June 1, 2020

May Insurance Insights

May Insurance Insights can be separated into two distinct categories. Firstly, the challenges and issues driven by COVID-19. These are the news items that probably attract the most attention. It includes news of expected losses. In fact Lloyd’s of London predict $200B loss for Insurance Industry. Pretty eye-watering numbers.

It is certainly not all doom and gloom though. ‘Business as usual’ activities make up the second category. Although these may not attract the emotive headlines, they certainly act as proof that the insurance market remains robust, innovative and continues to plan for the future.

Central issues from COVID-19

Support from Insurers

As we started the second full month of lock-down, the Financial Conduct Authority (FCA) called for Insurers to introduce measures for customers who were struggling financially. One recent notable example comes from LV with an offer of premium reductions. Reports of Zurich premium flexibility had been released earlier in the month. Zurich had already revealed a £2 million package to support charities.

Insurers face challenges over business insurance policies.

There has been a proliferation of articles on this subject from a multitude of publications.  Big Hospitality reported “Insurance Action group prepares to challenge Aviva and QBE” , in connection with the Hospitality industry. The dissatisfaction from the hospitality industry was also covered in detail by Forbes in Beer Industry slams ‘frankly deplorable’ response to insurance claims . Reporting on separate action, Law 360 UK declared Edwin Coe Forms 2 Biz Interruption Groups For COVID Claims. Roger Franklin, head of insurance litigation at Edwin Coe is quoted saying: “Unfortunately, in many cases claims have been denied because of arguments based on ambiguous policy wordings and weak legal precedent…” On the other side of the argument, Insurers say Business Cover not designed for this crisis. This continues to be a hugely emotive subject on both sides, so much so that the FCA have waded in.

FCA High Court Test Case over pandemic Business Interruption (BI) cover

The FCA is taking pro-active action as a result of the increasing number of challenges faced by individual insurers from various action groups, as reported above. Details can be found in the article The FCA Seeks Court Review in July to Resolve COVID_19 Insurance Dispute.  The Regulator has called for the market to submit details of policies for possible inclusion in the test case. Having reviewed 500 relevant policies from 40 insurers, the FCA have named 16 Insurers affected by the BI Test case.  Of these, eight are named that have agreed to participate in the High Court case.

Future provisions for pandemic insurance

The Association of British Insurers (ABI) believes the Government should offer a ‘significant level’ of support to ensure pandemic insurance is affordable for small business in the future. The article Insurers want Government support on affordable pandemic cover includes this quote from ABI’s director general, Huw Evans. “For such insurance to be affordable to [small and midsized enterprises] that would likely require significant levels of state support.”

 Building insurance for the future

Investment in insurance

  • Global insurtech investment: Unsurprisingly, Willis Towers Watson reported Insurtech Investment falls amidst Covid-19 pandemic. However, it is by no means a negative report. Indeed, the Global Head of Investment at Willis Tower Watson had positive news for the future. “Despite the very large percentage drop this quarter when compared with the last, we are still seeing a huge amount of activity in early-stage funding rounds, across a very large number of deals.”
  • By Miles: By Miles, the UK based pay-by-mile car insurance provider, raised £15 million in Series B funding
  • Urban Jungle: In more good news for the UK insurance market, Urban Jungle attracted £2.5 million of extra funding. The company provides insurance designed for ‘Generation Rent’ and Millennials. Their CEO Jimmy Williams summed up the company aspirations… “We are on a mission to bring transparency to the market, abolish hidden fees and enable the people who need it most to gain insurance. The industry is still operating with a model that was out of date years ago. It’s time to shake things up.”
  • Bikemo: A cycle insurance specialist has received £18 million in Series A funding. Bikemo, based in North Wales, is focussed on effective use of technology to support cyclists.
  • Bought by Many: The London based pet insurer raised £78.4m in equity funding. The company intends to use the funds to continue to expand its business reach in UK and abroad following their launch in Sweden.

Building the future for insurance

 Mergers and Acquisitions

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