Our partnership with Rent4sure consolidates our position as a leading provider of this specialist insurance and demonstrates that there are real opportunities to enhance and develop customer-focused solutions in this growing market. The economic conditions continue to facilitate an expansion in the number of residential landlords and, therefore, the need for relevant insurances to protect them.”

    Arc Legal is providing a range of legal and rent insurance products to Rent4sure clients including policies available with Nil Excess. The products cover legal costs for eviction proceedings and also provide cover for rent when a tenant defaults.

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    GlobalOptions a leading global provider of Special Investigative Unit Services to the insurance community announced that Bobby Gracey has accepted the position of Executive Vice President of International Operations at GlobalOptions. In this capacity Mr. Gracey will be responsible for all of GlobalOptions international operations.

    Prior to accepting the position, Mr. Gracey was the Chief Executive Officer of IFIC Forensics, a global forensic investigations organization. Mr. Gracey brings over 20 years of experience in developing counter fraud solutions, previously serving as the global Vice President of Counter Fraud Solutions for Crawford and Company. Mr. Gracey additionally served as the Chairman of The Chartered Institute of Loss Adjusters Anti-Fraud Committee.

    Commenting on the hiring of Mr. Gracey, Frank Pinder, President and CEO of GlobalOptions stated, “We are excited that Bobby has joined GlobalOptions to assist in expanding our Counter Fraud programs internationally. Bobby is well respected throughout the United Kingdom insurance community and brings with him a wealth of knowledge and expertise that will serve to maintain GlobalOptions SIU and Counter Fraud programs as the best solution for multi-national claims organizations to reduce the ever rising cost of insurance fraud.”

    Bobby Gracey commented, “I am so excited to be joining GlobalOptions and truly believe that their GlobalTrak technology and market leading operational responses will ensure they continue to be the global market leader in terms of counter fraud services and cost containment solutions. In addition it is a great honor to join such an experienced Executive team and I look forward to leading the International business to a new level.

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    Risk Management Solutions (RMS) announces that Paul Dali has been named chairman of its board of directors. Mr. Dali has been serving as an advisor to the board for the past year, providing invaluable perspective as RMS develops new technology and business capabilities to enable insurers and reinsurers to achieve breakthrough benefits from resilient and real-time risk management practices. 

    “Paul has already made an extraordinary contribution to RMS, and it’s clear he has the vision and determination to support our business transformation over the next few years,” commented Hemant Shah, CEO of RMS. “We are extremely fortunate to have attracted Paul, with his wisdom and passion for our business, ¬to this important role.”

    Mr. Dali, who has a strong strategic focus on the ‘real-time enterprise’, is a progressive and visionary leader and investor. He has backed a number of highly successful technology companies whose products proved to be breakthroughs in computer multimedia and infrastructure software. Prior to his career in venture capital, he served as CEO of Regis McKenna, one of the largest high-tech marketing companies in the U.S., and prior to that served as general manager of the PC Division of Apple Computer and chairman of Apple’s marketing council.

    The RMS board, which was historically comprised of corporate executives from RMS and its parent company, DMGT, now includes three new Silicon Valley directors whose roles are to serve as independent non-executive directors, assisting RMS as it executes its plan and providing guidance in key areas of expertise. Martin Morgan, CEO of DMGT, who has served as chairman of RMS for 14 years, remains a director of the board.

    In addition to Paul Dali, Dr. Gerald Held, a corporate director on numerous public and private technology company boards, and former Silicon Valley software executive, joins the RMS board as an independent director. Dr. Held has over 40 years’ experience, including serving as the head of database product development at Oracle Corporation, and leading software development and strategic planning at fault-tolerant and scalable systems pioneer, Tandem Computers. Dr. Held has been an active advisor to RMS over the past three years as it develops its software architecture and cloud computing technology.

    Dominique Trempont, a seasoned executive and board member with a focus on cloud and new media, also joins the RMS board. Mr. Trempont has over 30 years’ experience as an executive, CEO, and member of the board of directors of highly successful technology companies. He served as chief financial officer and head of operations for NeXT Software, which was acquired by Apple, and was CEO of a leading software-as-a-service company focused on enterprise self-service applications. He was also on the board of 3Com. Mr. Trempont currently serves on the boards of global public companies, DMGT, and Real Networks, and on those of private cloud-based companies, Trion Worlds, a leader in multiplayer gaming, and ON24, a leader in webcasting and virtual events.

    The rest of the board is comprised of:

    – Hemant Shah, CEO of RMS

    – Steve Robertson, CFO of RMS

    – Stephen Daintith, CFO of DMGT

    – David Dutton, DMGT executive director

    – Suresh Kavan, CEO of DMGI

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    XL Group announced that the Board of Directors of the Company approved a new share buyback program, authorizing the Company to buy back up to $850 million of its ordinary shares. The previous share buyback program, which had $250 million remaining, was canceled.  The Company expects the purchases to be made from time to time in the open market or in privately negotiated transactions, and that such purchases are expected to be funded from cash on hand.

    The timing, form and amount of the share buybacks under the program will depend on a variety of factors, including market conditions, legal requirements and other factors. The buyback program may be modified, extended or terminated by the Board at any time. All share buybacks will be carried out by way of redemption in accordance with Irish law and the Company’s constitutional documents. All shares so redeemed will be canceled upon redemption.

    The Company announced that the Board declared a quarterly dividend on February 21, 2013 of $0.14 per ordinary share payable on the Company’s ordinary shares. This action increases the quarterly dividend to $0.14 per ordinary share from $0.11 per ordinary share.

    The dividend will be payable on April 1, 2013 to ordinary shareholders of record as of March 15, 2013.

    The Company also announced that the Board of Directors of its wholly- owned subsidiary, XLIT Ltd., resolved to pay a dividend of $8.5575 per share on XLIT Ltd.’s Series D Preference Ordinary Shares, which dividend will be paid on April 15, 2013 to all shareholders of record as of April 1, 2013, and a dividend of $32.50 per share on XLIT Ltd.’s Series E Preference Ordinary Shares, which dividend will be paid on April 15, 2013 to all shareholders of record as of April 1, 2013.

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    Electrical Contractors’ Insurance Company Ltd (ECIC) Contractors Health and Safety Training Course for key partner brokers  has been launched in Penkridge, Staffordshire and Lymm, Cheshire and will again be run in conjunction with Marc Brocklesby, Risk Management Consultant at OHS Ltd. The aim of the training is to enable attendees to recognise client compliance risk and determine if their Health and Safety management systems reflect good practice.

    Marc has over 12 years consultancy experience and an understanding of loss prevention and underwriting having worked within the insurance industry for Norwich Union, Sterling and Holman’s. He is a member of the Institution of Occupational Safety and Health (IOSH) and Institute of Fire Safety Managers (IFSM).  In addition, Marc holds formally recognised qualifications in the management of asbestos and legionella.

    Phil Scarrett, Sales & Marketing Director, at ECIC said: “The Contractor Health and Safety Training Course proved popular when we launched it late last year, and we are now happy to say we are extending the training to other parts of the UK.

    “Health and Safety is vital in the building services industry and it is something that should be reviewed regularly. The point of this course is to help brokers stay up-to-date with the relevant legislation and also to review with them the risk assessment and management aspects of the Health and Safety legislation faced by their clients.”

    The course will also include an overview on:

    – Compliance software and management tools for contractors

    – Water management

    – Asbestos Management (CAR 2012)

    – The Fire Safety Order 2005

    The Contractors Health and Safety Training courses will be held during February. Delegates participating in the training will receive a certificate acknowledging the training and can claim 4 hours of CPD towards the CII and ABI member CPD schemes.

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    March is one of the busiest months of the year for car insurance renewals, and new research from Gocompare.com has revealed that 8.7 million (31%) UK drivers allowed their car insurer to automatically extend their policy for another year the last time they received their renewal. 

    – 8.7m (31%) UK drivers auto-renewed their car insurance policy last time

    – 29% of those who auto-renewed believed that because their insurer was cheapest last time they would offer good value again on their renewal

    – 28% of those who auto-renewed did so out of loyalty to the insurer

    – 4.2m (15%) said they just didn’t have time to switch

    – 2.8m (10%) drivers have stayed with the same insurer for 10 years or more

    But of the drivers who didn’t simply automatically renew their insurance last time, almost half (48%) were prompted to act by the need to save money, and 35 per cent just didn’t trust their insurer to give them the best deal year after year. And shopping around can result in substantial savings, with 51% of Gocompare.com customers saving up to £293.54 on their car insurance by comparing their renewal premium against quotes from lots of other insurers.

    The research also revealed that an astonishing three million (10%) drivers have been with the same insurer for 10 years or more, with 11.6 million (41%) staying with the same insurer for three years or longer. However, 86 per cent of drivers agree that insurers give better deals to new customers than those renewing.

    Little over half (51%) of drivers bother to check what they paid for their cover last year to see how much the renewal premium has changed, and insurers rarely make it easy for motorists to compare their new premium to their old one. An overwhelming 93 per cent of drivers would like car insurers to make it clearer how much their renewal has changed, and more than three quarters (78%) believe insurers should make renewal documents easier to understand.

    Just over half (52%) of drivers use a comparison site to check their renewal premium against those offered by other car insurers, whilst 15 per cent telephone a selection of insurers or visit their websites. Just 3 per cent approach an insurance broker to arrange their cover for them.

    The findings come at a time when insurers have recently been forced to introduce new gender-neutral rates following the EU ruling that came into effect on 21 December last year. Insurers have had to find new ways to calculate premiums meaning that drivers shouldn’t simply assume that their current insurer will still be offering the best deal when their renewal comes around.

    Scott Kelly, head of motor services at Gocompare.com, commented: “Drivers who allow their car insurance policies to auto-renew and expect to get the best deal are kidding themselves.  Renewal documents often start by explaining that you don’t need to do anything for your cover to continue. Unfortunately, they don’t explain that doing nothing is the worst thing to do if you want to be sure you’re getting the most competitive premium and still have the cover you need.

    “The EU gender ruling forced insurers to implement a major change in their pricing of car insurance policies, so this year it’s particularly important for drivers to check their renewal premiums and compare them against quotes from competing insurers.

    “Auto-renewing your policy almost certainly benefits your insurer far more than it does you, and although it may seem more convenient to file and forget your renewal documents, spending a few minutes comparing premiums and cover levels from numerous providers could save you hundreds of pounds a year.”

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    XL Group operations today announced an expansion of their footprint in the US with the opening of a Dallas, Texas office led by Dean Wolfe who was recently promoted to Western Regional Manager of XL’s newly created Property Facultative Western Region and a Philadelphia, Pennsylvania office led by Senior Underwriter Margaret LoSapio.

    Mr. Wolfe, who has more than 15 years of industry experience including seven years in XL’s Atlanta, Georgia office, will be responsible for XL’s reinsurance underwriting operations in Dallas, Texas and Walnut Creek, California. He reports to Kip Walker, XL Managing Director and Manager of Property Facultative Reinsurance operations, who is based in Atlanta.

    Prior to joining XL, Mr. Wolfe was based in Chicago, Illinois where he held progressively senior underwriting roles at various reinsurance companies including CNA Reinsurance. Mr. Wolfe holds a Bachelor of Science Degree from Southwest Missouri State University.

    Ms. LoSapio, who has been with XL since 2007 and reports to William Rosa, Eastern Region Manager for XL’s reinsurance Property Facultative Division, is responsible for helping to grow the Property Facultative book of business by underwriting national and global Property accounts.

    Before joining XL, she was a Property broker at Aon Risk Services in New York. Prior to that, she worked as a Property broker for Marsh Inc. in New York. Ms. LoSapio holds a Bachelor of Arts Degree from New York University.

    Commenting on the developments, President & Chief Executive Officer of XL Reinsurance America Inc. John Welch said: “We are fortunate to have the high caliber of internal talent required to take on these new responsibilities as we look to expand our presence. Both Dean and Margaret will draw on their depth of knowledge, wealth of experience and strong industry relationships to meet the needs of these important markets.”

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    AXA Assistance UK and The Co-operative Insurance have marked their 25th year of trading by extending their existing Motor Breakdown and Accident Assistance scheme.

    The Co-operative partnership is AXA Assistance’s longest established trading relationship, which has covered a range of insured products, services and schemes for The Co-operative Insurance’s banking and retail customers.

    Under this new deal AXA Assistance is providing a range of cover for The Co-operative’s 600,000 motor customers. These include accident assistance, roadside recovery and homestart services across the UK and Europe.

    This new agreement will sit alongside a long-standing Home Emergency scheme which AXA Assistance provides to home insurance customers. The Co-operative Insurance was one of the first clients to use AXA Assistance’s own dedicated Home Emergency service which the company launched in 2011.

    Paul Moloney, Head of Account Management at AXA Assistance, said: “We are proud of the fact we have supported The Co-operative’s customers for a quarter of a century.  Since we first started to provide assistance to their customers who had accidents abroad, we have strived to provide relevant solutions that deliver measurable added-value services. This new deal demonstrates the ongoing success of that strategy.”

    Nick Ansley, Motor Insurance Manager at The Co-operative, said: “AXA Assistance shares our commitment to delivering the highest quality of services to meet the needs of our customers. The combination of expertise, service capabilities and care they bring to our partnership has enabled us to continue developing relevant and valuable services over the last 25 years, and now beyond.”

    The services and insurance products are underwritten by Inter Partner Assistance, the underwriting arm and a fully owned subsidiary of AXA Assistance.

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    Five people have been sentenced to a total of over 32 years in prison following a joint investigation by Hill Dickinson Fraud Unit, Chaucer Insurance and Thames Valley Police.  The case concluded at Reading Crown Court with all individuals being found guilty for their involvement in the fatal road traffic collision in Denham on 11 June 2011.

    Hill Dickinson was appointed, by the Chaucer Fraud Team following concerns about the initial claim. Hill Dickinson Fraud Unit, in conjunction with Chaucer and Thames Valley Police undertook a complex investigation to secure the intelligence required to successfully bring the case to trial.

    The landmark case is believed to be the first of its kind in the country, as the deliberately-caused accident, arranged as part of a plan to commit insurance fraud, led to a second collision causing the death of an innocent member of the public.

    Chris Hallett, Director of Intel & Complex Fraud at Hill Dickinson commented: “These sentences send a clear message to the criminals committing insurance fraud who have no regard for the human consequences, that you will be tracked down and prosecuted. Joint collaboration and a commitment across the industry, and law enforcement agencies to bring fraudsters to justice is delivering results.”

    Sgt Jim Upton, Road Death Investigation Team from the Three Mile Cross Roads Policing department, said “The crash for cash culture has become more prevalent in our society, but this is the first known fatality as a result of an induced crash. Today’s sentences should serve as a warning that there are severe consequences to those who commit this crime. Thames Valley Police and our partners are absolutely determined to identify and dismantle this type of organised criminality, bring the offenders to justice and keep our roads safe.”

    Dawn Probert, Divisional Claims Director at Chaucer Insurance said “We extend our sympathies to Miss Gill’s family and friends.  This tragic accident reminds us how important it is that insurers have robust fraud prevention and detection strategies in place; so we can detect fraudulent activity, report those involved, and prevent the costs from being passed on to policy holders.  Chaucer remains committed to reducing fraud and the outcome of this tragic incident sends a clear warning to potential fraudsters of the penalties they could face.”

    Sentencing Details:

    Andrzej Boguslaw Skowron, aged 25, from Shelley Gardens, Wembley, has been sentenced to 10 years for causing death by dangerous driving and conspiracy to commit fraud.

    Radoslaw Piotr Bielawski, aged 24, from Rosewood Avenue, Greenford has been sentenced to 10 years and three months for causing death by dangerous driving and conspiracy to commit fraud. He pleaded guilty to doing acts tending to pervert the course of justice.

    Jacek Kowalczyk, aged 32, from Fraser Road, Perivale, Greenford, has been sentenced to 10 years and three months for causing death by dangerous driving, conspiracy to commit fraud and doing acts tending to pervert the course of justice.

    Artur Okrutny, aged 23, from Briar Road, London, has been sentenced to 12 months for doing acts tending to pervert the course of justice.

    Colin Lee, aged 32, from York Place, Aylesbury, has been sentenced to 12 months for causing death by careless driving. Lee was not involved in the plans to stage a collision for financial greed but was the driver of the van that fatally collided with the victim.

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    Last year marked a watershed moment in retirement benefits as numerous companies decreased their pension risk exposure by offering participants a one-time lump-sum pension payout. A new survey by Aon Hewitt reveals more employers plan to follow suit in 2013.

    Aon Hewitt surveyed 230 U.S. employers with defined benefit plans, representing nearly five million employees, to determine their current and future retirement benefits strategies. According to the findings, more than one-third (39 per cent) of defined benefit (DB) plan sponsors are somewhat or very likely to offer terminated vested participants and/or retirees a lump-sum pay out during a specified period, also known as a window approach, in 2013. By contrast, just 7 per cent of DB plan sponsors added a lump-sum window for terminated vested participants and/or retirees in 2012.

    “There is no question, employers are looking for new ways to aggressively manage their pension volatility,” explained Rob Austin, senior retirement consultant at Aon Hewitt. “In 2012, many DB plan sponsors were exploring options and planning their strategies—we think 2013 will be the year when many more actually implement large-scale actions such as offering lump-sum windows. Pension Benefit Guarantee Corporation (PBGC) premiums will begin to increase in 2013 and 2014, which will increase the carrying cost of pension liabilities and give plan sponsors an economic incentive to transfer those liabilities off their balance sheet.”

    Aon Hewitt’s survey also found that most employers (84 per cent) will not make any change to the benefit accruals they offer workers. Of those that are planning changes, fewer than one-in-five (16 per cent) employers are somewhat or very likely to reduce DB pension benefits, while 17 per cent are somewhat or very likely to close plans to new entrants in 2013. Just 10 per cent are somewhat or very likely to freeze benefit accruals for all or some participants.

    “Over the past few years, we’ve seen fewer pension plan sponsors closing their plans to new entrants or freezing the benefits for current participants,” said Austin. “However, employers remain under increasing pressure to manage plan volatility and are planning both smaller actions and bolder moves to manage that risk.”

    As a first step in their broader de-risking efforts, Aon Hewitt’s survey showed employers are contemplating what different economic scenarios would mean to their plan. Half are likely or somewhat likely to conduct an asset-liability study in 2013, and 60 per cent are somewhat or very likely to have their investments better match the characteristics of the plan’s liability through approaches such as liability-driven investing.

    “While the economic environment makes it imperative for DB plan sponsors to manage pension risk in some way, it’s critical that they approach it in a thoughtful manner,” stressed Austin. “The right de-risking strategy for one plan may not be an appropriate approach for another—most importantly, employers need to consider the funded status of their plans. For example, plans that are over funded will likely take measures to lock in this position and erase future volatility through actions such as offering lump-sum windows. An underfunded plan will need to take an approach that attentively addresses volatility such as implementing a glide path investment strategy that will de-risk the plan as the funded position improves.”

    Aon Hewitt’s survey found that while just 18 per cent use this glide path strategy today, the percentage is expected to nearly double to more than 30 per cent by the end of 2013. This shift comes as more plan sponsors abandon the traditional approach of investing a majority of plan assets in equities. Aon Hewitt’s survey found that while 52 per cent of plan sponsors favor this majority equity strategy today, just 31 per cent will use this approach by the end of the year.

    “Plan sponsors are taking a more holistic view of their pension plan by looking at the overall funded status of the plan and not focusing on the liabilities or assets individually,” explained Austin. “A glide path approach provides an easy link between the two. Additionally, this approach allows plan sponsors to have a long-term strategy in place that will systematically eliminate risk over time.”

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      Fitch Ratings says in a new report that its rating outlook for the Swiss insurance sector remains stable. The agency considers the Swiss primary insurance industry is well prepared to meet the challenges facing it.

      The Swiss life insurance market is threatened by the low interest rates persisting in Switzerland, in combination with the high proportion of sales represented by guaranteed products. Nevertheless, these threats are outweighed by the stability of the economy in Switzerland, the high predictability of financial and economic developments, and the fact that for group life business, guarantees are adjusted on a regular basis.

      “The non-life sector in Switzerland remains highly profitable, particularly on the technical side, and constitutes the backbone of the earnings stability of the Swiss primary insurance industry,” says Stephan Kalb, Senior Director in Fitch’s insurance team. “Market participants are highly disciplined and are successfully compensating for current low investment yields by focusing on their underwriting performance. Fitch expects the non-life sector to maintain its high level of profitability in 2013.”

      Competition in the Swiss insurance industry remains high, as Switzerland is a mature market with significantly higher insurance penetration than most other European countries. Potential for top-line growth is therefore limited.

      The key triggers that could result in a negative rating outlook are a worsening in the eurozone crisis or weakening in underwriting discipline of market participants. The stable rating outlook assumes low economic growth in Switzerland for 2013 and 2014.

      Fitch does not expect factors that could lead to a significant number of upgrades to emerge over the next 12-18 months. The biggest constraint remains the challenges regarding achievable investment returns in Switzerland, which are unlikely to disappear in the short term.

      The report, entitled ‘2013 Outlook: Swiss Insurance Market’, is available here.

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      Xchanging, the business process, procurement and technology services provider and integrator, launches its mobile application for the insurance market. The application, called X-presso, allows claims handlers and insurers to view and use claims files on the move using their iPads. The app has created a platform for further mobile applications, and new functions and services are already in the pipeline. 

      The application allows users to access the central market repository (IMR or Insurers’ Market Repository) of over 25 million insurance documents, and stitches together all the multiple documents associated with an insurance claim in an indexed file. The app further allows the user to find the critical page quickly, and in addition, to attach temporary notes to a file on the move, during a meeting or phone conversation.

      Xchanging is today launching the application, which can be accessed inside the Lloyd’s market using the Lime Street building’s new and enhanced Wi-Fi network, for both the Lloyd’s and company markets in a series of events held in the Lloyd’s building and on the Willis concourse.

      The launch theme: “Back to the Coffee House” celebrates the fact that insurance is once again an ‘on-the-go’ activity, no longer bound by access to a desktop computer.

      Adrian Guttridge, Executive Director, Xchanging Global Insurance Sector commented: “We are delighted to be launching X-presso today.  There is potential now for the market to take the next great step forward in modernising its processes, while at the same time maintaining the importance of the traditional face-to-face values that inform the insurance market.

      Jim Sadler, Chief Information Officer of Xchanging, continued: For far too long it has been felt that digitisation of the market would interfere with the critical face-to-face negotiation between broker and underwriter.  This app helps us to support and reinforce that face-to-face activity, finally exposing the myth that insurance is a backward looking business that cannot evolve into the modern day.  I am proud that Xchanging has been able to bring to market such an important ‘first’ for the insurance market.”

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      Munich Re has introduced ground-breaking insurance coverage with the US lighting company Xicato. Xicato provides its customers with a 5-year performance guarantee on its LED modules for colour consistency and lumen maintenance. Munich Re will now assume a portion of the financial risk the guarantee entails.

      Despite higher initial costs, LED lights, which contain a semiconductor light source, are overall much less expensive than other light sources because of their longer service life and energy savings. Industry studies forecast a multiplication of sales in the coming years – due to the ecological, economic and digital control benefits of LED lighting compared to conventional light sources and to new laws.

      Until now, LED warranties have generally covered catastrophic failure and workmanship issues for a period of one year. The Xicato warranty backed by Munich Re is the first of its kind to address real market concerns – the ongoing integrity of the light from an LED source for 5 years for both colour consistency and lumen maintenance.

      Founded in 2007 and based in San José, California, Xicato manufactures LED modules. It gives its customers a guarantee that after five years the colour composition will be substantially unchanged and that the light output of its modules will be at least 70% of the original level. If that is not the case, Xicato replaces any defective modules with new ones.

      Before agreeing to the performance guarantee cover, Munich Re conducted an in-depth examination of Xicato’s development and manufacturing processes. Munich Re brought in one of its specialist primary insurers to write the cover.

      The innovative solution is the first of its kind in the energy consumption sector and complements the range of performance guarantee coverages which have in the past primarily applied to renewable-energy production and green technologies. With this coverage, Xicato has the advantage of being able to partially relieve its balance sheet of the long-term, technical guarantee risk and use the capital thus freed up for purposes such as investment.

      Menko de Roos, CEO Xicato: “We see a trend where end-users, especially in the retail and hospitality markets, require a much higher comfort level that the LED solutions they install actually deliver. Munich Re’s extensive audit of our manufacturing processes serves as an independent assessment for our products’ colour consistency and lumen maintenance performance. They are now backed up by an actual warranty that can support any global end-user.”

      Thomas Blunck, member of Munich Re’s Board of Management, said: “We are delighted to have concluded the first contract of this kind for LED module technology with Xicato. It puts us ahead of the field again, following the performance guarantee covers for photovoltaic manufacturers we brought to the market in 2009 and our continuous expansion of the product range with comparable covers for other technologies in the renewable energies area. In every case, we relieve manufacturers or investors of part of their risks, thereby facilitating the use of new technologies.”

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      Inter Hannover, a subsidiary of Hannover Re, has announced the acquisition of London and European, a leading provider of title insurance and legal indemnity solutions.

      Nick Parr, CEO Inter Hannover, said: “London and European is an established authority in this specialist niche line and has a solid book of existing clients as well as a healthy appetite to grow profitably.  We believe there is a real market opportunity in this sector and we saw something exceptional in London and European. We have experienced a long and fruitful relationship with them and we’re delighted to have completed this deal to take full ownership of this growing business.”

      Inter Hannover is registered in England and its activities include writing primary insurance business via MGAs.  The company provides the security and protection of an S&P ‘AA-‘ and A.M. Best ‘A+’ rated global insurance provider.  Today’s announcement will mean significant investment into London and European; bringing the underwriting in-house to Inter Hannover and giving London and European access to superior rated security. The deal will provide London and European with the capacity to underwrite complex legal indemnity and title insurance solutions with Inter Hannover and, where necessary, in partnership with established Lloyds and London market insurers, as well the opportunity to offer other innovative risk management products to protect lenders’ books of business.

      London and European CEO, Christopher Taylor, who completed an MBO of the MGA in 2009 and who has successfully negotiated the deal announced today said: “Inter Hannover is an entrepreneurial business which has the ability to spot an opportunity in a specialist sector and the vision to realise its potential.  It’s no secret that the property market continues to be depressed but our continued success despite the state of the market is proof that our innovation, expertise and products have endured and remain invaluable solutions for lenders and conveyancers.”

      “I’m very pleased and excited by the new partnership between London and European and Inter Hannover.  Inter Hannover’s superior security will be a game changer for London and European – giving our clients access to other innovative risk management products and opening up our doors, products and services to a wider and potentially much larger market.”

      Christopher Taylor and all staff currently at London and European will remain with the business.

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      Aria Insurance Services has been securing a series of strategic partnerships for the delivery of assistance services. These agreements strengthen its capabilities to deliver a seamless service to the end customer, by linking with a major assistance player in each region. Aria Insurance Services also continues to work closely with the international network of its former parent, Europ Assistance.

      This powerful network, combined with the flexibility which comes from Aria Insurance Service’s independence and its renowned UK-based contact and case management centres brings a compelling offer for IPMI to the intermediary channel.

      The first deal to be sealed after Aria Insurance Services emerged as an independent last June is with leading Africa/Middle East regional healthcare administration services and assistance provider, GlobeMed Limited.

      EAJ, which has offices in Japan, the United States, Singapore, Thailand and China, is now also ready to co-ordinate the delivery of healthcare and lifestyle assistance services for customers of Aria Insurance Services. In turn, Aria Insurance Services is providing EAJ with assistance services in the UK and Europe.

      Close on the heels of these two announcements came news thatAria Insurance Services, which last year acquired Premier Occupational Healthcare, has joined forces with Medical Support Solutions to provide a full range of integrated assistance and medical services for employers with personnel in remote areas.

      This range of services, which includes insured solutions, covers pre-deployment OH review, healthcare delivery on site, fully backed up robust emergency response plans, medical evacuations and recovery capability.

      MSS specialises in the provision of remote site medical services and medical and emergency risk management. MSS offers a range of risk management solutions for clients operating in austere or remote areas – from the supply of medical equipment and consumables to delivering medical care through on-site medical facilities and medical personnel.

      Latif Sayani, Managing Director, Insurance Solutions said: “Aria is in a strong position with robust networks  and assistance partnerships ready to meet growth opportunities, not only in traditional iPMI markets of Europe, Middle East and Asia, but also in the emerging markets of North and Sub-Saharan Africa.”

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      Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, releases the latest edition of its monthly Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during January 2013. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon.

      The report reveals that torrential monsoonal rains prompted severe flooding throughout the Indonesian capital of Jakarta, killing at least 41 people. Government officials forecast total economic losses of IDR32 trillion (USD3.31 billion), and insured losses above IDR3 trillion (USD311 million). According to the National Agency for Disaster Management (BNPB), at least 100,274 homes were damaged or destroyed.

      The Australian states of Queensland and New South Wales were also impacted by catastrophic flooding during the month, killing at least six people. The Insurance Council of Australia cited insured losses above AUD300 million (USD313 million), with more than 27,800 insurance claims filed by January 31. Total economic losses in Queensland alone were estimated at AUD2.4 billion (USD2.5 billion), with the most significant damage recorded in the Queensland city of Bundaberg, where more than 2,500 properties were inundated.

      In Southern Africa, record rainfall prompted major flooding in at least five countries, killing more than 100 people. In Mozambique, at least 150,000 people were displaced along the Limpopo and Zambezi river basins, prompting a United Nations request for USD65 million for disaster relief and recovery. Additional flooding occurred in Zimbabwe, Botswana, South Africa and Kenya.

      Meanwhile, flood damage and fatalities occurred in Brazil, Ecuador, Turkey, China, Philippines, and Sri Lanka during January.

      v, President of Impact Forecasting, said: “As our January catastrophe report highlights, the potential for excessive rainfall and resultant flooding is a major challenge for countries across the world, and yet it is still one of the lesser modeled perils on a global basis. Impact Forecasting continues to work towards building a comprehensive flood modeling suite that addresses the flood peril. As part of this work, in 2012 we launched our Thai flood model, which has assisted the Thai market to better prepare for a potential reoccurrence of the devastating flood event that impacted the country in 2011.”

      Elsewhere in January, a strong United States storm system comprising at least 50 tornadoes –tying 2008 in becoming the second-largest January outbreak since 1950 – spawned widespread severe weather across central and eastern sections of the country, killing at least three people. The Georgia Department of Insurance estimated insured losses of USD75 million, while total economic losses were forecast at hundreds of millions of dollars (USD). The most significant damage occurred in Georgia’s Bartow and Gordon counties, where an EF-3 tornado damaged or destroyed 363 homes and 100 vehicles.

      Meanwhile, the strongest winter storm in more than a decade brought heavy rain, snow, hail, and damaging winds across much of the Middle East, killing at least 11 people. Israel was most heavily impacted, with total economic losses listed at NIS1.3 billion (USD345 million, after flooding from overflowing rivers inundated neighborhoods, businesses and infrastructure in low-lying areas. The storm also severely affected parts of Jordan, Lebanon, Syria, and the Palestinian Territories.

      Weeks of very cold temperatures killed at least 329 people in India, Bangladesh and Nepal, and wintry conditions also led to damage and travel delays in Europe and the U.S.

      Record heat, very dry conditions and gusty winds led to hundreds of wildfires across the Australian states of Tasmania, New South Wales and Victoria, killing one firefighter. Tasmania endured most of the damage, with150 homes were damaged or destroyed, and 1,783 insurance claims filed amid total insured losses of AUD86.7 million (USD90 million). Losses in Victoria were listed at AUD9 million (USD9.5 million).

      Minor earthquake events occurred in Kazakhstan, China, Indonesia and Chile.

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        Asta announces that Lloyd’s Franchise Board has granted “in principle” approval for Asta Managing Agency Ltd to establish and manage a new Lloyd’s syndicate 2357 backed by Nephila Capital.

        Initially the syndicate will underwrite catastrophe excess of loss reinsurance aimed at those cedants whose requirements generally cannot be fully satisfied by the conventional reinsurance market. The business written is a more sophisticated version of an Industry Loss Warranty (ILW) that not only reflects the size of insured loss but also reflects the geographic distribution of the cedant’s business to create a tailored index. Nephila has underwritten these products, which have become widely accepted by the market, for a number of years, and a substantial proportion of the syndicate’s business will be renewals of the existing portfolio.

        Asta is the Managing Agency and the syndicate is expected to start trading once all operations issues are in place. The syndicate will commence with a stamp gross premium of circa £100 million.

        The Active Underwriter will be Frank Majors, co-founder and current Principal of Nephila Capital. Nephila has also recently recruited Adam Beatty, an experienced reinsurance market professional who joins from Willis Capital Market & Advisory, where he was a Managing Director focused on reinsurance capital markets matters.  Adam will be based in London and will serve as a point of contact for Asta and Lloyd’s and will support Nephila’s communications with investors and trading partners in Europe.

        Stephen Cane, CEO of Asta said: “We are delighted to have guided the syndicate to this key stage in Lloyd’s application process. The new syndicate brings an innovative business product into Lloyd’s, which sits well with Lloyd’s strategy for future growth and product development as envisioned in the Vision 2025 plan, by introducing business that will complement, rather than compete with, existing business lines. In addition, the backing from Nephila brings together the skills of the capital markets and converges them with the re/insurance markets to create new revenues backed by a sophisticated investor base.”

        Frank Majors added “We  recognize the benefits of operating within Lloyd’s and are excited to be bringing this new syndicate to the Market in conjunction  with Asta.”

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        Trustees of defined benefit (DB) pension schemes could secure savings of 10% or more when they de-risk their pensioner sections, thanks to the introduction of health and lifestyle underwriting techniques in the bulk purchase annuity (BPA) market. The first major report on this innovation, published today by the Pensions Institute, coincides with news of the first ‘enhanced’ buy-ins to be completed in a market estimated to be worth up to £380bn.

        Individual underwriting could slash the cost of a buy-in relative to conventional approaches to pricing, while the entry of specialist enhanced insurers will shake up competition in the de-risking market, the report says. Importantly, as the report’s analysis of the first completed deals demonstrates, individual underwriting makes possible de-risking transactions that previously had been unaffordable, taking schemes closer to a fully funded position and to a final buy-out, at a time when they are suffering from increasing liabilities due to economic conditions. Members also benefit from these transactions, which can make schemes more secure and reduce the risk of transfer to the Pension Protection Fund (PPF).

        However, the report warns that in any complex market, such as DB de-risking, increased choice can lead to increased complexity. Regulators and stakeholders in the market will be keen to evaluate the different approaches to collecting health and lifestyle information from members, and also the pricing implications when individual underwriting shows the members of a scheme are likely to live longer than average assumptions would indicate. Another consideration is that the selection of an insurer that is able to address a scheme’s specific member profile requires considerable expertise and this might not be readily available to smaller schemes in particular. The report recommends that stakeholders and regulators work together to establish a clear regulatory framework and a code of practice to ensure the market reaches its full potential and develops in an orderly manner. The recommendations include a call for:

        – Consistent regulation of the BPA market on the part of the Financial Services Authority (FSA)1 and the Pensions Regulator (tPR). The FSA and tPR memorandum of understanding on pensions issues is woefully out of date and does not address de-risking.

        In April 2013 the FSA hands over to the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA), so the dual regulation of the bulk purchase annuity market becomes tripartite.

        – Consistent and reliable data for the de-risking market as a whole and the development of consistent data in the enhanced buy-in market. To achieve the latter objective would require enhanced insurers to share their qualitative and quantitative experience.

        – Insurers to develop flexibility in the way they can collect data on members’ health, so that schemes can benefit from whole-of-market bidding processes and avoid having to pre-select the insurer with the most appropriate methodology, as seems to be the case at present.

        – Insurers and reinsurers to work with schemes and their advisers to develop a comprehensive disclosure process, so that all material medical underwriting facts are made available during the bidding process. This would eliminate anti-selection concerns on the part of conventional underwriters.

        – Trustees to seek expert advice about the impact of the insurer’s covenant on the scheme’s financial position. They should also ensure that their trustee liability insurance extends to cover their liability in relation to de-risking exercises, including enhanced buy-ins.

        – Stakeholders and regulators to produce clear guidance for trustees, sponsors and their advisers to ensure best practice is extended to the smaller schemes, which constitutes the market initially identified by medical underwriters as suitable for enhanced buy-ins.

        ‘A healthier way to de-risk: The introduction of medical underwriting to the defined benefit de-risking market’, is published today by the Pensions Institute at Cass Business School. The report authors are Dr Debbie Harrison, Senior Visiting Fellow of the Pensions Institute, and David Blake, Director of the Pensions Institute and Professor of Pensions Economics at Cass Business School. The report was sponsored by Partnership Assurance and JLT Pension Capital Strategies.

        Dr Debbie Harrison, Senior Visiting Fellow at The Pensions Institute said: “This is a major development in the de-risking market. Trustees and scheme sponsors depend on securing affordable buy-ins in order to reach their ultimate goal, which is to transfer all liabilities to insurance companies. The introduction of medically-underwritten buy-ins will help them to reach this goal more quickly – a development that should be be welcomed by stakeholders and regulators alike.”

        Will Hale, Director of Corporate Partnerships at Partnership commented: “Sophisticated underwriting techniques, which have made a significant impact in the individual annuity market by increasing retirement incomes for people with health or lifestyle conditions, can now provide a more cost-effective way for certain DB schemes to insure their liabilities.

        “We believe the proposal for industry and regulators to establish a code of practice is a welcome and significant initiative. This provides a clear framework for how schemes and their advisers consider the benefits of individual underwriting when evaluating the most effective way to insure liabiities.”

        Martyn Phillips Director and Head of Buyouts at JLT Pension Capital Strategies commented: “Buy-ins are already a common tool for trustees looking to de-risk their DB schemes. In the same way that enhanced annuities have changed the decumulation landscape for DC pensioners through the Open Market Option, the enhanced buy-in offers DB trustees a more cost effective way to derisk. With an ever increasing pressure on costs driven by widening scheme deficits, it is important that trustees are aware of, and explore all available options.”

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