Post Magazine & Insurance Times
30 October 2008 Editions
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Post Magazine
News
Abbey in group buy
Adjuster snubs contract
New RSA appointment heralds public return
Bank issues warning
Aon stamp of approval
Aviva ready to grow
RSA warns on construction premiums
MMA widens reach with Glasgow move
HSE targets tradesmen with killer campaign
BLM: Mesothelioma claims cost underestimated
Feature articles
Interview - The magic touch
After turning around Euler Hermes, Richard Webster is now set to work his magic on loss adjuster Merlin Claims Solutions. He speaks to Post Magazine about transforming the firm into a major rival to the established market leaders.
Directors' and officers' liability - Managing the meltdown
A gloomy financial climate seems to go hand in hand with a rise in insolvency and litigation, a fact that many directors' and officers' insurers will be acutely aware of as they brace themselves for the impending storm. Post Magazine reports.
Brokers' Professional Indemnity - Exactly what it says on the tin
Three recent cases have highlighted the need for brokers to ensure the wording of policies is watertight when it comes to meeting the insured's requirements, writes Andrew Blair and Claire Saverymuttu (Barlow Lyde & Gilbert).
Business stability - Tough calls in tough times
Maintaining, and even increasing, the level of insurance protection during an economic downturn may not be seen as a priority for most companies, but it should be top of the agenda, as Terry Whittaker (QBE European Operations) explains.
Claims Club - A hopeless mismatch
As the credit crunch bites, the claims sector is going to inevitably go through a period of uncertainty – but does the industry have in place the suitable infrastructure, policies and culture to tackle the challenges it will face in the years ahead? Terry Renouf and Alistair Kinley offer their insights.
Claims club - Clubbing together
Rising stars in the UK claims sector gathered at CSC’s offices in London last month as the forerunner to Post’s annual Claims Club conference. Post Magazine reports on their discussion about the state of the industry and the challenges they hope to overcome in the future.
Claims club - Credit hire expert in claims firing line
A leading light of the credit hire industry braved claims specialists to defend his sector against accusations of stretching claims periods, delaying inspections and adding unnecessary extras.
Claims club - Recession to lead increase in periodical payment orders
Industry experts predict the credit crunch will lead to an increase in the use of periodical payment orders in settling serious personal injury claims.
Claims club - Transforming the claims landscape
With cost cutting becoming ever more important in every area of theinsurance industry, claims departments are racking their brains in order to save money. Yet with finances tight, how can insurersoverhaul outdated systems while meeting their budgets? Post Magazine explains.
Law reports
Court rules uninsured credit hire claim should fail
No jurisdiction over French discrimination
Claimant at fault refused injury award
Adjournment granted due to tight time
Insurance Times
News
Unions demand plaques pay-out
Paulson: no US bail-out cash for UK insurers
Reinsurance set to boom
Site to tackle health fraud
Hiscox adds £210m to syndicates’ capital
Feature articles
News analysis - The importance of being covered
The small businesses that line our high streets must save money to stay afloat as the economy slides towards recession. But cutting their insurance cover could get them into more trouble. Insurance Times finds out what the industry is doing to help these firms survive.
Regional market spotlight - The North West
Manchester is becoming the location of choice for many insurers, while consolidators are targeting brokers all over the region.
Crime - Cops, robbers and you
The Johnson family robbed the rich and went to jail, but one insurer accused police of dragging their feet over the high-value case. Was it right, and should the industry be more worried about an upsurge in fraudulent claims? Insurance Times reports.
Legal Week
News
Litigation costs fears to be addressed in new review
Abbey in group buy
Abbey Protection - the specialist supplier of legal and professional fees insurance products and services to UK small to medium-sized enterprises - has acquired Accountax Consulting, Accountax UK and Accountax Law for an initial consideration of £4.4m. The move follows Abbey's listing last year, with the stated objective to acquire other complementary firms.
Adjuster snubs contract
The UK's largest loss adjuster, Cunningham Lindsey, has snubbed Halifax Bank of Scotland Insurance after deciding not to retender for its business.
The bank is understood to have previously operated a three-strong panel of providers to handle the claims that it was unable to service internally with its in-house loss adjusting team.
Cunningham Lindsey, Crawford and Company and Carmichaels are believed to have worked with HBoS Insurance, although none have been retained. Instead, the bank has selected Merlin Claims Solutions.
A HBoS Insurance spokeswoman said: "The contract was awarded to Merlin last week and it covers the small scale of overflow of home insurance claims handling work not covered by our network of personal claims consultants.
"This would include remote areas such as the highlands, or areas of high claims density - for example, when a major incident has occurred and we need to draft in additional support to meet demand."
She added that the deal involved a rolling contract and that Merlin had "impressed" HBoS Insurance with its "approach to claims management and we believe there is a good match between the ethos of the two businesses".
Cunningham Lindsey would not comment on the review, although a source close to the adjuster said it had decided not to retender for the business after HBoS Insurance changed the terms of the contract that were to be offered.
New RSA appointment heralds public return
RSA is poised for a return to the public sector insurance arena, with the appointment of a senior broking figure from Aon.
The broker confirmed that Peter Bristow will leave his position of client director at the end of the week to join the insurance giant. His duties will be absorbed by the broker's public sector head Phil Thompsett.
Mr Bristow joins RSA as head of education, health and public services, and a spokesman for the insurer said: "His focus is going to be mid-market commercial, working with the broker community to build RSA's capability. We already write education and health business and he has been brought in to build our presence in the public sector area."
RSA was involved in the public sector market when it was opened up in the 1990s, but subsequently withdrew.
Zurich, which acquired the former Municipal Mutual in 1993, continues to be the market leader by some distance, although its domination of the market has caused unrest recently with attempts by a significant number of local authorities to set up mutuals.
Last year, Brian Shaw, UK public sector practice leader at Marsh, told Post: "As Zurich Municipal has a large part of the market, councils find it impossible to get a single quote elsewhere from other insurers," (Post, 5 April, p1).
A Zurich Municipal spokeswoman said it was difficult to comment, as RSA had not yet openly declared its intent for the market, but added: "sustainable and realistic pricing is key to provide the capacity that this market needs."
Dr Lynn Drennan, chief executive officer of Alarm, the national forum for risk management in the public sector, added: "We welcome RSA's decision to return to the public sector insurance market as a positive reflection of the improvements in public risk management. Additional choice in the market can only be a good thing for Alarm members."
Bank issues warning
The Bank of England has raised the prospect of insurance companies' investments falling below regulatory requirements or downgrades impacting their long term sustainability.
In its latest market review published this week, the Bank of England said: "As long-term investors, insurance companies tend to hold a significant proportion of their assets in equities and corporate bonds. Unlike banks and hedge funds, however, insurance companies generally do not employ much leverage and have long-term liabilities. So, insurance companies seem relatively well placed to avoid liquidity difficulties. Risks could arise, however, if the value of insurance companies' investments were to fall below regulatory capital requirements. This was an issue in the bear market of 2003 but regulatory reforms introduced in 2004 have reduced the likelihood of this risk by using a more risk-based capital requirement with countercyclical resilience testing."
Aon stamp of approval
The Post Office has signed a further five-year contract with Aon to continue managing its travel insurance scheme. Aon won the tender in partnership with Fortis, which underwrites the insurance policies.
Aviva ready to grow
The group chief executive officer of Aviva has insisted the group is positioned for growth once economic stability returns because it has a strong brand and capital position. Andrew Moss said: "These are unprecedented times. Our share price has been affected by the huge uncertainty in financial markets but people around the world are still saving and buying insurance from brands they trust, like Aviva. Aviva is strong." Its share price closed on Tuesday up 13.75 pence (5.61%) to 259 pence.
RSA warns on construction premiums
RSA's construction, power and engineering director for insurance, David Smith, has warned insurers against offering "unsustainable" premiums in light of a Royal Institution of Chartered Surveyors' report stating that the price of new construction work in the second quarter remained the same as the first quarter, despite rising costs.
The RICS reported that, with a decline in new work output forecasted, tender prices are expected to fall further over 2008 and 2009, with "little room to manoeuvre" if input costs keep rising as predicted.
Mr Smith warned: "Insurance will represent a cost that will be built into the tender price, so inevitably it will be strongly challenged. The industry, however, needs to guard against driving premiums to an unsustainable level to fund against claims costs. This can ultimately result in subsequent price corrections or even a lack of capacity to support builders or projects in the future."
He added that RSA would provide "certainty and stability" for customers and remarked: "In this tight economic environment, where tender costs are constantly being challenged, it's important to ensure that quality and safety do not suffer. Cutting corners in health and safety, for example, is not morally, legally or commercially acceptable in what is an inherently hazardous industry. Firms that do this will ultimately pay a heavy price for it."
Mr Smith said that RSA has been piloting mobile biometric technology, linked to a simple web browser, to monitor employees' and sub-contractors' site attendance in order to mitigate risks and reduce cost.
MMA widens reach with Glasgow move
MMA Insurance has widened its geographical footprint by opening an office in Glasgow.
The move builds on its decision to establish a Manchester underwriting team, which has gown to four since May 2007, with further announcements expected by the end of the year.
The MMA Glasgow and North-east team comprises Gillian McLaughlan, senior commercial underwriter, who joins from Allianz; and Ian McIntire, commercial underwriter, who joins from NIG. They will be supported by Scott Downie as development manager for Scotland and Anthony Harris as development manager for the North-east - both have several years experience with MMA in business development roles.
Derek Plummer, commercial director at MMA, told Post that having canvassed broker opinion, it discovered brokers were in favour of local underwriting presences, and that this support had been "virtually 100%" in Scotland.
He added he was surprised at the availability of quality underwriters in the city. "This is an evolving business strategy and we will build our presence to meet broker demand."
Mr Plummer said he expected rivals would be "surprised" by the bespoke solutions it would bring to Glasgow and the North-east, and that other areas in which MMA saw opportunity were being considered.
HSE targets tradesmen with killer campaign
The Health and Safety Executive has launched a new campaign that aims to reduce asbestos-related deaths.
As part of the 'Asbestos: the hidden killer' campaign, launched last Wednesday, the HSE has revealed that 20 tradesmen die from asbestos-related disease every week and this number is set to rise.
Steve Coldrick, director of the HSE disease reduction programme, said: "Exposure to asbestos is the biggest single cause of work-related deaths, with around 4000 people a year dying from asbestos-related disease.
"The overall number of deaths is rising because a large number of workers who have already been exposed to asbestos dust around 40 years ago will go on to develop mesothelioma, a terminal cancer, or other asbestos-related diseases."
The body said tradesmen account for 25% of the 4000 fatalities each year and, while the number of deaths in traditional industries such as shipbuilding, asbestos product manufacturing and metal plate workers, has plateaued, deaths in other trades continue to rise. The HSE claimed that every week, six electricians, three plumbers and six joiners die from asbestos-related disease.
Any building built or refurbished before 2000, when asbestos was banned, could contain the material and it is estimated that around 500,000 non-domestic buildings contain the potentially lethal substance.
The HSE is set to release its latest statistics, for 2007/2008, as part of its report Work related ill health injuries, dangerous occurrences, enforcement and gas safety next Wednesday.
BLM: Mesothelioma claims cost underestimated
The cost of mesothelioma-related insurance claims have been seriously underestimated, according to Nick Pargeter, partner at law firm Berrymans Lace Mawer (BLM). Speaking on a panel alongside employers’ liability specialists Jennette Newman and Michael Parr –also partners at BLM – Mr Pargeter said data compiled by the General Insurance Research Organising Committee asbestos working party 2008 found that, although the numbers of claims per individual claimant were falling, it had become easier to identify employers’ liability insurers, thus increasing the rate of claims.