Insurance Post

BIA 2015: Insurance Success: looking at the big picture

BIA 2015 - Insurance Start-up

Awards

• General Insurer of the Year
• Underwriting Initiative of the Year
• The Insurance Start-Up Award

Last year produced a mixed bag for insurers, with a tough rating environment and the looming presence of the regulator being marginally offset by efforts to clamp down on a notorious compensation culture. It was against this challenging backdrop that certain firms stood up to be counted.

With it being largely accepted that the benefits of the civil justice reforms introduced to tackle rising levels of fraud had not been fully realised, the race for Downing Street ensured the political will to support both the insurance industry and honest consumers was at its most pronounced by the tail end of 2014.

However, while broadly seen as a positive development, the creation of the
government-backed Insurance Fraud Taskforce came at a time where motor rates had undergone a 13% drop in the space of two years and unprofitability – barring the impact of rising reserve releases – had long since become endemic.

Combine this with the suffocating effect of regulatory red tape – both from Europe in the form of Solvency II’s onerous capital requirements and from the UK’s increasingly tenacious conduct watchdog – and it becomes easy to see that in order to be prosperous in 2014 insurers needed to be willing and able to address the big picture.

Step forward AIG, which – as the winner of the General Insurer of the Year Award – has proved that success is not simply measured on financial performance.

BIA 2015 - General Insurer of the Year

While AIG should take pride in its ability to deliver a 57% increase in new business to £438m, it is the insurer’s efforts elsewhere that served to secure a win in this coveted British Insurance Awards category.

Over the past 12 months, AIG placed strong emphasis on three strategic areas – the London market, portfolio/facilities business and retail specialisms. A testimonial from former Willis deputy CEO Steve Hearn particularly underlined the strides made by AIG in terms of London market engagement.

He said: “In the past 12 to 18 months I’ve seen the relationship between AIG and the London market change to being a much more engaged and collaborative partnership. AIG and the London market share many common attributes – history, product innovation and underwriting expertise.”

However, it was the added element of a customer centric approach and a determination to utilise its diversity and inclusion policy as a means of enhancing the firm’s position in the global market that really caught the eye of the judging panel.

Indeed, these attributes that prompted one judge to sum up the insurer’s award submission as “a year full of significant change and improvements. AIG has fought its way back to be a major player”.

Elsewhere in the market, with major business lines at saturation point in terms of competition, the rating environment continues to show – at best – limited signs of improvement.

While modest rate rises of 2% in motor have previously been predicted for 2015 – an increase that will do little to curb longstanding unprofitability amid a faster rate of claims inflation – the industry-wide combined operating ratio for the home insurance arena is also beginning to show signs it could tip the wrong side of 100% by next year.

With that in mind, the pursuit of more specialist lines of business has intensified – yet many have tried and failed to carve out a successful niche that should stand the test of time.

Not so HSB Engineering Insurance, which has harnessed its expertise to win the Underwriting Initiative of the Year award for its energy efficiency insurance solution.

BIA 2015 - Underwriting Initiative of the Year

With the UK insurance industry preoccupied with negative aspects of the Energy Act 2011, such as moral hazard and rising reinstatement costs, HSB has produced a risk model that enables delivery of project performance cover and measurable credit risk enhancement, benefitting property owners, energy service companies and funders alike.

By combining the firm’s engineering and underwriting capability it has developed an insurance product that has received international recognition from the likes of the United Nations Environment Programme.

HSB identified an insurance opportunity for a product which would act as a catalyst for investment in energy efficiency projects, by developing specialist models to present a realistic picture of projected performance and inherent risks.

Market response following the first policy being bound in January 2014 has been overwhelmingly positive, with former Arthur J Gallagher executive director for major risks Steve Walsham describing the product as “truly innovative”.

He said: “The HSB Energy Efficiency Insurance product is, in my opinion, a
market-leading innovative product. In an industry that, historically, has struggled to deliver true innovation, this product stands out by blending the market standard conventional risks with innovative asset performance protection.”

Meanwhile, for the final award winner in the BIA 2015 insurer category it is a case of ‘if at first you don’t succeed, try, try again’.

Returning a year after missing out on The Insurance Start-Up Award, Bought By Many made a glorious return to the Royal Albert Hall to pick up the very same accolade after presiding over a year of dramatic growth.

BIA 2015 - Insurance Start-up

Since missing out at the 2014 awards ceremony, the firm has grown from 14,000 to 76,000 members, amassed a larger Facebook following than any other insurance intermediary globally, been approached by insurers in China, France, Italy, the Netherlands, and South Africa, and has become directly regulated by the Financial Conduct Authority.

Commenting on how the start-up differentiates itself from the pack, Elaine Dixon, relationship and team manager at Sterling, said: “Bought By Many bring a fresh concept to the way in which insurance is purchased. Their innovative style and marketing expertise means insurance can reach new customers with specific needs.

“Unlike aggregators, Bought By Many understands the risks we like. Better still, they find new customers for us through social media who genuinely value the premium, features and service of our home insurance products.”

Noting the firm’s remarkable progress over the past year, one judge on the BIA panel remarked: “[Bought By Many] has gone from strength to strength over the past 12 months, providing a service with tangible benefits and using technology and web-based services to drive business.”

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