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Liverpool Victoria Friendly’s core operating entities, Liverpool Victoria Insurance and Highway Insurance, have both been assigned ‘BBB+’ insurer financial strength ratings by Standard & Poor’s with a stable outlook.

S&P’s release follows :

The ratings reflect the relative strengths and weaknesses of the group (LVFS). Standard & Poor’s considers the strengths to be LVFS’ improving competitive position, good level of capitalization, and its strong investment profile. Constraining factors are current and historical operating performance, and the relatively concentrated exposure to both the motor market within the non-life space and more-specialist life-insurance products. In addition, the group is fully exposed to the U.K. insurance operating environment and future changes in its competitive landscape.

We consider the strengthening of the group’s competitive position since 2006 to be positive for the rating. The group has predominantly focused on repositioning toward products aligned with its strategic aims in the life and non-life insurance markets, and obtaining a top-five position in these chosen markets. In addition, there has been a focus on improving group brand awareness, further strengthening the management team, and improving efficiency. We expect to see LVFS’ position in its chosen markets strengthen further over the rating horizon.

The predominant constraint on the rating is current operating performance. Although earnings continue to improve, this remains a rating weakness. LVFS exhibits diversity in terms of earnings provided by the composite business model. However, this is somewhat offset by the concentration on the motor insurance market within the non-life insurance space and the smaller and more-specialist markets in the life insurance space. The concentration within the U.K. market exposes the group to the current competitive and challenging operating environment.

The stable outlook reflects our expectation that LVFS will maintain its current competitive position in its chosen markets and its good capital position. These are both rating strengths. We also expect operating performance to be resilient, despite prospective changes to conditions in both the non-life and life insurance markets.

A positive rating action on LVIC and Highway may be taken if:

– The group improves its financial profile by continuing to improve operating performance in all business segments. Measurement of this would be based on sustained and significant improvements in operating profits. In particular, this would result from consistently achieving combined operating ratios of below 100%, but also from generating sustained increases in profits from the life business by increasing the scale of new business; and

– The group achieves strong capitalization; or

– The group improves its business profile by further strengthening its competitive position. This would be measured by market share in its chosen markets and also through increased operating profits.

A negative rating action may be taken on LVIC and Highway if LVFS fails to:

– Maintain good capitalization; or

– Produce positive trends in operating performance, based on increased operating profits; or

– Maintain its competitive position in its chosen markets.

A negative rating action may also be taken if we no longer assess the non-life operations as core under our group methodology.

Source : S&P

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Aviva is warning homeowners to beware of Halloween hooliganism and bonfire night burglaries. Recent data shows that the week from 30 October to 5 November generally sees a rise in burglaries.

Research conducted by the insurer with 16 police forces across the UK found that the week from 30 October to 5 November last year saw an average increase in reported burglaries of 26% compared with the weekly average for the rest of the year. The highest increase was in Strathclyde where police saw an increase of 57% in reported burglaries for that week compared with their weekly average for the rest of the year. This is supported by ten years of Aviva claims data which shows a 28% increase in burglary claims on Bonfire Night, making it the worst night of the year for break-ins.

Rob Townend, property claims director at Aviva says :”Shorter days present more opportunities for criminals to work under cover of darkness. On Bonfire Night in particular, many people are out of the house at public displays or at parties and the noise of fireworks provides a distraction and means that suspicious sounds such as smashing glass aren’t heard.”

Halloween also presents a threat to homeowners as tricks take a more sinister turn. Ten years of Aviva claims data shows a rise of 150% in malicious damage claims to the home with damage to cars rising by 50% and car thefts also increasing by 20%. Common Halloween claims include smashed windows, vandalism to vehicles and damage to garden property.

Table 2: Criminal Damage in Halloween 2010

Rob Townend, property claims director at Aviva says : “Unfortunately, the combination of darker nights and a mischievous occasion like Halloween or a noisy one like Bonfire Night present too good an opportunity for some criminals to resist. These are real hotspots in the crime calendar when homes and cars can be more at risk than any other time in the year.

“However, simple measures can help to minimise the risk – put the car in the garage if you have one, tidy up any loose garden items or ornaments so they are not used to cause damage and make your house look occupied if you are going out by leaving lights on and of course make sure all doors and windows are securely locked.

“Obviously, theft and malicious damage are covered as standard by your home insurance if the worst does happen, but it’s best to take steps to avoid having the worry of being a victim of crime in the first place.”

Source : Aviva

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New research from Allianz Your Cover shows that teenagers in average and in the UK are worth almost £500 every time they leave their home. Data shows that teens could be worth as much as £810 if they carry high tech gadgets such as iPads, MP3 players and portable video game consoles.

Andy James of Allianz Your Cover, said: “Young people are carrying more expensive belongings than ever before. Our research shows this figure is going up every year – over the course of two years the amount of cash teenagers are carrying has increased from £42 to £89.

“We are encouraging teenagers and their parents to do what they can to prevent theft outside of the home. Being vigilant when out, mindful of personal safety and only carrying essential items, can all help to reduce the risk of items being lost or stolen.”

It appears however parents are unaware of this spiralling trend as only 5% think their teenagers are taking more expensive items out with them when compared to this time last year.

The average teenager carries:

In 2010 In 2011
£42 in cash £89 in cash
Mobile phone worth £110 Mobile phone worth £99
And wears £230 in clothes And wears £261 in clothes

Parents reveal that over half (54%) of their teenage children have lost or had an item stolen – an increase from a third (29%) in 2010. This rising trend is worrying parents as nearly half (48%) think their children are vulnerable to crimes such as mugging and more than a third (35%) are more concerned than 12 months ago.

The items teenagers are most likely to lose or have stolen are

  1. Mobile phone (23%)
  2. Cash (20%)
  3. Watch (19%)

Andy James continues: “Of the parents whose teenage children have lost or had an item stolen, only a third (32%) have claimed or have considered claiming on their house insurance for the loss.  As teenagers are carrying increasingly expensive belongings, parents should make sure their home insurance covers their teens’ possessions outside of the home if something unfortunate should happen when they are out and about.”

Source : Allianz

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The European Commission presented a package of measures to support entrepreneurship and responsible business, with the idea that a responsible approach to business means more and more sustainable economic growth.

First, the Social Business Initiative will help this emerging sector to fulfil its unexploited potential. This is complemented by an ambitious strategy for Corporate Social Responsibility to generate a higher level of trust and consumer confidence and improve companies’ contribution to society’s well-being. Both initiatives reinforce Commission efforts to engage with the private sector on social and environmental issues, especially relevant in times of public budget constraints.

The Commission is also proposing to improve transparency and promote sustainable business among multinationals. Mining and forestry companies would have to be more open about taxes, royalties and bonuses paid worldwide.

Finally, the Commission is proposing to simplify accounting rules for SMEs, potentially saving them up to €1.7 billion per year. The proposals would also reduce burdensome reporting obligations for listed companies, including SMEs, adding further to cost savings.

Commission Vice-President Antonio Tajani, responsible for enterprise and industry policy, said: “This package of measures is in the interests of both enterprises and of European society as whole. It reduces administrative burdens on small and medium-sized enterprises, and sets the conditions for a strong, dynamic social market economy in the medium and long term”.

“Social business is one of the pockets of untapped potential in our Single Market ” said Internal Market Commissioner Michel Barnier. “Social business is a good example of an approach to business that is both responsible and contributes to growth and jobs. But we need to ensure all companies, not just social businesses, take their impact on wider society seriously: that’s why I also want big multinationals – in particular those in the forest and mining industries – to be more open about what they are paying to governments across the world.”

Commissioner for Employment, Social Affairs and Inclusion László Andor said “Socially responsible business stems from a realisation that the crisis is not just economic and financial but also about ethics. Values like solidarity, sustainability, inclusiveness and integrity are not always upheld by business and I believe our economies have suffered as a result. This is where social business and CSR can have a decisive impact and thus also contribute to Europe’s 2020 goals of more jobs and growth.”

Key elements of the package

Encouraging responsible business

To increase transparency to the payments made by the extractive and logging industries to governments all over the world, the Commission has proposed to introduce a system of Country-by-Country Reporting (CBCR).

This system would apply to EU privately-owned large companies or companies listed in the EU that are active in the oil, gas, mining or logging sectors. CBCR is a different concept from regular financial reporting as it presents financial information for every country that a company operates in rather than a single set of information at a global level. Reporting taxes, royalties and bonuses that a multinational pays to a host government will show a company’s financial impact in host countries. This more transparent approach would encourage more sustainable businesses. In order to cover the various types of companies active in these industries under the CBCR system, the Commission is proposing to revise both the Transparency Directive (2004/109/EC) to cover listed companies and the Accounting Directives (78/660/EEC and 83/349/EEC) to cover large non-listed companies.

Furthermore, the proposed revision of the Transparency Directive would prevent investors from secretly building up a controlling stake in a listed company (“hidden ownership”). Such practices can give rise to possible market abuse, low levels of investor confidence and misalignment of investor intentions. Under the Commission’s proposal, investors would need to notify all financial instruments that have the same economic effect as holdings of shares.

The Commission’s Communication on Corporate Social Responsibility (CSR) offers a modernised definition of this concept that is consistent with internationally recognised principles and guidelines. It serves as a strategy that will allow companies to achieve their potential more effectively. It aims at improving trust in business including by launching in 2013 a European award for CSR and creating multi-stakeholder CSR platforms in a number of relevant industrial sectors.

Facilitating Social Entrepreneurship

Social businesses are companies that have a positive social impact and address social objectives as their corporate aim rather than only maximising profit. Today, the social economy represents 10% of all European businesses and employs over 11 million paid employees. The Social Business Initiative contains a number of actions to support its further development. It proposes ways to improve social businesses’ access to funding (including EU funding through the Structural Funds and the future setting-up of a financial instrument to provide social investment funds and financial intermediaries with equity, debt, and risk-sharing instruments), measures to improve their visibility and a simplified regulatory environment (including a future proposal for a European Foundation Statute, forthcoming revision of the public procurement rules and state aid measures for social and local services).

Cutting red tape for SMEs

By proposing to amend the Accounting Directives (78/660/EEC and 83/349/EEC), the Commission aims to reduce the administrative burden for small companies. Simplifying the preparation of financial statements would also make these more comparable, clearer and easier to understand. It would also allow users of financial statements such as shareholders, banks and suppliers to gain a better understanding of a company’s performance and financial position. Potential cost savings for SMEs are estimated at € 1.7 billion per year.

Furthermore, under the proposed revision of the Transparency Directive (2004/109/EC), listed companies, including small and medium-sized issuers, would no longer be obliged to publish quarterly financial information. This would contribute to further cost savings and should help to discourage short-termism on financial markets.

Next steps:

The package of proposals for more responsible businesses follows up on the Single Market Act (see IP/11/469), in which the Commission laid out twelve levers to re-launch the Single Market for 2012 for sustainable, smart and inclusive growth. Two of the key actions identified were the creation and development of small and micro enterprises, by introducing smart regulation and cutting red tape, and the creation of an eco-system conducive to the development of social entrepreneurship.

The proposals to revise the accounting Directives and the Transparency Directive will now be passed to the European Parliament and the EU’s Council of Ministers for adoption. The Communication on Social Entrepreneurship forms the starting point for a number of legislative and non-legislative initiatives that are to be rolled out over the next two years. There will be a first opportunity to discuss them with stakeholders at the Conference on Social Economy and Social Business hosted by the Commission on 18th November 2011 in Brussels.

Source : European Commission Press Release

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AXA Wealth’s platform, Elevate, has added Stadia Trustees, the specialist pension provider, to its offering. 

The partnership will allow IFAs to use Elevate’s range of investment options within Stadia Tustees’ EssentialSIPP. Stadia Trustees is among a small number of SIPP providers that can offer customers investment choices across a range of HMRC-permitted investments, from cash deposits and shares to alternative investments, such as land and unlisted securities.

David Thompson, managing director, AXA Wealth UK Distributors, said: “AXA Wealth continues to look for partnerships that strengthen its platform proposition, whilst offering advisers and their clients what they want and need. With the RDR little over a year away, partnerships like the one with Stadia Trustees ensures that AXA Wealth is placed to offer a market leading proposition to advisers and their clients.”

Tony Hales, managing director, Stadia Trustees, said: “Stadia Trustees has linked with Elevate through its third party capability as we recognise the access it provides to real SIPP investments. The EssentialSIPP provides investors with a cost effective and reliable investment wrapper and use of Elevate will make the process of portfolio selection and management easier for advisers and their clients.”

Source : Axa Wealth Press Release

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Aon Benfield’s annual Homeowners ROE Outlook report is now available. This report analyses insurers’ prospective returns on equity for homeowners business based on their July 2011 rate filings.

The report, compiled by the firm’s Analytics division, reviews the latest rate filings and supporting actuarial information of insurers operating in the 25 largest U.S. states. It reveals that insurers’ prospective after-tax ROE for homeowners insurance is 4.8 per cent on average, a decrease from the 6.9 per cent of 2010, mainly due to forecast subdued investment returns and higher estimates of non-coastal losses.

Aon Benfield estimates that investment returns will average 3.8 per cent during the current annual period, a decrease from the 5.0 per cent seen in prior years. Excluding this change, insurers’ prospective ROE would be 6.3 percent, down from 6.9% in 2010, and still well below the true cost of capital.

The report reveals that homeowners insurers have improved their recovery of the cost of reinsurance capital in recent years but could still recover a greater share of the annual cost of exposing capital to retained catastrophe losses.

Bryon Ehrhart, Chairman of Aon Benfield Analytics, said: “Great progress has been made across the homeowners insurance industry to more fully recover the cost of reinsurance over the past few years – a net cost that is generally lower than the cost of exposing an insurer’s own capital to catastrophic risk.  However, homeowners insurers continue to maintain and expose significant capital to retained catastrophe risk. The filings we reviewed show that the annual cost of exposing insurer capital to catastrophic risk is not being fully recovered. Homeowners insurance consumers therefore continue to benefit from rates that do not fully reflect the annual cost of insuring their homes.”

Source : Aon Benfield

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The trend for new homes to be built to a diminishing floor area halted last year, compared with those built since the turn of the twentieth century. Latest research from The Building Cost Information Service (BCIS) shows that, in 2000, two and three bedroom semi-detached houses were built with 16% fewer square metres than their counterparts in 1900. Over the last year, however, the size of these dwellings has stopped shrinking. This is a trend that is replicated across the spectrum of detached, semi-detached and terraced houses.

The findings of the BCIS 2010 survey, using the previous five year cycle, also reveal fresh trends in the floor plans of new homes being built in the UK. These houses are now more likely to incorporate utility rooms and more en-suite bathrooms, as well as an increased use of bay windows and integral garages. Additional rooms are also increasingly being built ‘in the roof’ – particularly in three storey buildings. Larger properties are incorporating higher specification kitchen finishes and under floor heating. The use of land is being maximised by the innovative construction of ‘coach houses’ – or apartments built over garages, a carport or drive-through, providing access to additional parking.

Whatever the size of a dwelling, it is important for insurers to be in a position to accurately assess risk and competitively price policies. Although bedroom rated policies give a standard sum insured for all policyholders, an underlying or ‘Notional’ rebuilding cost is still needed when setting premiums. The BCIS Notional Rebuilding Cost Matrix contains 2.6 million residential rebuilding cost values covering most houses, bungalows and flats and is the most comprehensive dataset of its kind. BCIS data is independent, accurate and commercially unbiased and has been the principle source of rebuilding cost information and house rebuilding cost inflation statistics in the UK for over 40 years. The Matrix uses rebuilding cost models already accepted as industry standard by surveyors and loss adjusters.

Andrew Thompson, International Development and Data Director at BCIS explains: “We recognise that providing a comprehensive Matrix of residential rebuilding cost values enables insurers to competitively price policies and increase their buildings insurance business, whilst protecting their loss ratios by accurately assessing risk”.

Source : BCIS Press Release

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Aon Corporation has announced the launch of a new initiative to engage employees and clients, “Pass It On”.  This is a multi-faceted, global program that combines elements of employee engagement, community service and client partnerships and should expose how Aon’s teams are dedicated to their communities and clients.

“Pass It On” officially kicked off Sunday October 23 at Old Trafford at half time of the derby between Manchester United and Manchester City. Manchester United Legends Denis Irwin, Bryan Robson and Gary Pallister will be on hand to support the launch.  Aon is the principal partner and global shirt sponsor of Manchester United.

The eight-month program begins on October 24 in three “start cities:” Hobart, Australia; Cape Town, South Africa; and Punta Arenas, Chile. Three regional route teams from Aon—Asia Pacific, EMEA, and the Americas—will compete for points as they pass Manchester United footballs along three transcontinental routes covering approximately 180,000 km, nearly four-and-a-half times the Earth’s circumference. The footballs will stop at Aon offices and other points of interest around the world.

In Africa, for example, the footballs will embark on a 35,000 km mobile vehicle tour, moving across Africa from Cape Town, South Africa to Cairo, Egypt, visiting 40 African offices and participating in various charity and client events along the way.

The Africa footballs will meet up with the other teams’ footballs in London in June 2012, where they will be auctioned off for charity at Aon’s 25th Anniversary Gala Celebration at Lloyd’s of London.

“We are a firm of inspired thinkers who use team work and innovation and who possess a relentless drive to live by our values and support the aspirations of others,” said Greg Case, Aon’s president and chief executive officer. “Pass It On will enable our colleagues to literally pass on what it means to be Aon—through our knowledge, service, values and client expertise. It is another step toward uniting our firm, and it will enable us to celebrate and take pride in the things we do every day to make a difference in the world.”

As part of the interactive, online competition, colleagues in each Aon office will earn points for their team by submitting photos, videos and stories covering various aspects of Aon, including client success stories, colleague profiles and stories on local community service initiatives.

“Aon is a global firm of people helping people, and Pass It On is an extension of what we do every day in our work,” said Greg Besio, executive vice president and chief human resources officer. “Through this program, we will leverage our global connectivity and enable our colleagues to develop and participate in local events that strengthen the bonds we have with our clients and demonstrate our commitment to supporting the communities where we work and live.”

As the balls pass through each office, Aon colleagues will celebrate the firm’s commitment to the communities in which it serves by organizing local charitable activities and client events. For example, in Santiago, Aon Chile will host a community event to raise money for Padre Semeria Foundation, which operates safe homes for children. In Sydney, Australia, Aon’s Women International Network group will host a client event featuring Dr. Lisa O’Brien, CEO of The Smith Family, a regional children’s charity focused on education. Aon colleagues in Cape Town, South Africa, have coordinated a skills and drills football program for disadvantaged children with the official Manchester United Soccer School.

“Pass It On” is the second phase in Aon’s global employee engagement program designed to engage the firm’s colleagues, families and communities. Last year, Aon’s inaugural “Follow the Football” initiative focused on the launch of its four-year global sponsorship with Manchester United.

Nine official Manchester United footballs visited 50 Aon offices in 28 countries around the world and traveled 154,000 kilometers in nine months. One Aon colleague from each office who best embodied the traits in Aon’s Leadership Model was selected to sign the football in their office. Aon hosted more than 70 global town hall meetings since engaging in the partnership in June 2009, and held its first annual Aon United REDy day in June 2010, where Aon colleagues more than 400 offices around the world participated in fundraising events and raised nearly $150,000 for over 200 unique charity partners.

Source : Aon Press Release

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Ageas Protect is the first protection provider in the industry to introduce ‘product labelling’. This innovative approach introduces clear consumer signposting onto its pre-sale marketing material, beginning with its Key Facts documents.

The pioneering concept has been developed using the well regarded food labelling concept, which allows consumers to choose between products and keep a check on the amount of foods high in fat, salt, saturates and added sugars that they’re eating.

Ageas Protect is introducing this brand new protection concept into its Key Facts Documents of its menu-based ‘Your Life Plan’ products which feature the provider’s 5 Star Defaqto rated Critical Illness and Income Protection covers, and the ‘Real Life Cover’ product. If the initial launch is successful the initiative is likely to be extended and used across all consumer-facing material.

Ageas Protect’s product labelling takes into account the major needs that consumers have to consider including death, terminal illness, specified critical illness, long term sickness, total & permanent disability, and unemployment.

Andy Milburn, Head of Marketing at Ageas Protect, comments: “As a nation we’ve seen how well food labelling works. Ageas Protect has now applied the same thinking to protection products. We can use this clear and simple approach to help show consumers the potential needs that they may not have mitigated as a result of their initial purchase, as well as identifying the most urgent needs that are covered within their policy.”

Martin Werth, Managing Director at Ageas Protect added: “The protection gap is becoming a dull factor to quote, but it is still getting bigger due to the tough economic climate and negative industry issues. When consumers are aware of the need to take out protection cover, they tend to use the internet to find what they want and often the only product they know about is level term cover. We believe product labelling helps to address this issue and should be used more widely. We have tested this concept with a number of advisers who all believed the initiative to be an extremely positive one.”

Ageas Protect is calling for the entire protection industry to be more proactive and remind existing customers about the cover they have. Product labelling will be introduced on Ageas Protect Key Facts Documents in November. The documents will be available to download from the adviser page of www.ageasprotect.co.uk.

Source : Ageas

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Changes to NHS and the welfare state are feared by SME employers according to Jelf Employee Benefits. Indeed 55% of employers at small- to medium-sized enterprises, fear the cost impact of the reforms on their operations and profitability, showing that the repercussions of the coalition’s changes will be felt much more widely than simply at NHS Trust and individual patient level.

SMEs are the backbone of the British economy as they account for more than 99.9%  of enterprises and employ nearly 14 million people, so Jelf Employee Benefits believes it is vital that their concerns over welfare and NHS reforms are heard.

NHS waiting lists and the work-capability assessments

Jelf Employee Benefits believes that the increased financial pressures felt by business, stems from two areas high on the political and media agenda. Anecdotal evidence of increased waiting lists on the NHS may mean key employees take longer to return to the workplace, which in the current economic climate could be catastrophic for marginally profitable employers (and even worse for fledgling business yet to make a return.)

Similarly, the Government’s new approach to means testing those on long-term state incapacity benefit, via the work-capability assessment (WCA), is now finding that huge numbers of people are allegedly ‘fit’ to return to work. In effect, many of these claimants may be forced back into the workplace purely on financial grounds, even though it may be inappropriate for both the employee and employer.

Steve Herbert, head of benefits strategy for Jelf Employee Benefits says: “The Health Bill and welfare reforms are both hugely contentious issues for this country but to date, the debate hasn’t particularly expanded beyond those individuals or organisations on which it will have an immediate impact. Small- and medium-sized enterprises are struggling with a number of economic pressures and this could be the straw that breaks the donkey’s back.

“Consider being an SME owner-manager with 150 employees: at any one time several members of staff may be receiving medical treatment and should they be delayed in returning to work, or be forced in to returning too soon, the consequences for that employer are enormous. The ramifications for micro businesses may be even more extreme.

“As a major provider of healthcare benefits consultancy to SMEs, we very much understand that reforms are required. However, we recommend that the House of Lords should consider the wider impact on business, in the interests of providing a stable labour market and employment opportunities.”

Source : Jelf Benefits

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The Insurance Fraud Bureau (IFB) released details of the action plan designed to deliver their new strategy and supporting financial investment required in the fight against organised crime. The future IFB role in tackling and preventing fraud is based on the need for the industry to retain the confidence of its customers and stakeholders, by taking long-term commitment to the reduction of insurance fraud.

The strategy reflects IFB industry customer needs identified during engagement activity supported by Deloitte, and includes intensifying focus on tackling organised motor fraud and the development of IFB’s first application fraud services.

Deloitte supported the IFB to assist in gathering, analysing and presenting information from a number of sources. Executives from IFB customer organisations were invited to engage with the Deloitte and IFB teams. Additionally, fraud practitioners in IFB customers were invited to participate in a survey, and engagement took place with industry stakeholders including the ABI, BIBA, fraud service providers and the FSA.

By increasing the annual industry fraud prevention spend on the IFB by 0.5%, the IFB will have the capacity to play a far greater role in preventing fraud impacting on customers. For a budget of £2.8m in 2012, rising by a further £150k in 2013, this will enable the IFB to more than double its employee headcount.

The additional staff will assist in enabling the IFB to provide services, assistance and support to help its customers realise target fraud savings of £60m over a three year period. In addition, the IFB will have the capacity to manage organised motor insurance fraud impacting on its customers valued at £161m.

The levy increase will enable the IFB to increase organised insurance frauds being researched,

analysed and developed; new industry organised insurance fraud operations; intelligence sharing with Police forces; and Cheatline fraud reports received from the public converted into intelligence reports released to customers.

David Neave, IFB Board Chair comments:

“Undetected insurance fraud is estimated to be costing the industry £2bn per annum, with motor fraud representing a sizeable element of these losses. Much is already being done as insurers are annually spending well in excess of £100m on preventing or detecting fraud. Of this less than 2% is spent on the industry platform to tackle organised fraud – the IFB. With the new resource levels identified in the long-term strategy, sufficient steps can be taken to bolster in-house systems and processes and the industry’s ability to tackle organised crime. All of which to the benefit our industry partners and consumers”.

Glen Marr, IFB Director comments:

“The industry engagement activity we have undertaken to form our future strategy has firmly reinforced the value placed on the IFB model by the industry and the appetite to invest more to reduce organised insurance fraud. We have devoted significant effort to strengthening the core capability of the IFB over the past 12 months, and we have never been better prepared to take the IFB model to the next level. We look forward to continuing to work with our industry partners as a collective, to root out and disrupt those concerned with organised fraud, to include professional enablers”.

Source : IFB Press Release

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Aon Benfield has launched its Solvency II Revealed report, which contains a series of in-depth articles on the key challenges of the new regime based on actual client projects.

Solvency II Revealed offers fresh perspectives on the regulatory challenges of the EU protocol, and includes important considerations for firms’ key personnel managing the regulation, from chief financial officers and chief risk officers, to actuaries and catastrophe modellers.

Themes highlighted in the report include:

– Combining the management of insurance and market risk, and leveraging the internal model framework, enables insurers to optimise their overall business strategy across insurance and investment risks and deliver higher shareholder returns without increasing risk or capital.

– Solvency II will change the investment behaviour of insurance companies.  Allocating risk and capital across underwriting and investment risk more dynamically provides an opportunity to deliver a more stable return to shareholders through the underwriting cycle.

– Insurers do not necessarily have to choose between a reinsurance programme which achieves business objectives and one which reduces capital requirements. A non-proportional treaty with or without frequency protection (aggregate covers) can substantially reduce capital requirements as an additional benefit to the protection against unexpected losses.

– Internal models, despite requiring a significant investment, result in more accurate calculations of solvency capital for catastrophe risk. Irrespective of whether the standard formula or an internal model is used, catastrophe excess of loss reinsurance remains the leading mitigation tool for natural catastrophe risks and a cost effective source of capital.

– Pandemic and terrorism risks drive the life catastrophe capital requirement. Fully transparent models, such as those developed by Impact Forecasting, allow insurers to demonstrate internally and to regulators how to potentially quantify these risks.

– Ratings agencies are unlikely to change their ratings processes as a result of Solvency II but insurers that can demonstrate an effective internal modelling process may achieve favourable capital adjustments under the rating agency models over time. This could mean a reduction in the capital needed to support their rating.

– Many insurers have chosen to reap the benefits of using an internal model – such as Aon Benfield’s ReMetrica – for Pillar 1 but these can also play a positive role under Pillar 2 as part of the Own Risk and Solvency Assessment (ORSA) to demonstrate to regulators that risk is being effectively managed.

– Calculating the fair value of a reinsurer’s share of technical non-life liabilities could be a challenging task if the reinsurance programme has changed in recent years.  The report examines the Solvency II framework and presents two different approaches from a practical perspective.

Gareth Haslip, EMEA head of Aon Benfield Analytics’ Risk & Capital Strategy team, said: “As insurers continue to prepare for Solvency II, the key is in understanding how and where to prioritise resource to not only achieve compliance but also make the most of the business opportunities arising from the regulation. We are helping insurers prepare for Solvency II by offering expertise on both sides of the balance sheet and advising clients on designing both optimal insurance and asset strategies under Solvency II.”

Marc Beckers, head of Aon Benfield Analytics in EMEA, added: “The report highlights key areas of strategic change, driven by the transition to Solvency II, which can also create a more value-oriented way of running an insurance company. Following the unofficial confirmation by the European Council and several regulators of 2014 as the new start date for Solvency II, we are continuing to work with insurers across Europe to help them prepare for Solvency II and in the process maximise the return on their investment. Our involvement focuses on areas such as catastrophe risk, model validation, investment optimisation solutions, benchmarking of premium and reserve risk parameters, structuring solutions for companies with capital concerns due to the economic environment or because the Standard Formula is inappropriate.”

Source : Aon Benfield

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Binge drinking in the United States results in 79,000 deaths per year and costs $745 per person, or nearly $2 per drink, according to a government report. The Centers for Disease Control and Prevention report uses data from 2006, the latest year for which information is available.  Costs related to excessive alcohol drinking reached $223.5 billion that year, according to the report. 

The CDC defines binge drinking as four or more drinks per occasion for a woman, and five or more drinks per occasion for a man; heavy drinking as more than one drink per day on average for a woman, and twice that amount for a man; and any alcohol consumption by pregnant women or underage youth.

Researchers looked at cost related to losses in workplace productivity (72 per cent of the total); related health care expenses (11 per cent); law enforcement and criminal justice expenses (9 per cent); and costs from drunken driving accidents (6 per cent).

“This research captures the reality that binge drinking means binge spending, not just for the person who drinks but for families, communities, and society,” said CDC Director Thomas Frieden.

Responsible behavior combined with effective policies “can decrease unhealthy drinking, reduce health care and other costs, and increase productivity,” Frieden said. More than three-quarters of the cost of excessive alcohol consumption “is due to binge drinking, which is reported by about 15 per cent of US adults,” said Robert Brewer, alcohol program leader at CDC and one of the report authors.

The report is based on data from the Alcohol-Related Disease Impact Application; the National Epidemiologic Survey on Alcohol-Related Conditions; and the National Survey on Drug Use and Health, among others.

Brewer said that in order to reduce binge drinking and related damage, effective strategies for communities include “increasing the price of alcohol and reducing alcohol outlet density.”

The full study, “Economic Costs of Excessive Alcohol Consumption in the US, 2006,” will appear in the November issue of the American Journal of Preventive Medicine.

Washington, Oct 17, 2011 (AFP)

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Shares of BP PLC rallied Monday, leading Britain’s benchmark stock index higher after the oil group announced a settlement with Anadarko Petroleum Corp. over the Gulf of Mexico oil spill.

The FTSE 100 index rose 1.2% to 5,532 in morning trading. It gained 3.1% last week, advancing for a third week.

BP’s shares (BP) surged 5% and were the biggest gainer on the FTSE 100 Monday.

The gains came after Anadarko (APC) and BP announced they have agreed to settle their dispute tied to the 2010 Deepwater Horizon oil-rig disaster. Anadarko, the Houston energy major, will pay BP $4 billion and the two companies will mutually drop their claims against each other.

In the insurance sector, Aviva PLC gained 4.8% after the firm was upgraded to buy from neutral at UBS, which said that the stock’s recent underperformance should be reversed if euro-zone policy makers are able to bring the debt crisis under control.

“So far, though, the stock’s bounce has lagged those of European peers such as Axa and Allianz,” UBS said in a note to clients.

Mining shares rose along with metals prices. Vedanta Resources PLC rose 3.3% and Rio Tinto PLC gained 3.2%.

On the downside, shares of security firm G4S PLC sank nearly 17% and were the biggest decliner in the FTSE. G4S said it will buy Denmark’s ISS A/S for an enterprise value of 5.2 billion pounds ($8.2 billion). It also announced a rights issue at 122 pence to raise £2 billion.

London, October 17, 2011 (Dow Jones)

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As of October 17 2011, new Aviva CI customers will be able to receive partial payments for two early forms of cancer: low grade prostate cancer and ductal carcinoma in situ, an early form of breast cancer. For these conditions, claimants will receive a lump sum of up to £20,000.

For both conditions Aviva covers all forms of recognised surgical treatments. This is particularly important for breast cancer patients, given that many critical illness policies only cover mastectomy. A third of breast cancer cases are treated by a mastectomy, compared to two thirds treated by lumpectomy, which underlines the importance of covering several types of treatment.

The partial payments are also an additional benefit, separate to the main policy. This means that critical illness cover will continue to be in place, should the customer need to make a further claim in the future.

In addition, Aviva has made enhancements to a number of conditions, taking them beyond the standard ABI guidelines to assume an ‘ABI plus’ status. This provides more comprehensive cover for customers, meaning that more people may be able to claim – and in some cases bring forward a claim more quickly – under the new definitions. Aviva now offers 12 ABI plus conditions under its critical illness cover.

As part of this, Aviva is the first provider to make Multiple Sclerosis (MS) an ABI plus condition. The standard ABI definition requires six months of continuous symptoms to be presented after a definite diagnosis, before a claim is paid. Aviva has now reduced this to three months so that customers can benefit more quickly.

Robert Morrison, chief underwriter for Aviva says: “These enhancements are great news for customers who can now benefit from more comprehensive cover. Cancer treatments can take a huge emotional and physical toll, so this extra financial support is there to provide peace of mind so patients can concentrate on getting well.”

“We wanted to be sure that any additions and changes to our CI policies would offer real benefits to our customers. Unfortunately one in three people in the UK get cancer: breast cancer is the most common form for women, while prostate cancer is the most prevalent for men, so we believe these enhancements could make a genuine difference to a great many people.”

Aviva paid £62 million to its critical illness (CI) customers during the first six months of 2011, a 21% hike on the same period last year. In total, 755 people received CI payments between January and June 2011, averaging £81,000 each.

During the first six months of the year 92.5% of critical illness claims were paid, bringing the last 12 months’ claims paid percentage to 94.3%.  In 2010 Aviva paid the highest proportion of CI claims across the industry.

Aviva research has found that financial support can aid cancer patients in a number of ways:

– Providing peace of mind to aid physical and emotional recovery.

– Giving people the chance to take time off work to recover / adapt to lifestyle changes.

– Relieving the stress caused by juggling work and illness / treatment side effects.

– Covering new expenses such as childcare and support around the home.

Source : Aviva

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Major international groups are vying for the acquisition of Polish insurance company Warta from Belgium’s KBC for a sum  estimated at between 233 and 350 million euros, a report said Saturday.   

The Polish financial daily Parkiet, quoting a source in Brussels, said they  included Zurich of Switzerland, Japan’s Sompo, Vienna Insurance, Germans  Allianz and Talanx, Italian Generali and France’s Axa.

It said Warta, Poland’s third-largest insurance company, could change hands  early next year.

KBC is being forced to divest assets under the oversight of the European  Commission after the banking and insurance company had to be bailed out by the Belgian government during the global financial crisis of 2008.    In July it received EU approval to sell off its Polish units Warta and  Kredyt Bank.

KBC announced on Monday a deal to sell its Luxembourg offshoot KBL to a  Qatar investment group for 1.05 billion euros ($1.41 billion), finding a new buyer after a deal with India’s Hinduja group fell through.

KBC group chief executive Jan Vanhevel said the sale will allow the Belgian  bank to release capital, reduce its risk profile and further focus on its core markets in Belgium and central and eastern Europe.

The transaction will release around 700 million euros in capital for KBC,  increasing the bank’s tier-1 capital ratio by 0.6 percent.

European banks have been trying to bolster their capital to meet new international standards and to help them cope as the eurozone debt crisis makes funding more difficult.

Warsaw, Oct 15, 2011 (AFP)

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A strong premium income growth in China and Malaysia drove AIA to report its highest ever quarterly new business value.

AIA, 32.89 per cent-owned by American International Group, said its value of new business amounted to $245 million in its third quarter ended Aug. 31, up 53 from the same period a year earlier. The group’s value of new business margin increased 4.5 percentage points to 36 per cent, and annualized new premium sales were up 52 per cent at $766 million, AIA said.

AIA Chief Executive Mark Tucker  stated : “We remain confident that the region’s dynamic economic growth and vast demand for savings and protection products will continue to provide the group with significant profitable growth opportunities for many years to come.”

Hong Kong, October 13, 2011 (Dow Jones)

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South Korea’s anti-monopoly watchdog said it had imposed a combined fine of $316 million against 12 life insurers for colluding to rig interest rates.   

The Fair Trade Commission said Samsung Life Insurance, Kyobo Life Insurance and 10 other major insurers were fined 365.3 billion won for fixing interest rates applied to deposits set aside to pay for clients. Interest rates are a key factor that determines insurance premiums and the amount of money clients can receive in the future.

Samsung Life was ordered to pay 157.8 billion won while Kyobo must pay 134.2 billion won, the commission said.

Their illegal activities took place between 2001 and 2006 through diverse negotiation channels that allowed them to better retain customers and maintain overall profitability, it said.

Four others, including Dongbu Life Insurance and Prudential Life Insurance,  were found to have engaged in similar practices, but they were just ordered to  take corrective action immediately, it said.

Seoul, Oct 14, 2011 (AFP)

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 XL Group announced preliminary net loss estimates related to catastrophe loss events in the third quarter of 2011, including Hurricane Irene, Tropical Storm Lee, the September Texas Wildfires and the July Danish Floods.

The Company’s preliminary loss estimates, pretax and net of reinsurance and reinstatement premiums, range from approximately $90 million to $120 million. Approximately three quarters of these losses relate to the Company’s Insurance segment.

The Company’s estimates are based on its review of individual treaties and policies expected to be impacted along with available client data. The Company’s loss estimates involve the exercise of considerable judgment and are accordingly subject to revision as additional information becomes available. Actual losses may differ materially from these preliminary estimates.

Source : XL Group

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The theme for the next BIBA Conference will be Shaping our Futures. The conference and exhibition will be held at Manchester Central on May 16 and 17 2012.

The title reflects BIBA’s Manifesto commitment to influence the issues affecting brokers and to take the lead role, with support from members, in driving through change in the insurance industry.

External forces will continue to affect the broker market in 2012, from the current loss of economic confidence in Europe and the US, to the impact on the customer and broker of future regulatory conditions, developing technology and other changing risks. Nevertheless, BIBA is committed to promoting the value of getting the best risk assessment advice for businesses and consumers.

Eric Galbraith, BIBA Chief Executive, added: “Throughout 2012, BIBA will continue to take the initiative in promoting the need for more proportionate, appropriate and cost effective regulation, while stressing the personalised and professional services available to businesses and consumers provided by BIBA members. Shaping our Futures will look in depth at the pressures facing the market, while providing the networking and learning experience so valued by brokers, insurers and providers”

Lindsay Campbell, BIBA Conference Organiser, said: “It’s great to be returning to Manchester. We receive extremely positive feedback about this particular city, and indeed Manchester Central, which has always proved a popular venue for delegates and exhibitors alike.  We look forward to seeing as many of you there as possible!”

The event will follow the successful two-day format launched in 2010, which provides maximum value for attendees and the biggest business networking opportunity for the UK’s insurance industry.

The 2011 conference attracted 4,152 attendees including 174 exhibitors and 2,526 brokers.  Entry to both the conference and exhibition will continue be free to all employees of BIBA member firms and all brokers are welcome to attend the exhibition at no cost.

Source : BIBA

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