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Sofia Ashmore

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    The Lloyd’s Market Association (LMA) has laid out a five-point plan for reducing the annual national bill of over £2 billion for whiplash motor insurance claims.

    Responding the Government’s Transport Select Committee inquiry into whiplash and fraud, the LMA proposed five key changes to the current system which, it argued, would significantly reduce the number and cost of whiplash claims in the UK, particularly reducing the number of frivolous and fraudulent claims.

    The recommendations made by the LMA to the Transport Select Committee in its response are:

    – Increase the level of injury claims handled by the Small Claims Track from the current £1,000 to £5,000.

    – Introduce a new fit-for-purpose medico-legal process with stronger governance of costs, production and content of medical reports. Currently many of the medical agencies conducting assessments of whiplash claimants are owned by solicitors. This is a situation the LMA wants to see changed. Better categorisation of whiplash injuries is also needed.

    – Publish a new public tariff of damages that courts can award to whiplash claimants, dependent on the severity of their condition. The LMA noted that a similar system operates successfully in France, and agreed scales of damages have worked well in other areas of compensation in the UK.

    – Reduce the period in which a whiplash claim can be made from three years after the accident to six months (or pay less damages for claims submitted more than 6 months after an accident).

    – Initiate a new public debate on the appropriate level of damages for whiplash claims in the UK.

    David Powell, the LMA’s Underwriting Manager, said: “We welcome the Transport Select Committee’s investigation of whiplash claims. This is a timely review of what has become a difficult and costly issue for the insurance sector.

    “A major difficulty is that the low barrier to success for whiplash claims, and the high cost of opposing them, often makes it uneconomic for defendants to mount a legal defence – even when claims are weak. Whiplash is a highly subjective injury: the accepted legal evidence of causation and injury is entirely based on doctors describing symptoms reports by the claimant – potentially up to three years after the event.

    “We believe the proposals outlined by the LMA would be sufficient to reduce the frequency and cost of low value motor claims in the next few years.

    In 2012, there were around 828,000 whiplash claims in the UK, up 60% since 2006.

    The Transport Select Committee will outline its recommendations on whiplash claims later this year.

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    Specialist lines underwriting agency, CFC is celebrating the news that it has been awarded a Queen’s Award for Enterprise in International Trade.

    CFC sells innovative commercial insurance products in 60 countries worldwide through its extensive network of brokers, bringing substantial premium income into the UK each year. The award, acknowledged as the UK’s highest accolade for business success, recognises the firm’s successful strategy of targeting niche sectors worldwide, adapting services to each market, continually pushing boundaries to provide cover for companies that have historically been underserved and putting service at the centre of everything it does. This has seen CFC’s exports grow by over 300% in the last six years.

    Commenting on the award win, CFC Managing Director David Walsh said: “I speak on behalf of everyone at CFC in saying that we are proud and honoured to have joined the elite group of companies recognised by Her Majesty the Queen for our contribution to UK business in achieving substantial growth in overseas earnings. This has been a real team effort and I would like to thank everyone within the business for their outstanding contribution as well as our broker partners and capacity providers for their continued support.”

    He continues: “Coming just a year after our MBO, I believe the award also reaffirms that the decision to step out on our own was the right one.  We passionately believe in what we do and are proud of how far we have come. We could not be more excited about what the future holds and this award will only spur us on to work towards achieving our future goals.”

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    Research from the ABI published highlights that the UK is the ‘Whiplash Capital of Europe’. Eight in ten personal injury claims following road traffic accidents are now for alleged whiplash, over twice the average of France, Spain and the Netherlands.

    The full extent to which the UK’s compensation culture has led to an epidemic in whiplash claims set out in the ABI’s submission to the Transport Select Committee inquiry into whiplash. This highlights that:

    – In the UK 78% of personal injury claims following road accidents are for whiplash, twice the average percentage of whiplash claims across Europe. It compares to 30% in France and Denmark, 31% in Spain, 35% in the Netherlands and 68% in Italy.

    – Despite the 20% fall in injuries reported to the police between 2006 and 2011, the number of personal injury claims made by third parties has jumped by.40%.

    – Whiplash claims now cost over £2.2billion a year, adding an extra £90 to the average annual motor insurance premium.

    James Dalton, the ABI’s Head of Motor and Liability, said: “Insurers remain fully committed to ensuring access to justice for genuine claimants. But the harsh reality is that the UK remains the ‘whiplash capital of Europe’, with our ‘have a go’ compensation culture making whiplash the fraud of choice for many. With an annual whiplash bill of £2 billion adding an extra £90 a year to the average motor premium tough action is needed to tackle this problem.”

    The ABI’s proposals for tackling the UK’s whiplash epidemic are:

    – Medical assessment of personal injury claims by independent, accredited doctors with the latest training in soft tissue neck injuries.

    – Ensuring a simple and speedy way of settling low -value claims by increasing the Small Claims Track Threshold from £1,000 to £5,000.

    – Setting out a fair and transparent method for calculating compensation for minor whiplash injuries, which is set independently.

    James Dalton added: “Our proposals will ensure that genuine claimants receive access to justice at a proportionate cost, while driving out fraudulent and exaggerated whiplash claims that increase the cost of car insurance for honest motorists”.

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    Fitch Ratings has affirmed Eurco Re Limited’s Insurer Financial Strength (IFS) at ‘BBB’. The Outlook is Stable.

    Eurco Re’s IFS rating was affirmed following its parent company Belfius Insurance’s (previously Dexia insurance Belgium) decision that Eurco Re will exit third party reciprocal reinsurance treaties in an orderly way. Fitch expects that Eurco Re will maintain its current strong capital position and meet its current obligations after the strategic revision. This view is supported by a letter of comfort which has been provided by Belfius Insurance and presented to the Irish regulator, stating that it will ensure that Eurco Re has a margin of solvency capital equal to at least 150% of the regulatory minimum.

    Eurco Re’s ownership by Belfius Insurance (previously Dexia Insurance Belgium) provides uplift to Eurco Re’s rating to a level two notches below that of Belfius Bank (previously Dexia Bank Belgium; ‘A-‘/Stable, Viability Rating ‘bb’). Belfius Bank is the parent of Belfius Insurance, Eurco Re’s immediate parent.

    The Stable Outlook reflects Fitch’s expectations that Eurco Re would continue to benefit from potential support from its immediate parent Belfius Insurance or from its ultimate parent company Belfius Bank. Given the relative small size of Eurco Re’s operations, Fitch believes that even in a run-off scenario the parent would have the ability and willingness to support its Irish subsidiary.

    Belfius Bank is a leading Belgian bank owned by the Belgian federal state. Eurco Re acts as the group’s only active reinsurer with bank counterparties that are significant in Belfius Bank’s banking activities. As a result, Fitch believes that based on its ownership, Eurco Re would likely benefit from support from the group if ever it were needed.

    About 35% of Eurco Re’s gross premium income is from intragroup business. In addition, its third-party business ultimately arises because Eurco Re is a part of the Belfius Bank group. Fitch therefore considers Eurco Re to be entirely dependent on the Belfius Bank group for business. In 2012, Eurco Re’s net premium income was EUR226m.

    RATING SENSITIVITIES

    The key rating triggers that could result in a downgrade of Eurco Re include a reduction in Fitch’s view of potential support from Belfius Bank or Belfius Insurance as reflected in a modification in the commitment of support reducing the margin of solvency capital below 150%, a material change in Eurco Re’s operations, or a downgrade of the parent. An upgrade is unlikely in the near term.

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    On Monday, April 15, two bomb explosions occurred in Boston, Massachusetts, near the finish line of the Boston Marathon. Both explosions appear to be the product of low-grade explosives detonated outdoors. The casualty toll stands at 3 fatalities, with 144 injured, 17 of whom are in critical condition. Many victims suffered severed limbs, shrapnel wounds, and lower-leg injuries. Most of the property damage appears to be within 10-20 feet of the explosions, and insured property losses are unlikely to exceed a million dollars. However the costs of business interruption as a result of security restrictions made after the event may be a larger source of insurance claims.

    “The Boston marathon attack was the first high-profile successful act of terror in the U.S. since 9/11, but it should be seen as one of the dozens of terrorist plots launched against the U.S. homeland since then,” said Dr. Gordon Woo, catastrophist at RMS. “In particular, in September 2009, Najibullah Zazi intended to detonate backpack bombs on the New York subway killing the maximum number of people possible. With large quantities of explosives being increasingly hard to procure or improvise, the use of smaller sized lethal explosive devices has been the preferred attack mode in recent plots against the western alliance.”

    Street events, like the marathon, are inherently vulnerable because while there are very large crowds public access is unrestricted

    “Terrorism risk is best mitigated by counter-terrorism forces interdicting plots before terrorists move to their targets. Fortunately, this happens with more than 90% of U.S. and U.K. plots. However, plots involving a small number of operatives, such as seems to be the case with the Boston bombing, are the most difficult to prevent. Terrorism attacks remain a very real threat; there have not been larger attacks only because of the success of plot interception,” said Dr. Woo.

    The point of attack, in the heart of Boston, is in accord with the escalated level of threat to central business districts of the principal cities. Major cities, such as Boston, and major international sports events provide very high profile targets. Such events attract large crowds ensuring that an explosion causes significant injury and loss of life while the media publicity of the event amplifies the terrorizing impact. High security inside sports arenas forces terrorists to look for softer targets outside: an informal event like the Boston marathon is substituted for an event such as the Superbowl or the Olympics. Additionally, deflection to a lower risk profile city, such as Boston, suggests that the perpetrators were concerned security would be higher in New York.

    Dr. Woo added, “The insurance of sports events is likely to be impacted by the Boston Marathon bombs. The shortage of terrorism insurance cover in the years after 9/11 led to the securitization of the cancellation risk of the 2006 FIFA World Cup. So while the property insurance loss is small, the Boston Marathon bombing may well have a significant influence on the terrorism insurance market.”

    RMS, through its quarterly Terrorism Risk Briefings, has indicated the increased likelihood of smaller scale attacks as opposed to macro-terrorism attacks. This trend towards the use of smaller bomb sizes to circumvent security forces is anticipated by the RMS Probabilistic Terrorism Model.

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    According to catastrophe modeling firm AIR Worldwide, just after 3:00 p.m. local time (10:44 UTC) on April 16, a powerful M7.8 earthquake struck a sparsely populated area of southeastern Iran about 50 kilometers (30 miles) from the country’s border with Pakistan. According to the United States Geological Survey (USGS), the earthquake struck at a depth of 82 kilometers (51 miles). The Iranian Seismological Center characterized the quake as the worst to strike the country in 40 years. It was felt as far away as New Delhi, India, and the Gulf States. According to AIR, insurance losses from this event are expected to be minimal.

    According to AIR, four major tectonic plates (the Arabian, Eurasian, Indian, and African plates) and one smaller tectonic block (Anatolia) are the source of the seismicity and tectonics in the Middle East and its immediate surrounding regions. In southern Iran, seismic activity is dominated by the collisions of the Arabian and Indian plates with the Eurasian plate. At the longitude of today’s event, the Arabian plate is converging toward the north-northeast at a rate of approximately 37 millimeters a year with respect to the Eurasian plate. The M7.8 rupture today occurred as a result of normal faulting at an intermediate depth— about 82 kilometers (51 miles)—in the Arabian plate lithosphere (the uppermost region of the earth’s crust). The Arabian plate is subducting (pushing beneath) the Eurasian plate at the Makran coast of Pakistan and Iran south of today’s event.

    The subducting Arabian plate is known to be seismically active to depths of about 160 km. The frequency of moderate and large earthquakes within the Arabian plate is not high compared to similar activity in other subducted plates worldwide, but several earthquakes have occurred within this slab in the region of today’s event over the past 40 years, including a magnitude 6.7 shock 50 km to the south in 1983. In January 2011, an M7.2 earthquake occurred approximately 200 km to the east (in Pakistan), where the tectonic environment is similar to that of today’s event.

    In Saravan (population 60,000), the largest Iranian city close to the epicenter of the earthquake, a state of emergency was declared. A Saravan official reported that about six or seven people had been injured and that buildings were damaged in villages near Saravan and near Khash, a smaller town closer to the epicenter. In Zahedan (population 550,000), northwest of the epicenter, people reportedly poured into the streets when the shaking began.

    In Pakistan, officials reported injuries in the town of Mashkeel in the province of Baluchistan, which borders the Iranian province where the earthquake ruptured. Officials said that several hundred houses in the town had collapsed. In Karachi, about 700 km (435 miles) to the east, news reports showed buildings shaking and people running from them in panic. Other reports state that the walls of residential buildings and government offices developed cracks from the shaking.

    The earthquake caused tall buildings to shake and sway as far away as India’s capital, New Delhi (1,500 km/950 miles distant), also sending people running into the streets. Buildings in Qatar and Dubai were also reported to have been evacuated because of shaking.

    According to AIR, Iran is situated on major geological fault lines, and earthquakes are not uncommon in the country. Only one week ago, on April 9, an M6.3 quake struck close to Iran’s only nuclear power station—on the opposite (western) side of the country.

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    With a heavy spring thaw underway, Canadians are seeking various ways to protect their homes this season. Approximately 40 per cent of all home insurance claims are the result of water damage, according to data from Aviva Canada Inc., one of the country’s leading providers of home, auto, leisure and business insurance.

The data also shows that the average cost of water damage claims rose 117%, from $7,192 in 2002 to over $15,500 in 2012, a year in which the company paid out over $111 million in property water damage claims. Last year’s spring thaw was unusually uneventful, due to the dry winter that preceded it but with a more normal snow-filled winter winding down, Canadians should be more proactive in 2013.



    “With so many Canadians making a significant investment in their basements as more of a comfortable living space than a grungy storage room, a greater value in belongings in a high-risk area of the home has led to an increase in number of water damage claims,” said Wayne Ross, Vice President of Property Claims for Aviva Canada. “We strongly encourage homeowners to take matters into their own hands in order to protect their homes.”

The top ten steps Canadians should take this spring to safeguard their homes and possessions from water damage are:

    Inspect your roof: To prevent leaks, get the roof inspected every few years to check the condition of the shingles and replace when necessary.

    Clear out gutters: Prevent blockages, such as leaves and other debris that could force water into your home.

    Install a backwater valve: These valves close automatically if the sewer backs up and can prevent thousands of dollars in damage.

    Scope out your sump pump: If your basement has one, examine it and conduct a test run if it doesn’t get used frequently.

    Divert snow away from your home: Ensure that snow is removed from around your home, its foundation, doors and basement windows.

    Check your foundation: As ice melts, if you notice water pooling in certain areas, clear the liquid away from your home.

    Ensure your window wells are debris-free: Clear any accumulated garbage or leaves to allow water to drain properly.

    Ensure street catch basins are not blocked: These prevent snow from building up on the street level, protecting water from seeping towards your property.

    Protect your valuables: If your home is prone to water damage, consider moving valuables away from high-risk areas, such as the basement, or place items on high shelves or risers.

    Start right: If you are finishing your basement, make sure to seal your exterior walls.

    
Without taking such precautions, homeowners could put their homes and family belongings at great risk.  A provincial breakdown of the increase in the average cost of water damage claims from 2002 to 2012 is included below. The data highlights that BC and Ontario have seen the highest percentage in the average cost of a water damage claim over the last ten years.

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      According to catastrophe modeling firm AIR Worldwide, On April 15, 2013, at 2:50 PM, two bomb blasts occurred near the finish line of the Boston Marathon. The blasts occurred within 13 seconds of one another, near the race finish line, which is in the heart of Boston’s Back Bay neighborhood. The first blast occurred a few hundred feet short of the finish line while the second was 550 feet farther back along the course. Under most terrorism insurance policies, business interruption losses arising from restricted access or closure by civil authority is triggered only when there is physical damage arising from a covered peril (e.g., explosion, fire, smoke, etc.) within the designated area. However, the damage need not occur to the insured premises specifically.

      According to AIR, terrorists often seek targets that achieve the greatest impact, and not only in terms of harm and destruction. They may seek out symbolic sites or activities that represent an aspect of culture that they wish to disrupt or destroy. The Boston Marathon is an iconic event as well as a popular one. It takes place on Patriots’ Day, a Massachusetts holiday that commemorates the first battles of the Revolutionary War, which took place in Lexington and Concord, Massachusetts. The holiday is also known as Marathon Monday since the Boston Marathon takes place on that day.

      This year, it also coincided with “tax day,” the day on which federal tax returns are due for the majority of Americans; it is a day that also inspires rage among anti-government extremists. However, officials say it is too early to determine whether the attack was the work of foreign or domestic groups, or of a “lone wolf,” as in the case of a similar attack at the 1996 Summer Olympics in Atlanta, Georgia. The Pakistani Taliban has denied any involvement.

      Because Patriots’ Day is a holiday in Massachusetts, the race draws large numbers of people along the 26.2 mile course, and crowds gather at the finish line. The event is also widely televised, providing a guaranteed audience for the attacker(s).

      According to AIR, the finish line of the Boston Marathon is located in the heart of Boston’s Back Bay neighborhood. While Copley Square is an open space and some of the buildings are midrise, there are several high-rises in the area. If the bombs had been larger, and had been used in a more densely-built area, their impact could have been amplified by the built environment as the buildings will reflect shock waves.

      The bombs used in this case were likely small, portable devices that were by all accounts crudely constructed. Early reports of the devices being packed with ball bearings (BBs) has been discounted by federal law enforcement officials. They now believe the bombs were placed near or in metal garbage bins and the blast created small metal fragments which acted as shrapnel.

      While the bombs were not as powerful as more sophisticated devices, they seem to have been designed to inflict harm to people rather than buildings. According to AIR, plate glass windows at nearby businesses were shattered and thereby posed additional risk to people, but no structural damage has been reported. The injuries, however, have been severe. Although the winners had been crowned almost three hours earlier, there were still large numbers of runners approaching the finish line when the blasts occurred. Family members and well-wishers were still gathered as the largest packs of runners approached the finish line. The blasts have left three people dead (a number that could still rise) and have injured well over a hundred, with over 50 people in serious or critical condition. Most of the injuries were to lower limbs, indicating that the devices were on or near the ground.

      A large section of Boston’s Back Bay area remains off-limits to all but law enforcement officials and the FBI, which has taken over the investigation. Businesses and hotels that are located within this section remain closed. Other nearby businesses are open, but security is high and access is hampered by inaccessible streets. This is expected to clear within a few days as the investigations continue.

      It is still in the early aftermath of this event and officials remain cautious with respect to the information they share with the media. Initial reports indicated that two other bombs had been found, which had failed to detonate; however, this is yet to be confirmed by officials.

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      Gallagher Heath has been awarded a place on the Insurance Services Framework (ISF) following a competitive tender process, led by the Government Procurement Service (GPS).

      The ISF was set up following extensive collaboration with public sector organisations and representatives from the insurance industry to provide an online platform through which public bodies can more quickly and cost-effectively procure insurance protection and additional support services.

      By working hard to ensure that every single insurer market it places business with was also successful in becoming an appointed supplier – as client approaches to ISF brokers via the framework are restricted to using ISF-approved markets – Gallagher Heath can offer public sector organisations access to insurance for the majority of risk exposures they face. This could range from mainstream property and motor liabilities to specialist coverage for fine art, terrorism, marine or cyber risk.

      Peter Bristow, Managing Director of Gallagher Heath’s Public Sector Unit, said: “Gallagher Heath is delighted to have been appointed as a broker on the Insurance Services Framework. Our track record of providing innovative and cost-effective insurance solutions for public services places us in an ideal position to support this initiative and the organisations using it.

      “Our ability to literally tick every box in terms of access to insurance coverage means we are perfectly placed to help public sector clients obtain protection appropriate to their specific needs.”

      The aim of the ISF and its rigorous pre-selection process is to cut the administrative burden and cost associated with goods and services procurement for public sector bodies, which are compelled by law to comply with the European Union’s tender process and publish all contract notices for projects above a certain financial threshold. By using the ISF, public sector bodies do not need to run a full OJEU tendering process, but can use a shorter and less complicated mini competition process to obtain insurer quotations.

      It allows public sector organisations to procure a wide range of insurance covers and brokerage services including travel, personal accident, property and construction, plus a range of support services such as claims handling and risk management.

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        The credit bubble that devastated the global economy when it burst in 2008 is casting a long shadow.

        Consumers are deleveraging their balance sheet, banks are shrinking assets to comply with tighter ratios and governments are tightening fiscal belts. Hit by this triple deleveraging, , no wonder real economies are struggling. The sole albeit powerful stimulus is central banks inflating their own balance sheets to levels not seen since 1945. This unpleasant reality begs three questions: is it the right time for governments to cut debt? Are central banks not administering a medicine worse than the disease?? How should banks and insurers react??

        Starting with governments, it is fashionable to lambast austerity as self-defeating. In reality government debt is a counter-cyclical option when initially low, not when flirting with 100%% GDP1. Yet, if austerity is a sensible strategy, much depends on its implementation: cutting investment where it is low is as counterproductive as raising taxes where their burden is excessive.

        Turning too central banks, quantitative policies are responsible for ultra a-low bond yields and rich valuations in credit. T his may sow the seeds for bubbles, but alternatives look worse: ending quantitative policies and hiking rates would t rigger a bond sell-off and a double dip. Dangers will appear later, when money supply accelerates, if central banks do not deleverage their balance sheets on time. Inflation may then come back with a vengeance.

        Banks and insurers must therefore adapt to low interest rates and a significant risk of inflation in the medium term. For long-term investors, investing in equities should be part of the solution. This is also what central bankers wish and what regulators implicitly stated when drawing the lessons of thee debt bubble. And yet, financial re-regulation makes investment in equities so costly in capital that this option is almost dead. Isn’t this a blatant contradiction and an obstacle to global recovery?

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        BrokersLink has launched a Global Employee Benefits Practice Group and appointed Gerard Baltazar as its first Chairman.

        The group will drive business development in the area of international employee benefits for its 70 members.

        José Fonseca, Chairman of BrokersLink said: “We are seeing an increased flow of multinational employee benefits opportunities and want to ensure that BrokersLink members are able to take full advantage of these.  By launching a Global Employee Benefits Practice Group, our brokers based anywhere in the world can quickly and efficiently access the specialist resources required to both win and service this complex type of business.

        Mr Baltazar is is the Chairman and CEO of In2Matrix, an international employee benefits consulting firm, and founder of BrokersLink’s Center of Excellence for Global Employee Benefits.  He has 20 years’ experience in the financial services industry, having started his career at In2Consulting Ltd UK as a holistic financial planner advising high net-worth clients. He later opened an employee benefits division and founded In2Matrix Group.  In addition, Mr Baltazar is a member of the Advisory Council for the Russian British Chamber of Commerce.

        BrokersLink’s Global Employee Benefits Practice Group will sit alongside the network’s established Global Construction Practice Group, which has already helped members secure and service significant contracts across the world.

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        The Joint Committee of the European Supervisory Authorities (Joint Committee) has published today its first Report on Risks and Vulnerabilities in the European Union’s (EU) Financial System.

        The publication identifies the key cross-sectoral risks facing the EU’s financial markets and system, and sets out recommendations on how these can be addressed through coordinated policy and supervisory action by policy-makers, the ESAs and Member States.

        The report is the first of what will be a regular publication by the Joint Committee on cross-sectoral financial market risks in the EU.

        Gabriel Bernardino, Chairman of EIOPA and current Chairman of the Joint Committee, said: “Today’s first report by the three European Supervisory Authorities has identified some key cross-sectoral risks facing the EU’s financial system including, in particular, the risk of fragmentation, over-reliance on collateral, concerns with regard to the quality of financial institutions’ assets, and the loss of confidence in institutions and benchmarks.

        This cross-sectoral work provides EU policy-makers and regulators with an overall view of the risks they face and moves us away from a narrow sectoral approach, and the inherent risk of failing to see the big picture”.

        Risks
        The report has identified the following risks the EU financial system is facing:
        1. Weak macroeconomic outlook and consequently a deterioration for financial institutions’ asset quality and profitability;
        2. Low interest rate environment;
        3. Risk of further fragmentation on the single market ;
        4. Increased reliance on collateral;
        5. Lack of confidence in financial institutions’ balance sheet valuations and risk disclosure; and
        6. Loss of confidence in financial benchmarks.

        Recommendations
        In light of the findings in the report, the Joint Committee believes that only a concerted response by policy-makers and EU Member States can restore the confidence and trust that has been eroded during the financial crisis.

        The Joint Committee urges the EU political leaders to press ahead with the establishment of Banking Union, including the Single Supervisory Mechanism, and bank resolution schemes. In their turn, the ESAs remain committed to fostering supervisory convergence, amongst others, through a strong role in supervisory colleges and through the development of both the EU-wide Single Rulebook and Supervisory Handbooks.
        During the crisis, the ESAs have successfully facilitated on-going open communication among national authorities within supervisory colleges and ESA financial stability groups. This was only possible because of the trust that has been built up in recent years with the establishment and coordination of these groups.

        Note on the developments in Cyprus
        The cut-off date for this report was 13 March 2013. Therefore, recent events in Cyprus are not discussed in the publication. The ESAs have closely monitored the situation in Cyprus as it has developed. The winding-down of Laiki Bank and the restructuring of Bank of Cyprus will lead to losses throughout the financial sector in Cyprus, but the risks of direct international contagion seem to be limited. So far, market conditions and deposit dynamics have remained relatively stable. Recent events manifest the risk of further fragmentation of the single market and underscore the need for closer coordination and integration, including in supervisory colleges, and through full implementation of the banking union.

        Notes for editors
        The Joint Committee is a forum for cooperation that was established on 1st January 2011, with the goal of strengthening cooperation between the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA), collectively known as the three European

        Supervisory Authorities (ESAs).
        Through the Joint Committee, the three ESAs cooperate regularly and closely and ensure consistency in their practices. In particular, the Joint Committee works in the areas of supervision of financial conglomerates, accounting and auditing, micro-prudential analyses of cross-sectoral developments, risks and vulnerabilities for financial stability, retail investment products and measures combating money laundering. In addition to being a forum for cooperation, the Joint Committee also plays an important role in the exchange of information with the European Systemic Risk Board (ESRB).

        The full text of the report can be viewed in section “The Joint Committee” on EIOPA website.

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        Allianz Global Corporate & Specialty (AGCS) has appointed Kevin Northcott as the Regional Head of Financial Lines. He will be based in the London office with overall responsibility for South Africa, Canada, Dubai, Australia, New Zealand, UK and Ireland. Kevin will be driving product development and is tasked with expanding the presence of ACGS in this line of business.

        Kevin has over 30 years’ insurance experience, with 25 years in the Financial Lines sector. Since joining Allianz in 2005 he has held a number of senior roles in Europe and Asia Pacific. In 2009, Kevin became the General Manager of AGCS in Hong Kong and then in 2010, he took the role of CEO. Prior to joining AGCS, Kevin worked at AIG and ACE.

        In addition to traditional Financial Lines Products such as Directors and Officers (D&O) Liability, Professional Indemnity and Financial Institutions products, Kevin also has experience in specialised products such as Malicious Product Tamper, Kidnap and Ransom (K&R) and Political Risk portfolios.

        AGCS UK CEO, Carsten Scheffel, said: “I am pleased Kevin has joined us in London. With his breadth of experience, understanding of the market and knowledge he will be an asset to our business. I look forwarding to introducing him to our business partners. With an excellent team in place we have the skills and expertise to be a market leader in this field.”

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        Fitch Ratings has upgraded Ageas’ immediate holding company Ageas Insurance International NV Long term Issuer Default Rating (IDR) to ‘A-‘ from ‘BBB+’ and affirmed the Long- and Short-term IDRs of the ultimate Ageas holding company ageas SA/NV at ‘BBB+’ and ‘F2’, respectively. Fitch has also affirmed AG Insurance’s Insurer Financial Strength (IFS) rating at ‘A+’ and IDR at ‘A’. The Outlooks on the IFS rating and the Long-term IDRs are Stable.

        Fitch has also affirmed Milleniumbcp-Ageas operating entities’ (MBCPA) IFS ratings at ‘BBB-‘ with a Negative Outlook. The ratings of Ageas Insurance Company (Asia) Ltd and Ageas Capital (Asia) Ltd are unaffected by the rating actions. A full list of ratings is at the end of this comment.

        KEY RATING DRIVERS

        Following the restructuring of the Ageas group in 2008, Fitch believes that Ageas SA/NV continues to face litigation risk in Belgium and the Netherlands. Despite the company’s denial of all allegations, if the actions against ageas SA/NV were successful, they could eventually have a substantial negative financial impact on the company. This litigation risk is reflected in non-standard holding company notching with ageas SA/NV’s IDR being two notches lower than the IDR of AG Insurance instead of the standard one notch. However, intermediate holding company, Ageas Insurance International NV, 100% owned by ageas SA/NV, is not directly involved in any material litigation initiated by former Fortis shareholders, or other material litigation. Consequently, Fitch has upgraded the rating of this intermediate holding company whose IDR now reflects standard notching, at one notch lower than that of AG Insurance.

        AG Insurance’s ratings continue to be supported by its strong capital adequacy, acceptable debt leverage and leading business position in Belgium. Fitch expects AG Insurance’s solvency to remain solid despite a proposed dividend of EUR325m. AG Insurance reported a profit of EUR433m at end- 2012, up from a EUR436m loss in 2011. Operating profitability is good and in line with expectations with the combined ratio improving to 104.4% in at end-2012 (106.6% – 2011). AG Insurance’s financial and business profile is fully in line with the rating range. These strengths are offset by the company’s lack of geographic diversification.

        On 21 March 2013, AG Insurance successfully issued a USD550m perpetual subordinated debt. The proceeds of the issue will be used in priority to redeem, fully or partially, the outstanding perpetual subordinated loans of Ageas Hybrid Financing SA. Therefore, Fitch expects AG Insurance’s debt leverage to remain unchanged at an acceptable level in the short term.

        MBCPA’s ratings incorporate some benefit from Ageas group’s ratings and ongoing and expected future operational and financial support. Majority owner Ageas has clearly stated that it continues to view MBCPA as a strategic investment and a long-term partnership. In addition, Ageas has indicated that together with Millennium bcp, owner of the remaining 49% of MBCPA, it would ensure the protection of existing policyholders should this be necessary. At end-2012, MBCPA reported a net profit of EUR94m and a regulatory solvency ratio of 273%. The Negative Outlook on MBCPA’s ratings reflects the Negative Outlook on Portugal’s sovereign rating.

        RATING SENSITIVITIES

        The ratings could be downgraded if entities prove unable to sustainably generate positive earnings or to maintain solvency at their historical level, around 200% of the regulatory minimum. A downgrade could also be triggered by the deterioration of AG Insurance and MBCPA’s leading business positions in both their domestic insurance markets (although this is unlikely in the short term). A reduction in the level of support from Ageas as well as aggravated litigation risk initiated by former Fortis shareholders could also lead to a downgrade.

        All of MBCPA’s operations are concentrated on the Portuguese market, which is experiencing very challenging economic conditions. This has a profound impact on life insurance, which is the group’s main activity. As such, the ratings are adversely affected by Portugal’s sovereign rating.

        An upgrade of the ratings is unlikely in the medium term, given the companies’ financial and business profile, in particular their lack of geographical diversification.

        The ratings actions are as follows:

        AG Insurance

        IFS rating affirmed at ‘A+’; Outlook Stable

        Long-term IDR affirmed at ‘A’; Outlook Stable

        Subordinated bond affirmed at ‘BBB+’

        ageas SA/NV

        Long-term IDR affirmed at ‘BBB+’; Outlook Stable

        Short-term IDR affirmed at ‘F2’

        Ageas Insurance International

        Long-term IDR upgraded to ‘A-‘ from ‘BBB+’; Outlook Stable

        Short-term IDR affirmed at ‘F2’

        ageas Finance N.V.

        Senior unsecured affirmed at ‘BBB’

        Ageas Hybrid Financing

        Hybrid capital instruments affirmed at ‘BB+’

        Ageasfinlux SA

        Hybrid capital instruments affirmed at ‘BB’

        Ocidental-Companhia Portuguesa de Seguros de Vida S.A.

        IFS rating affirmed at ‘BBB-‘; Outlook Negative

        Ocidental-Companhia Portuguesa de Seguros S.A.

        IFS rating affirmed at ‘BBB-‘; Outlook Negative

        Medis – Companhia Portuguesa de Seguros de Saude S.A.

        IFS rating affirmed at ‘BBB-‘; Outlook Negative

        Unaffected Ratings

        Ageas Insurance Company (Asia) Ltd

        IFS rating ‘A’; Stable Outlook

        Long-term IDR ‘A-‘; Stable Outlook

        Ageas Capital (Asia) Ltd

        Senior unsecured rating ‘A-‘

          0 2

          The European Insurance and Occupational Pensions Authority (EIOPA) invites market participants and (re)insurance stakeholders to provide their feedback on its “Discussion Paper on Standard Formula Design and Calibration for Certain Long-Term Investments”. 

          The European Commission (EC) requested EIOPA to examine whether the calibration and design of regulatory capital requirements for insurers’ long-term investments in certain asset classes under the envisaged Solvency II regime necessitates any adjustment or reduction under the current economic conditions without jeopardising the prudential nature of the regime.

          EIOPA has already carried out an in-depth analysis of some of the asset classes explicitly listed in the EC letter. The Discussion Paper summarises EIOPA’s preliminary findings and contains specific questions to stakeholders.

          EIOPA invites all interested stakeholders to provide their feedback. This offers them an opportunity to inform EIOPA’s further technical work on these issues, in particular in relation to data limitations. The insights gathered in this way will help EIOPA to produce a well-informed recommendation on the review of the design and calibration of the standard formula in relation to the asset classes considered. EIOPA will also look at the influence that the maturity of insurance liabilities has on regulatory capital requirements for long-term investments. Last but not least EIOPA will analyse non-regulatory obstacles for long-term investments by insurers.

          The further research by EIOPA on long-term investments should lead to a final report early July. This enables EIOPA to take full account of the results of the Long-Term Guarantee Impact Assessment scheduled for the end of June. Combining the results of these two important work streams allows a full examination whether the regulatory framework of Solvency II should be amended to facilitate long-term investments.

          The period for providing comments will end on Tuesday, 28 May 2013. Earlier responses are very much appreciated.  All contributions have to be provided in the dedicated template (Link: https://eiopa.europa.eu/consultations/consultation-papers/index.html ) and are to be sent to the email address LTI{at}eiopa.europa.eu (Link: LTI@eiopa.europa.eu ) under the heading ‘Discussion Paper’.

          Please note that comments submitted after the deadline or not submitted on the provided template cannot be processed.  The Discussion Paper can be accessed from the EIOPA website (Link: https://eiopa.europa.eu/consultations/consultation-papers/index.html ).

          0 1

          Cooper Gay Swett & Crawford, the global wholesale insurance and reinsurance broker, has moved to a 100% shareholding in Cooper Gay Chile S.A. following the acquisition of the remaining 49.99% shareholding from Servicios Security SA, part of Security Financial Services Group.

          The share acquisition is in line with CGSC’s continuing strategy of 100% ownership of its global operations.  Terms of the agreement were not disclosed.

          Cooper Gay Chile was formed in 2004 and is the 3rd ranked reinsurance broker in the Chilean market.

          Led by Guillermo Pastore, CEO for the Cono Sur region (comprising Argentina, Chile, Paraguay and Uruguay) and General Manager, Luc Van Eyghen, Cooper Gay Chile specialises in the placement of facultative and treaty reinsurance for industry sectors including energy, mining, public utilities, large industrial and commercial operations.  The 23 strong team also places catastrophe excess of loss programmes.

          The acquisition follows on from the closing of CGSC’s investment agreement with Lightyear Capital LLC (“Lightyear”) in January 2013, under which the New York-based private equity firm along with institutional co-investors took a controlling interest in CGSC. providing CGSC with the ability to continue its growth by acquisition of high quality businesses and teams in the wholesale and reinsurance markets.

          Steve Jackson, Regional CEO for Latin America said:  “Acquiring the remaining shares in Cooper Gay Chile clearly shows CGSC’s continued commitment to growing its business in Latin America.  We have significant development plans for this operation and intend to stay at the forefront of reinsurance broking in the region.

          Toby Esser, CGSC Group CEO said: “Latin America has played a significant part in the development of Cooper Gay since its formation.  We are therefore delighted to be able to secure 100% ownership of our Chilean  business as we invest in the people and infrastructure required to take advantage of the considerable opportunities created by the growing reinsurance needs of its clients.”

          0 1

          Commercial underwriting specialist Evolution Underwriting has made a series of internal promotions headed by Paul Upton who takes on the role of group chief executive officer.

          Karl Flaherty has also been promoted to the newly created role of senior underwriting manager – Trading.  Karl will concentrate solely on new business with a particular focus on larger Property and Casualty risks and professional lines.

          Hannah Forde, who originally joined Evolution as an administrator, has been promoted to the role of underwriter. Hannah will continue to focus on the Southern renewal book as well as supporting the team with wider financial objectives for the forthcoming year.

          Karen Cuffe has taken on a wider role with new responsibilities within Evolution Risk Services for the smooth operational running of the business. This is in addition to her existing portfolio of management accounting work.

          Evolution group chairman Terry Wheatley commented: “Paul Upton has been with the company since its formation and is well known as the face of Evolution in the media and the wider insurance community. In a number of areas Paul has been carrying out many of the duties associated with this role for some time and his promotion recognises those contributions and capabilities. This and these other promotions coincide with a significant plan of growth and development for our business. Once again we have demonstrated our commitment to developing our own people and to promoting them from within the business where we can. I wish all of them the best in their new roles and look forward to working with them to achieve our plans.”

          He added “we are also actively recruiting for our Trainee Underwriter programme which offers graduates and college leavers the opportunity to build a career as an insurance professional supported by Evolution through both training and help with formal qualifications. We will be in a position to announce a new intake shortly”.

          0 3

          Allianz Global Corporate & Specialty Africa (AGCS Africa) has appointed Isaac Mahlangu as the Head of Market Management Africa. Mr Mahlangu is based in the Johannesburg office and will be driving AGCS’ growth initiatives across the region and developing relationships with key clients and brokers. He will report directly to Delphine Maidou, CEO of AGCS.

          Mr Mahlangu has more than 16 years experience in the African insurance market during which time he has built an in-depth knowledge of the sector. His role is to manage and build client and broker relationships across all parts of the business. In addition to this he will facilitate access to the wider Allianz network and promote the company’s global capabilities. Prior to joining he worked for AIG in various roles, most recently as Head of Client Management.

          Delphine Maidou CEO of AGCS Africa comments: “Being able to expand our knowledge and experience is a positive step in our development as a business. With this appointment, and several others that we have made over the past six months we are delivering on the promise we made to our partners of bringing local expertise where they want it. Isaac’s responsibilities will be to build on our market presence and reaffirm us as one of the top industrial insurers in Africa. I know he will deliver this and drive closer relationships with our clients and brokers.”

            0 1

            Xchanging has begun the roll out of free Wi-Fi access in the City of London.

            The first installation at 34 Leadenhall Street will be followed by installations at Lloyd’s and the London Underwriting centre later this year.  Further locations will be added during 2013.  Xchanging is also considering hosting free Wi-Fi in other UK insurance hub cities.

            The service supports Xchanging’s growing mobile applications for the insurance market. However the Wi-Fi service is not password protected and can be used by anyone.

            Xchanging made a commitment to providing City Wi-Fi in February this year at the launch of X-presso. This application 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 due for release also in the second quarter of the year.

            Geoff Kennard, electronic services director at Xchanging said: “The launch of Wi-Fi in the City is an important step to help the insurance market in modernising its processes, while simultaneously maintaining crucial face-to-face contact.  Xchanging is investing in new innovations but it is also investing in existing technologies such as Wi-Fi to help the market make the most of the tools it already has.”

            0 1

            Bluefin Insurance has appointed Tim Philip as interim Chief Financial Officer, subject to FCA approval. Tim will report to Stuart Reid, CEO of Bluefin.

            Tim previously spent over 10 years at Towergate, leading the finance division from its initial launch in 2002. During his time at Towergate, Tim worked on over 200 acquisitions as well as multiple financing transactions, ranging up to £1 billion. Prior to this, Tim worked at Heath Lambert, Benfield Group and PwC.

            Stuart Reid commented: “We are delighted to welcome Tim Philip to Bluefin. Our previous Chief Financial Officer, Robert Organ, has accepted the position of Finance Director, Axa Insurance Commercial Lines & Personal Intermediary, for which we wish him all the best. Tim has a wealth of knowledge and experience of this sector, which makes him ideally suited to work with us and means he can hit the ground running.”

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