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EC News (22nd March 2018)

March 22, 2018

Round-up of the weekly news and developments from the global (re)insurance market with stories from Lloyd’s, Paraline, Markel International and more.

Lloyd's issues electronic placement mandate

Lloyd’s has issued a mandate for electronic placement following approval from the Board and Council, warning of financial penalties for failures to comply.

The Corporation said that the mandate is designed to drive the market’s transformation from paper to digital and ensure the market realises the benefits of electronic placement.

From the end of the second quarter this year, each Lloyd’s syndicate will be required to have written at least 10 percent of its risks electronically.

This target will rise by another 10 percent each quarter until the fourth quarter to reach 30 percent, with further targets to be confirmed before the end of the year.

Lloyd’s said that by way of financial incentive, if managing agents meet with each of the target requirements then members of that syndicate will be eligible to receive a rebate on their annual subscriptions.

However, it warned that if managing agents do not meet with each of the target requirements, then members of that syndicate will pay additional fees, in order to contribute to the costs of modernising market systems and processes and may be subject to capital loading.

The electronic placing platform provided by PPL was launched in July 2016, initially for standalone terrorism business. Currently, 36 lines of business are available on the platform, with 29 brokers and 93 carriers signed up.

Accident and health will be the next class to go live in April, with the PPL board working with the market to agree suitable live dates for the remaining classes of business including reinsurance and aviation.

The mandate has been developed following detailed discussions with members of the Lloyd’s market, the Lloyd’s Market Association (LMA), the London & International Insurance Brokers' Association (LIIBA) and the International Underwriting Association (IUA).

Lloyd’s CEO Inga Beale said: “We must ensure that Lloyd’s and the London market moves together and continues to prioritise its modernisation efforts. We have agreed the scope and requirements for the electronic placement mandate.”

“We have a system that works and that supports face-to-face negotiations. Adoption by the market will increase efficiency, reduce back office costs, and most importantly improve customer service.”

LIIBA chief executive Chris Croft remarked: “The LIIBA Board welcomes the proposal made by Lloyd’s to mandate use of an electronic trading platform. We have supported its adoption since PPL was first initiated and there is clear evidence that the platform now provides a sound basis for the placement of London market risks.”

Meanwhile, IUA chief executive Dave Matcham said: “PPL can only be successful if it is widely used across the London market and supported by enhanced capture of data in a structured manner. Growing volumes and take-up for the system across multiple business lines is an urgent priority for 2018.

“The mandating of electronic placement by Lloyd’s will undoubtedly provide a significant boost for these objectives. The IUA supports this initiative and will continue to actively promote and engage members in paperless electronic trading. Many IUA members have already demonstrated clear support for PPL and I strongly expect this to accelerate further in the coming months.”

Paraline taps Rayner as Syndicate 4242 active underwriter

GC Securities’ Paul Rayner has been appointed as active underwriter of Paraline Syndicate 4242 and Special Purpose Arrangement 6123.

Rayner replaces former active underwriter Megan McConnell who left her position at the end of 2017, later resurfacing at Hiscox Re as director of underwriting.

Rayner will assume his new role in April and will also join the Paraline board.

He joins the carrier from GC Securities where he served as managing director; a role in which he developed and led a series of initiatives in the Lloyd’s and company markets including M&A, start-ups and capital raises. Prior to that, he served as a director at Aon Benfield Securities.

Bruce Schnitzer, chairman of Paraline said: “We have built a high-quality portfolio of insurance assets and Paul’s experience and expertise will add greatly to our prospects for future success.

“We have known Paul and respected his capabilities for a long time. He was instrumental in the formation of Syndicate 4242 and has continued to remain close to the business. He also has longstanding relationships with many of its underwriting capacity providers and with ICAT, the syndicate’s primary distribution partner. And, Paul advised in the transaction through which we acquired ICAT and again at the time of our strategic investment in Asta."

Markel International exits London open market property

Markel International has announced that it has ceased writing London open market property business with immediate effect. 

The company said that the development has no impact or implications for Markel’s US and Bermuda property businesses which have not faced the same challenges as the London open market business.  

As a result, head of property direct and facultative (D&F) Dean Pitts and senior underwriter Guy House will leave the company.

Markel International president William Stovin said that Pitts and House had worked hard to make the business successful but unfortunately the market had been against them "in terms of both capacity and pricing".

“That has been a feature of the market for some time and, despite their and our best efforts and a range of strategies, we have not been able to overcome this fundamental issue,” he added.

Aon UK names Kimber as chief risk officer

Aon UK has appointed Matt Kimber as its new chief risk officer (CRO).

Kimber succeeds John Nicholson who has been interim CRO for the past 11 months. He will report to Aon UK CEO Julie Page and will join the Aon UK board.

Kimber joins from JLT where he served as group head of risk and compliance for five years. He was previously CRO at Marsh and has also held positions at the likes of HBOS and Lloyds. 

The appointment comes weeks after Page was named CEO of Aon UK, replacing Dominic Christian who takes up the new role of global chairman of Aon Benfield.

Commenting on the hire, Page said: “Matt brings great energy and experience to our risk and compliance team and we are delighted to have him on board. I would also like to thank John for the excellent job he has done as interim CRO and wish him well as he returns to his role as a non-executive director on the Aon UK Ltd board.” 

GIC Syndicate 1947 gets green light for April launch

Pembroke Managing Agency has received final approval from Lloyd’s to establish and manage GIC Syndicate 1947, in time to begin writing business from 1 April.

Syndicate 1947 has a stamp capacity of £55mn for 2018 and will underwrite property, agriculture and engineering lines of business.

Neil Attwood has been appointed as active underwriter for the syndicate. Prior to joining the carrier, Attwood was active underwriter at AmTrust Syndicate 2526 and before that Torus Syndicate 1301.

Attwood will report to Chris Brown, strategic partnership director for Pembroke Managing Agency.

Brown commented: “GIC Syndicate 1947 will bring a balanced and diversified domestic Indian portfolio into the Lloyd’s market that otherwise would have been beyond our reach”.

Attwood added: “Harnessing Pembroke’s specialty lines expertise with GIC Re’s underwriting and distribution capability in India, will further develop business opportunities for GIC Re, Pembroke and other participants in the Lloyd’s market.”

Brit selects Walker as head of UK property

Brit has appointed Neil Walker from Marsh as head of UK property.

Walker most recently served as UK placement leader for the Marsh Propositions business, responsible for the strategic development of a number of lines including education, healthcare, private clients and public sector. Before that, he held broking roles at Aon and HSBC Insurance Brokers.

In his new role, Walker will be responsible for leading and building out Brit’s UK property offering as well as working with its specialist liability team to align Brit’s UK P&C proposition.

He will report to Tom Hillier, divisional director for specialist liability.

LSM promotes Hitchcock to European terrorism role

Liberty Specialty Markets (LSM) has promoted Joanna Hitchcock to the newly-created role of Paris-based terrorism underwriter as part of its plan to grow its European terrorism account.

Although based in Paris, the carrier said that Hitchcock will circulate among LSM’s European offices, meeting brokers and attending industry events.

Hitchcock joined LSM’s graduate programme in 2014, going on to become an assistant underwriter for terrorism in London. She has been quoting on business referred by LSM’s European offices for the past year.

Paul Beattie, LSM’s underwriting manager for war and terrorism said: “We’ve been writing terrorism very successfully for many years from London, but have been experiencing increasing demand from Europe. With our plans to grow our European business, this was the right time to create a new role based in Paris to service that demand and build stronger relations across the continent.”

“Joanna has been with us for approaching four years and has made a very positive impact on our business. Her knowledge and expertise will be a considerable asset to our European business,” he added.

Hiscox launches cyber ILW

Hiscox has launched the first ever cyber industry loss warranty (ILW) product in a bid to address uncertainty around cyber tail risk.

Hiscox said that the new product responds to an accumulation of cyber losses throughout the year, adding that it can act as an effective hedging tool for underwriters of cyber risks. The Lloyd’s carrier said that ILWs are common in the property reinsurance and retrocession markets, but states that its new solution is the first that responds specifically to cyber losses.

ILW structures enable organisations to obtain coverage based on the total insured loss of an industry, rather than the losses of an individual insurer. The size of the market loss will be determined by the PCS Global Cyber Index.

Commenting on the launch Hiscox Re & ILS CEO Mike Krefta said: “We have big ambitions in cyber and our new cyber ILW is another important step forward in developing that market. We believe innovations like this demonstrate our technical abilities and willingness to be a market leader in emerging risks.”

Co-Head of PCS, Tom Johansmeyer remarked: “We’re excited to work with the Hiscox team to make cyber risk more accessible via the ILW market. Based on the loss activity reported last year through the PCS Global Cyber Index, we identified some key advantages to ILW trading over traditional approaches, particularly potential settlement speed for aggregate ILWs based on the PCS reporting process. For the next few years in particular, the ILW market could provide unique opportunities.”