AUGUST 2014 Follow@UKMGAA
to our August newsletter; again, any comments, suggested topics or
ideas on how to improve this would be gratefully received.
~The Editorial Board~
Catherine Bell, Director, MGAA and Chairman, inet3 talks about the MGAA Membership & Benefits Committee
& Benefits Committee focuses attention on all matters relating to
our much valued and ever increasing membership. With 94 MGAs from an
incubator to the established large multi national, the committee is
dedicated to reflecting the needs of all of our membership and factor in
the diversity of the classes of business and territories that are
traded with. Currently our membership criteria means that we can only
consider UK Regulated MGAs who underwrite from
the UK. We are currently reviewing this, with the advent of interest
and applications being received. As a committee we factor in all views
and it is our intention to ensure that members are true MGAs and that
they fit our criteria of having a “primary fiduciary duty” to insurer
partners, rather than to the end consumer. This does not mean that we
are not heavily vested in the needs of the client, and ensuring that the
client is at the heart of the approach of MGAs to their
primarily broker community. We work closely as a team to consider all
aspects of how we as MGAs distribute and underwrite our business and as
a committee we are constantly working to bring together parties in a
spirit of collaboration.
of our key themes for 2014 was to develop nationally our regional out
reach via podcasts of our briefings and by attending a variety of “meet
and greet” events. BIBA was hugely successful this year building on our
awareness and meeting potential new members in person, garnering
opinion, and welcoming comments about our Association. With a new CII
"Off the Shelf “ involvement we are broadening the medium by which we
are helping people understand what MGA’s are and do, and meet the broker
and wider community, by working in conjunction with the CII. Our
podcasts and market briefings account towards CPD hours which mean that
we are integral to the professionalism in our sector, and a recent
Delegated Authority P66 paper as part of the ACII qualifications help to
focus on our sector as part of the educational process. These podcasts
are primarily on the website for our members who cannot make market
briefings, but are keen to derive value and participate. We will also be
attending the Lloyd’s of London hosted Meet the Market event in
Manchester on 7th October as part of this initiative.
committee are always keen to encompass issues which we believe are
topical and relevant relating to MGA’s including applications to join,
TOBA’s, compliance, regulation, conferences and
recently having amalgamated with the Events Committee our busy calendar
of events, market briefings and Capacity Exchange. The
MGAA Membership Committee has a representative for insurers who is able
to add a hugely relevant insight when we are debating issues with an
insurer focus. We encourage contributions and welcome ideas on matters
which are worrying or create concern. One of our key intentions is to
create environments where our members can come together and network,
establish business opportunities and find ways to work together to
benefit our sector and with this in mind our next upcoming major event,
the Capacity Exchange on 10th September, is definitely a date for the
diary. Insurers with capacity and our much valued supplier members all
congregate in one place so the MGA members can establish new
relationships. Of all of our events this is key in bringing people
is made up of volunteer members who are all highly experienced in the
MGA community and have much knowledge and experience with which to
consider the very varied and diverse matters which affect MGAs in this
ever changing dynamic industry.Three of our team are board members and
this is instrumental in keeping our decisions at the forefront of the
direction of the Association.
ask for experts to attend our meetings to gauge feedback which may
be relevant to members and consider ways in which we can
practically assist by cascading the information via newsletters, and at
our very well attended events. We garner supplier members who are of
critical importance to the MGAA. These are businesses with expertise and
knowledge, with a mindset of wanting to be involved and many of these
suppliers sponsor our events such as the very popular and well
attended event at the House of Commons last month. This event, very
kindly hosted by Jonathan Evans MP, was the pinnacle of opportunities to
network in the most auspicious of surroundings whilst enjoying a full
tour of the House of Commons. Feedback from members has been
overwhelmingly supportive and we will certainly consider repeating this
next year. Supplier members are key to what we do and contribute hugely
to our market briefings and provide insight and awareness of key topics
which relate to our businesses. Keeping an open mind to learn what they
can bring to add value is in the spirit of collaboration that we
support. We always like to hear about new innovations and technology so
that this can be shared to benefit all.
meet monthly and our findings and recommendations are fed back to the
bi-monthly Board Meetings in order to ensure that the MGAA is ever
conscious of the needs of members with the decisions we make. We are
here to further the future of our sector by working together.
host for the evening was Jonathan Evans MP – Chairman of the All Party
Parliamentary Group on insurance – who agreed to escort a guided tour
for dignitaries such as Sian Fisher - Chief Underwriting Officer OIM,
Inga Beale - CEO of Lloyds and Nicholas Hales - CEO of R&Q.
the assistance of the staff at the Palace of Westminster we also
organised a series of guided tours of which nearly 140 members joined.
will recall that in February 2014 at our General Meeting Reg Brown was
awarded Honorary Life Membership of the MGAA and we took the opportunity
of presenting Reg with a Certificate to commemorate this award together
with an engraved paperweight.
recognised a number of other members who gave their time and commitment
to the formation of the MGAA. Reg Brown, as Chairman, explained how this
came about and made special presentations to Brian Russell (APC) and Frances de Zulueta (Alpine).
The board also
recognised that in addition to engaging with the steering committee
certain members had continued to play an active part within the MGAA.
Accordingly the following members were awarded the status of Honorary
Members of the MGAA; Sian Fisher (OIM), Charles Earle (Arista), Keith Stern (Lloyds), Ian Barrett (Concise PR) and David Coupe (EC3 Legal).
Sian Fisher (Board Director, MGAA) with Lord Hunt
would like to thank all those that joined us at this wonderful event
and our sponsors for supporting us in the organisation of the evening.
We would like to share with you some of the comments the MGAA received
in praise of the evening.
absolutely splendid evening! It was a perfect setting for the event and
everything was so well organised” (Norman Hughes, Compliance Management
profile event, well attended and said everything about what you and the
team have done and the direction and relevance of the MGAA.” (André
Ford, Nexus Underwriting Ltd)
“It was also lovely to see all the deserving people who have made the MGAA possible receive recognition.” (Paula Doolan, BLM)
On Monday 28th
July we held a market briefing in Lloyds with the tracing office of
ELTO. The briefing looked specifically at the situation of ERN tracing.
Whilst FCA have accepted that the 99% capture rate is unrealistic they
will be looking for “best endeavours”. This position was explained by
the tracing office executives of ELTO at the briefing. Slides of the
briefing are available on our website.
meeting we have obtained the links for the relevant guides that you may
find of use. Included is a link to the Broker Guide should you wish to
pass that on as well as the Employers guide for the end customer.
ELTO often get
asked what format the Employer Reference Number (ERN) takes. From their
discussions with HMRC they can confirm that each ERN is unique to the
employer and will not be replicated. On PAYE records the format for most
numbers allocated since 2001 is ‘nnn/aznnnnn’. ‘nnn’ is the 3 digit
number for the tax office whose catchment area the employer falls into.
‘aznnnnn’ is the ERN, where ‘n’ is numeric and ‘a’ and ‘z’ are letters.
For numbers allocated prior to 2001, the format is ‘nnn/annnnn’ in the
majority of cases.
As previously mentioned the ELTO guides to give further information on the ERN and ELTO in general. ELTO have also produced a guide which can be issued to policyholders to explain why the industry is now collecting the ERN. For added information click here for the ELTO newsletter should you wish to subscribe.
Many of you will be aware of the FCA’s consultation paper CP14/8.
ELTO have responded to the current FCA consultation confirming that at
the close of 2013 the Employers’ Liability Database (ELD) contained some
12 million policy records covering the equivalent of more than 22
million policy years. Though there are still issues with this data
reaching insurers, most of which is captured by insurance brokers, these
figures demonstrate the industry’s determination to make policy data
available for potential claimants to access.
Delegated underwriting in a regulated environment
As has been
identified in our regulatory newsletter there is increased scrutiny over
delegated underwriting from both a prudential risk and conduct risk
perspective. Lloyd’s of London issued their new code of practice for
delegated underwriting in October last year and members will recall
Peter Montanaro’s market briefing in February 2014 [available on
continued its emphasis on strengthening the supervision and management
of all of its cover holders which will include MGAs with Lloyd’s paper.
Areas of FCA concern
director of supervision at the Financial Conduct Authority (FCA),
highlighted four key areas of concern regulators have about delegated
insurers not performing effective due diligence or oversight of coverholders;
coverholders acting ultra vires or in a manner contrary to insurers’ expectations and instructions;
writing business their principals would not or could not write due to
that business being contrary to the principals’ underwriting philosophy;
coverholders not having the requisite ability, expertise, facilities or systems to write the business they are handling.
“insurers must consider whether those to whom they have delegated
authority for underwriting or claims handling are capable of acting in
the manner they expect and have adequate information to ensure that
their agents are acting properly."
So what should MGAs do?
answer is to behave like any other risk carrier working in today's
regulated environment. Being an underwriter, irrespective of whose
balance sheet they are working from, they should be reporting to the
management or board and communicating to their principals on all
significant underwriting MI. This will allow the MGA to demonstrate they
know, understand and are in control of the risks they are writing.
FCA raises conflict of interest concerns
The FCA has
published its thematic review: ‘Commercial insurance intermediaries –
conflicts of interest and intermediary remuneration’. The review focused
on seven large intermediary groups operating in the SME insurance
market and was supplemented by a survey of over 1,000 SME businesses.
Key findings of the review included:
in business models where intermediaries carried out more than one role
in the distribution chain, often exacerbated by lack of segregation
Insufficient control mechanisms and management information on conflicts
A lack of customer understanding on the nature of the service being provided
from the FCA include direct engagement with the intermediary sector, to
enhance understanding of its rules and expectations on conflicts
management, and the provision of further information to SME customers
about their right to receive full commission disclosure on request.
European Insurance and Occupational Pensions Authority
EIOPA issued a
discussion paper in May 2014 looking at conflicts of interest and
proposed amendments to IMD II. Whilst this is nothing new in relation to
conflict management it does seem that the UK market is well ahead of
our European colleagues. However we believe that it is wise to be aware
of what is happening on the European front. This affects our sector of
the market as the discussion paper specifically mentions proposed
amendments to the IMD around Insurers agents being required to act in
the best interest of policyholders.
discussion paper does not mention commission disclosure as it falls
outside the scope there are concerns following the German U-Turn on
We will follow
this as it progresses through the European discussion and keep members
apprised of the progress. If you would like to review the discussion
document please contact Peter Staddon email@example.com
FATCA [Foreign Account Tax Compliance Act]
This issue has been raised by a member who trades in US$. Our Associate partners Grant Thornton have prepared a short article and further information can be found on our website (click here).
Our friends at the
ABI have advised that Brendan McCafferty has been appointed Chief
Executive Officer of Flood Re. Brendan will begin his new role in the
fourth quarter of 2014 and his appointment will be subject to further
regulatory approval as part of Flood Re’s authorisation.
Brendan has over
28 years’ industry experience across insurance, broking and consulting
and has worked for leading brands including Aviva and RSA. He was
formerly UK President of global insurance broker, Willis. Our
relationship with ABI in regard to Flood Re continues.
The Law Commission
Many of you will
have seen that there is currently a paper going through the House of
Lords regarding Insurance contract law. At the MGAA Board meeting in
March we were joined by the Law Commissioner, David Hertzell. David
outlined his view on the Commercial Insurances Bill which was similar to
the Consumer Insurance Act passed last year. Further details are below
Report on Insurance Contract Law
The Law Commissions have published their second report on this project, Insurance Contract Law: Business Disclosure; Warranties; Insurers’ Remedies for Fraudulent Claims; and Late Payment(Law
Com No 353; Scot Law Com No 238). The report includes a draft Bill
which would implement the recommendations. Further information is
available at: http://lawcommission.justice.gov.uk/areas/insurance-contract-law.htm.
majority of the Commissions' recommendations are included in the
Insurance Bill presented by Government to Parliament under the special
procedure for Law Commission Bills. The Bill also makes amendments to
the Third Parties (Rights against Insurers) Act 2010, so that that Act
can be brought into force.
The Insurance Bill and accompanying Explanatory Notes will be made available on: http://services.parliament.uk/bills/.
The Bill does not
include our recommendations on late payment, or those concerning
warranties or other terms relating to particular descriptions of loss.
The Government did not consider these provisions to be sufficiently
uncontroversial for the procedure at this time, but has asked the
commission to continue to work on solutions to be introduced at the next
The executive summary of the Commissions' report identifies how our recommendations are included in the Insurance Bill currently before Parliament.
Law Commission | http://www.lawcom.gov.uk
Scottish Law Commission | http://www.scotlawcom.gov.uk
Conduct & Ethics Committee
At the last
C&EC Duncan Minty, market specialist on business ethics, joined the
meeting and explained how MGAs can manage and improve their own conduct.
Duncan identified 4 key areas being
emerging across the product life cycle (policy design, pricing, claims,
complaints, whistleblowing); puts pressure back on management oversight
of key ethical issues; tough for MGAs in their 'agents of carrier'.
Conflicts – on the FCA radar; expected to be better managed; focus not just on disclosure but on mitigation as well.
Consent – central
theme of add-on thematic review; complex, not well understood, but
proximate cause of much detriment down the delivery chain.
Inducements – focus of review in long term market, but FCA will apply lessons learnt to general market.
Watch out for a market briefing late 2014 or early in 2015 in the Old Library at Lloyds.
IT Forum – “The Cloud”
One of the 4
members' only forums run by the MGAA is on IT. All too often we see the
words that our IT is “in the Cloud”, but what does that actually mean.
Member of the IT forum, Michael Dear [Collegiate Management Services]
has prepared a paper which explains what this means and how it affects MGAs.
Why use Twitter
The MGAAs public
relations partners Concise have explored the use of twitter and confirm
that with over ½ billion users worldwide, it’s not surprising that
Twitter is no longer the preserve of the big brands. Businesses all over
the world in many different commercial sectors are embracing it to
reach and communicate with their existing customers and to find new
the insurance market has developed and thrived on the strength of
relationships, it’s no surprise that Twitter can be an important tool in
maintaining and building partnerships, in a relatively cost-effective
In some respects
Twitter is like a networking event. But rather than having to work a
room of lots of potential contacts to find one or two that might be
relevant to your business, it provides the opportunity to identify and
communicate with many businesses without the leg work, refreshments and
need to travel from your desk!
require commitment and maintaining a presence is a key part of using it.
It must also be able to demonstrate a return on any time investment
made in it. Knowing your audience, what they are interested in and want
to hear about are very important for delivering Twitter success and
There are also
reputational matters to consider particularly around who is able to use
and who monitors a Twitter account, as well as staff using their own
personal accounts in work time. A specific social media policy needs to
be drawn up and in place to provide the parameters and guidance on using
The effective use
of Twitter can help build awareness and understanding of your business.
You can participate in discussions relevant to your business lines or
areas of expertise. You can find out what other industry experts and
leaders are talking about and respond to them. Most importantly, you can
communicate directly with large numbers of likeminded individuals and
businesses to drive growth and sales.
Is it time your business joined the fast growing band of insurance Tweeters?
Alex Wise is a director of Concise PR (www.concisepr.com).
John Needham and John Perry have written a technical briefing regarding Income Recognition for
MGAs. This followed their successful market briefing which was held in
the Lloyd's Old Library on the 10th June 2014. This briefing has been
pod cast and is available from our website.
One other issue
raised at the market briefing related to Application Note G to the FRS 5
form. John Needham has issued a confidential guide and copies can be
obtained by contacting the MGAA firstname.lastname@example.org
Keycare has locked a deal with Suffolk Constabulary with a 500 per cent increase in customers over the last 12 months.
breaking SAFEkey lost key recovery and key registration service provides
residential and business owners protection and assistance if they lose
keys – enabling police to access unattended property in the event of an
Launched in 2012,
the unique safety scheme has been taken up by thousands of people – as
reinforced by the fivefold surge in members when compared to the same
period last year. It was showcased by Suffolk Constabulary at this
year’s Suffolk Show, which attracted over 70,000 visitors, including
recovery and replacement for any type of keys attached to a Keycare fob,
including both personal and business keys, up to £1,500. There is a 24
hour emergency helpline, 365 days a year and access to a nationwide
network of locksmiths.
For further information http://www.keycare.co.uk/ or https://bdaily.co.uk/technology/01-07-2014/security-proves-key-to-500-per-cent-growth-of-pioneering-scheme/alternatively call 0845 303 0550.
MGAA – On the Road
On the 24th
June Peter Staddon, Managing Director, and Jane Comerford, General
Manager, spoke at the Leeds Town Hall to the local Insurance Institute
of Leeds. Attended by in excess of 70 local institute members, Peter
explained about MGAs and how they interact with the market. The meeting
concluded with Peter and Jane hosting a coffee meeting in a local hotel
where we were joined by interested parties.
Further dates are being agreed and we will shortly be attending meetings in
London, Manchester, Chelmsford, Cambridge and Cheltenham
For further details or to join Peter and Jane please contact email@example.com
Meeting with FCA – 1st October 2014
We have been able to secure an open door meeting with the regulator. The current date is the 1st
October 2014 and will be held at Canary Wharf. At present we are
advised that this meeting will be limited to 100 but we are awaiting the
actual time of day. Please put this date in your diary and look out for
London Market Claims 2014 - 16th October 2014
The London market claims event is being held on the 16th October and is dedicated to improving claims performance for policyholders. http://www.the-insurance-network.co.uk/lmc14.aspx
brings together the entire value chain, including insureds,
underwriters, MGAs, reinsurers, brokers, claims adjusters and other
service providers - to benchmark and share knowledge and expertise.
This year there’s
more discussion time to tackle the practical issues, a stronger focus on
pre-placement and more client/risk manager perspectives, as well as a
keynote from Dominic Christian at Aon and the results of exclusive
research from Gracechurch Consulting.
Register before 15th Aug with the code MGAA14 and receive 20% off the registration fee. Plus book 2 delegates and the third comes free.
Cyber Risks – Does perception reflect reality? – 11th September 2014 15:30pm – 17:30pm
Cyber Risk and
associated regulatory scrutiny is growing exponentially across Europe.
A successful cyber-attack could cause significant financial,
operational and reputational harm to a targeted company, and potentially
also to the organisations and individuals that the company does
For Managing General Agents the importance of understanding the nature of cyber-threat is two-fold;
information risk practitioners must appreciate the level of
preparedness needed to mitigate and combat such events, while brokers
and underwriters must appreciate the full extent of the risk and
exposure in order to place and write business effectively.
BNY Mellon is a
Global Systemically Important Financial Institution (G-SIFI) and Lloyd’s
have created this symposium to bring together all those in the Lloyd’s
market with a vested interest in understanding and managing cyber-risk.
To join and hear
industry experts explain new cyber threats, regulatory concerns, best
practice behaviours, and cyber-attack examples:-
The Old Library at Lloyd’s, 1 Lime Street, London, EC3M 7HA
To reserve your place email Kate.Anderson@bnymellon.com
For those of you who missed our compliance newsletter you can access this from http://iual-mgaa.informz.ca/iual-mgaa/archives/archive_437290.html
Financial Ombudsman News
The Ombudsman newsletter 117 was issued on the 24th
June, 2014. Although it is looking at health care and PPI we can draw
some conclusions as to how they will view similar situations which
relate to general insurance issues.
Information Commissioner Newsletter 2014
commissioner has issued their July newsletter which can be accessed via
the following. The newsletter looks at data protection authorities
responding to complaints.
Ordnance Survey have recently issued a news round up in their newsletter. A copy can be downloaded fromhttp://response.gv-c.com/Mail/View/144?a=019DD267FDEAA084C0BF582409D3BDAA&r=25124526267C34D22484C2BEC8DCBBF3&t=