IRL Preview – March 2019

IRL Preview – March 2019

 

Subscribe to the Insurance Research Letter here. Each issue has topical articles written by experts that you won’t read anywhere else. Stay current with major developments with our Global Briefs; monthly Synopsis of insurer and broker news; and the popular Back Page with all sorts of non-insurance fun and interesting subjects.

Highlights

Britain’s Ongoing National Humiliation
Britain’s Ongoing National Humiliation is Prime Minister Theresa May. Throughout the Brexit project she has shown herself to be an ineffective salesman, a poor public speaker, deaf to advice, terrible at delegating and lousy at appointing Brexit negotiators. The situation is a mess. Following on from David Cameron’s miserable pleas to the European Union for changes to the rules for Britain, the country lurched into the Referendum in 2016. Since then the EU has… read on page 10

IRL: Click on this link for a hysterical SNL-type look at Brexit for Americans

Attractive Target Group
The Rising Middle Class in China and its Implications for Insurance and Reinsurance
Middle-Class Society China: Insurers and Reinsurers are facing big Opportunities and Challenges
China has become a superpower economy in the world. The industrialization and increased domestic and international trades have supplied large numbers of people with a disposable income with which they can be considered as a middle class. The implications of the rising middle class are tremendous, as it will dictate the directions of companies’ success or failure. Knowing the huge and attractive customer base is an advantage when offering them insurance products and services. The insurance and reinsurance markets must grow with this opportunity and minimize the risks that have recently emerged. The following implications…read on page 11

Leveraging the Power of Networks
While the Japanese insurance market is currently still stable and profitable, it offers only limited growth opportunities as the shrinking population negatively affects premium income in almost all insurance classes. While expansion into new intangible risk classes such as cyber insurance or digitalization initiatives still offer leeway for potential domestic growth within Japan, there is no doubt that the future of Japanese insurers lies abroad such as in growth markets in Asia-Pacific where premium growth rates…read on page 15

Brexit – IRL, February 2019

Brexit – IRL, February 2019

* One Star Missing

A Brexit of illusions

By David Worsfold

Brexit is everywhere. In the UK you cannot escape from it. Brexit dominates the news, the whole political system is consumed by it, it is top of boardroom agendas and it is the most frequent topic of conversation wherever you go. Even though some families and friends try to avoid discussing it – for fear of falling out – Brexit still looms large as the grim elephant stalking the room.

There is an increasing sense of desperation – or is it despair – as the country hurtles towards the EU exit door. Endless scenarios are mapped out which will either see the UK propelled firmly through that door on 29 March, find the departure delayed for months while something – no-one knows what – is renegotiated, or even see Brexit cancelled. This latter scenario is looking increasingly unlikely.

Some of the scenarios have entered the realms of fantasy, and our politicians are not immune on that count.

In one night at the end of January they managed to vote to send Prime Minister Theresa May back to the negotiating table with a mandate to renegotiate one part – the Irish border – of an agreement that MPs (Members of Parliament) rejected by an unprecedented 2 to 1 majority just two weeks earlier. That same night they narrowly voted to against a no-deal Brexit. Yet, the chances of persuading the EU to change an agreement it took months to negotiate are not promising, which means the UK Parliament either accepts the original deal or leaves on 29 March with no deal. They voted for an illusion, not a reality.

The day after that vote, British businesses, including the insurance and financial services sector, were unanimous in saying they were re-doubling their planning for a hard – no deal – Brexit on 29 March. They could see what the politicians were blind to: by voting against May’s original deal, against a no deal but for a renegotiation that the EU has already rejected, they had actually made a no deal Brexit more likely.

The insurance industry, along with the entire valuable service sector, has never been part of Prime Minister May’s deal. 80 percent of UK GDP is excluded from it.

What the abandoned service industries have been hoping for is a two to three year transition period following Brexit during which a new relationship with the EU can be worked out. For them all the talk about trading on World Trade Organisation terms is another irrelevant illusion. The WTO is just about tariffs while trading with the EU is about regulatory alignment.

If the UK insurance industry wants to maintain a smooth relationship with its European clients two priorities have to be addressed. Firms can re-domicile large parts of their business into new EU subsidiaries and many are already doing this with Dublin and Luxembourg as the top destinations. For those who need to maintain cross-border relationships they also need UK regulations to stay in line with European regulations. Their hope was that this could be worked out during the transition period: a hard Brexit with no deal jeopardises that.

The alarm bells started ringing even louder at the end of January when the powerful Treasury Select Committee of MPs announced that it was going to look at how UK financial regulations could be varied after Brexit.

Launching the inquiry, Nicky Morgan MP, chair of the Treasury Committee, said: “London is the world’s premier financial centre, and many of us want to keep it that way.

“Brexit will have a significant and long-lasting impact on the financial services sector, including the insurance, retail banking and asset management sectors, in the UK, the EU, and potentially the rest of the world.

“The UK may converge, seek equivalence, or diverge from the EU. As part of our new inquiry, the Treasury Committee will examine the risks and rewards of each of these choices.

“We’ll also explore the opportunities outside Brexit, such as fintech, on which we should be capitalising.

“After we’ve taken evidence from industry, regulators, ministers and officials, we’ll make a series of recommendations to the Government and regulators about what it should prioritise in negotiations with the EU and the rest of the world.

“We’ll also seek to conclude whether it would be in the long-term interests of the UK to align closely with EU financial rules, or to forgo financial services trade with the EU and pursue trade with other third countries.”

That last sentence is the sting in the tail. It is precisely what insurance company bosses fear, the illusion that by deviating from the narrow path of equivalence with the EU there is a new world of yet untapped trading relationships that will be opened up.

The crisis over Brexit is unprecedented and has been made worse by the woeful inadequacy of British constitutional precedent to cope with it. The UK is a representative, Parliamentary democracy but the referendum was an exercise in direct democracy. That put Parliament on a collision course with the people. Our unwritten constitution and the arcane precedent-based rules of Parliamentary procedure have both been exposed as not fit for purpose. That, above all, is why it is so hard to predict where we will be at 11pm GMT on Friday 29 March 2019.

IRL Preview – February 2019, Brexit articles

IRL Preview – February 2019, Brexit articles

Subscribe to the Insurance Research Letter here. Each issue has topical articles written by experts that you won’t read anywhere else. Stay current with major developments with our Global Briefs; monthly Synopsis of insurer and broker news; and our popular Back Page with all sorts of non-insurance fun and interesting subjects.

IRL February 2019 Highlights

The UK’s problem with Brexit is Theresa May herself

Having suffered two humiliating defeats in Parliament, the UK prime minister is displaying a suicidal inability to learn from all the signs that she will be unable to deliver a Brexit plan which both the EU and the UK can agree upon before the 29th March. Read more on page 12

The Great Online Data Scramble

We used to think that databases would solve all of our problems by keeping information about people organized and categorized. And for a while it did work that way—paper files became digitized, scattered data collated, and duplicate files were slowly weeded out until… read on page 10

Is insurance the new frontline of activism?

With some global insurance companies publically backing populist campaigns, we explore whether the insurance industry has become the new front line of ethical business protestation.

In the past, passionate lobbyists would use shareholder meetings to try to protest against a company’s direction. More crudely perhaps they would even camp out at a corporate headquarters with chants and placards in an attempt to draw media attention to their cause. In recent years, however, a new target has emerged for the protester. The insurer. Read more on page 11

A Brexit of illusions

Brexit is everywhere. In the UK you cannot escape from it. Brexit dominates the news, the whole political system is consumed by it, it is top of boardroom agendas and it is the most frequent topic of conversation wherever you go. Even though some families and friends try to avoid discussing it – for fear of falling out – Brexit still looms large as the grim elephant stalking the room. Read more on page 12

IRL Preview – January 2019

IRL Preview – January 2019

To learn more about subscribing to the Insurance Research Letter email us. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

IRL January 2019 Highlights

What DARPA Technologies can offer the Insurance Industry – In the last decade, many of the giant humming brains of technology have migrated to government projects for the Defense Advanced Research Projects Agency (DARPA) because the work there has been super fun – their instructions were simply “build whatever massive tool you want to, and then turn it over to our analysts to use or not use as they choose.” Page 10

2018 – A CrisisRisk™ Year in Review – In reviewing 2018 critical incidents, critical events, disasters, and crises, it is clear that the ability to identify and control those events before escalation into a crisis is essential. Understanding each event’s CrisisRisk™ potential, the preparation required, and the responses needed, empowers leadership. Page 10

Globalization has not reached its peak – An interview with Coface CEO Xavier Durand who speaks about the impact of sanctions and trade wars on credit insurers on page 13

Read about the Consequences of Brexit Deal Rejection for U.K. Insurance Market on page 13

IRL Preview – December 2018

IRL Preview – December 2018

Subscribe to the Insurance Research Letter here. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

December Highlights

I Still Hope

It seems that hate has been with us since men first marked a few signs on clay tablets, thousands of years ago, to commemorate kings, business deals, and wars. Should we fight hate? Definitely yes, to protect our offspring, neighbors and ourselves, and also those who disagree with us. Page 12

US Tax Reforms – Impact on Bermuda Update

Bermuda has long been an attractive jurisdiction for financial services. The obvious reason for this is a beneficial tax regime, but that is not the only reason why organisations establish or do business on the island. Page 13

Making an M&A Match

Learn Why Company Culture is Key to Success – Mergers and acquisitions offer a strategic opportunity for a business to thrive. The right deal can enhance an already strong brand, open new markets, and bring together leaders who can multiply each other’s growth. It can give talented individuals the chance to succeed in a larger environment and maximize their expertise in innovative ways. Page 14

Crisis Stress: Part 4 – Concentration, Memory and Focus

In the first three parts of this short four-part essay series, I briefly summarized some of the ways in which a crisis affects people in terms of physiological reactions including the Acute Stress Response (ASR) and some (but not all) of the various psychological and cognitive effects of such stress on crisis mangers and their performance. In this fourth and final essay in this series, I will cover some of the recent research on diminished memory and recall abilities rising from acute stress factors during crises. Page 14

Customer/Prospect Data Warehouses – Buy, Borrow or Build?

We are now in the rosy afterglow of InsureTech, and Insurance technology themes have surfaced. AI data warehousing to more closely understand their current clientele appears to be an industry-wide initiative. We love data warehouses and the customer insights that can be generated from querying the data. No question. Page 16

Are You Prepared For An Active Shooter Event At Your School?

We have not had a child die in America in a school fire in over 50 years. Unfortunately we cannot say the same for violence. What should schools do to increase security and safety? Every individual in any organization must be trained and know what decisions to make, and when. Page 16

The Future of Insurance, and How Insurance of the Past Has Failed Us

For most of us, our home is our largest purchase and shelters our prized possessions. But a home is more than that. It’s our safe place, where we can be ourselves; the feeling of comfort when you come home from a long trip; the sound of children’s feet running to meet us at the door when we get home. Page 17

IRL Preview – November 2018

IRL Preview – November 2018

Subscribe to the Insurance Research Letter here. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

Highlights November Issue

Crisis Stress: Part 3 – How and Why A Crisis Affects People
In this four-part essay Dr. Chandler summarized some of the ways in which people, including the crisis manager, are affected by a crisis in terms of physiological reactions, touching upon the Acute Stress Response (ASR). In this part 3 essay, he will cover some (but not all) of the various psychological and cognitive effects of such stress. Page 12

Training for Bomb Threats and Suspicious Package Detection
Many organizations consider this type of threat as extreme but may not fully appreciate the danger because they believe it won’t happen. However, consider that between September and October of this year there have been 31 events which involved an IED and 87 events that were either suspicious in nature, threat call or a hoax (faux IED device). Page 14

Brown & Brown Enters Into Agreement to Acquire Hays Companies
Brown & Brown Insurance has been aggressive in its growth this year (19 deals with total annualized revenue topping $95M). Now the company is making history with its latest move. On October 22, 2018 Brown & Brown announced it had reached an agreement to acquire Hays Companies insurance operations. Page 13

5 Ways to Survive an Active Shooter Event
Read this Q&A with Former Secret Service Agent Jason Russell on page 15

Brexit …. bah!
When Theresa May said, “Brexit means Brexit” more than a year ago she did not know what she was talking about and she still doesn’t. Britain stands to lose more than it gains. Closed borders and trade barriers with 27 former friends vs. tangled financial cooperation and on-going frustration with international bureaucrats. Page 17