MANAGING DIRECTOR’S REPORT
Just like the Paul McCartney record – another year over and a new one begun – but where has that year gone. It seems only a short while ago that we penned the newsletter to advise members of the previous 12 months and now here we are again.
So, as we rapidly approach the end of 2017 it is interesting to look back over the past 12 months to review our achievements. Our Chairman, Charles Manchester, outlined the association’s 5-year business plan during his opening address at our conference in July. To read more click here.
I am pleased to report that the association continues to grow and our MGA members now total at 132 MGAs who, between them, are writing just under £4 billion in gross written premiums. 36 Market Practitioners and 52 suppliers also support us. In total, we now have 220 members. We are also able to report on another successful year and this could not have been achieved without the unconditional commitment we receive from our Board, the standing committees and of course our members. I wish to thank the Board, all of the committee and forum members for all their hard work and support over the past 12 months and we look forward to building upon this in 2018.
I remind our MGA members that we are in the process of electing 3 directors to represent your interests on the MGAA board. Nominations have now closed and the election will take place early in January. This is your chance to select a fellow MGA to represent you and to take the association and members’ interests forward on the board.
Over the past 12 months we have continued our engagement with:
The All Party Parliamentary Group on General Insurance
The Department of Transport
The HMRC/Treasury IPT and VAT liaison group
Lloyd’s of London
The American Association of Managing General Agents
The Underwriting Agencies’ Council of Australia
The London Market Group on new market initiatives
We have also been working with other European associations such as EIOPA and OECD to ensure our members’ voices are heard and that the importance of MGAs in the UK insurance market has not been overlooked.
Brexit has been one of our major focuses in 2017 and under the chairmanship of Mark Birrell, Chair of LRC, and aided by David Coupe, we have formed a group of interested parties into a subcommittee. We have also run a “Shape & Share” workshop for members and will be putting together a new workshop in the New Year – So watch out for information on this in January. Irrespective of whether you are transacting European business from the UK, Brexit will affect many members, especially in relation to the “Passported” in insurers, so we are seeking clarity from Treasury, PRA and the FCA. Don’t forget we are writing policies in 2018 that could straddle the March 2019 date.
Our Brexit committee and workshop meetings have benefited from expert presentations and our thanks go to Hayley Spink and the team at Lloyd’s, as well as Helen Dalziel of the IUA who have been great supporters of the MGAA at these meetings.
We continue to work closely with the FCA, engaging on the thematic reviews for IDD and the SM&CR consultations. It is vitally important that the voice of MGAs is heard and I would encourage you to be reactive to any call for evidence we may request. After all, the regulator cannot understand your specific issues without you relaying them to us for inclusion within our submissions.
Our thanks goes to Norman Hughes who is a regular attendee of our LRC and Compliance Forum. Norman also puts together the monthly Compliance Newsletter and if you do not receive a copy of this important document then I would encourage you to sign up and suggest to your fellow colleagues they do likewise.
On the 2nd October, we held our annual “Open Door” meeting in Lloyd’s with the FCA. Over 140 members registered to attend and we were able to pose specific questions to the FCA senior supervisory staff on issues that you felt were of great importance. I would like to extend my thanks to David Coupe, EC3\Legal, who chaired this meeting on behalf of the MGAA.
In July, we held our third annual conference and over 630 members and guests registered to attend. We have started to plan our 2018 conference, which will be held at a new venue, The Hilton, Bankside, on Thursday 12th July. Please ensure that you have this date in your diary. We will send further details of the programme and discussions taking place.
Jane, Teresa and I would like to wish you a Happy Christmas and a prosperous 2018.
American Association of Managing General Agents [AAMGA]
Earlier this year, the MGAA board met with Bernie Heinze, Executive Director of AAMGA and their President Ed Levy RPS; together with the Incoming President Corinne Jones. The MGAA and the AAMGA have met regularly and are in contact with regards to important issues that affect the UK and the US market.Following the merger of AAMGA and NAPSLO, the new organisation is WSIA. Brady Kelly, the new Executive Director, and Corinne Jones will be meeting the MGAA Board when they visit London in the New Year.
As members are aware there was an announcement in the Autumn statement that IPT was, yet again, going to increase. A representative of the MGAA sits on the HMRC/Treasury IPT & VAT liaison group and whilst we were disappointed that the rate was increasing we were pleased to see that representation made to Treasury, via this group, had seen a longer lead in time before the increase takes effect. We continue to attend this liason group to represent members’ interests.
IDD and IPID
There is still some confusion with regards to the implementation date of the IDD. However, at the time of writing, we can now confirm what the IPID will look like and members are recommended to contact their capacity providers to ensure they are in receipt of the document requirements.
In the FCAs’ Policy Statement PS 17/27 it states on page 34 that “the information to be included on the IPID includes the start dates of the contract” – it clarifies this in the following paragraph “For example an IPID could state …This cover lasts for one year and the dates of cover are specified on your policy schedule”.One of the major uncertainties about this new EU directive was that the EU Commission and parliament had received representation for the EU member states to delay implementation until 1st October 2018. However, if this is to be achieved then there are 3 distinct committee stages to go through. The word from Europe is that even if there are no challenges at any of the 3 committees the earliest date for ratification of the datechange would be the 28th February – 5 days after the current implementation date.
A statement from the FCA on 21st December stated:”The European Commission has announced (link is external) a proposal to push back the application date of the Insurance Distribution Directive (IDD) by seven months to 1 October 2018, following requests from the European Parliament and Member States for a postponement.
Member States (including the UK) will still be required to transpose the IDD into national law by the original date, 23 February 2018. However, under the current proposals, firms will not be required to comply with the IDD until 1 October 2018. The European Parliament and the Council will need to agree and confirm the new application date in an accelerated legislative procedure.”
FCA announce their next Live & Local program
FCA have confirmed their “Live & Local” workshop and roundtable dates for the first half of 2018. Places can be booked on the FCA website here.
The FCA latest Regulatory Round Up has information on general insurance such as Wholesale Insurance Broker market study, IDD, Lifetime Pet Insurance, Insurance Linked Securities, Client Assets and Live & Local. Also cross-financial services pieces (but very relevant to GI) on FSCS Funding, Appointed Representatives, Digital Comparison Tools, Complaints Data and Our Future Approach to Consumers.
Modern Slavery Reporting
Following the 2015 Act, members Weightmans have provided some information which MGAs, their clients and policyholders should be aware of. This statute was enacted to enlist the support of the UK’s largest commercial organisations in the fight against slavery and human trafficking. It is a very modern piece of legislation in that it harnesses the power of the internet and its access to public scrutiny to combat this extensive problem, with estimates suggesting that nearly 40 million people worldwide are enslaved.
To read more about this Act, click here.
Ethics training has to be a big priority for MGAs in 2018
The importance of ethics training in the industry is going to soar over the next three years and when we say soar, that’s no exaggeration. Insurance professionals are going to be weighed-up and tested like never before. There are three drivers to this.
Firstly, new regulations coming out in 2018 will reinforce the importance of ethics in how individuals and firms should operate in regulated markets.
Secondly, those same regulations will introduce both much clearer individual accountability within regulated firms and an organisational map detailing which individuals are responsible for particular regulated activities.
Thirdly, the FCA is moving forward with its use of data driven tools like machine learning to identify trends and pockets of misconduct
Read more from Duncan Minty here.
Insurance Business MGA 5 Star survey
In the next issue of Insurance Business UK, brokers have an opportunity to speak their minds about their MGAs performance by taking part in its annual Brokers on MGAs survey.
The broker community has been asked to give feedback on their MGA’s performance in a variety of areas, such as underwriting turnaround time, claims support, pricing and more. By rating as many as three MGAs, brokers have an opportunity to share which qualities they consider most important in a MGA, while letting their MGA partners know how they can improve the Broker/MGA relationship.
MGAA full members have the opportunity involve their broker partners by encouraging them to take the two-minute survey. Feedback will shape the findings of IBUK’s report, due to come out in early 2018 – showcasing which MGAs received the highest ratings, and highlighting the next steps for them to take. Deadline for Brokers to complete the survey is early January 2018
PKF Littlejohn – VAT update
Change in the treatment of pension fund management services by insurance companies, recovery of input tax on infrastructure work, charities and Making Tax Digital plans, cost sharing exemption not applicable for financial services and insurance sectors, application of the VAT zero-rating for charitable buildings, VAT at standard rate applied to conversion works on mixed use properties, radical changes to VAT system proposed by European Commission – to download their newsletter, click here.
Members DAC Beachroft recently hosted an MGAA market Briefing on GDPR. Their presenter, Jade Kowalski has agreed to write a Top 10 Tips for distribution to the MGAA membership. Meanwhile The General Data Protection Regulation, which comes into force on 25 May 2018, represents a seminal moment in the history of European privacy rights and data protection. The Regulation ushers in significant financial sanctions, rights of compensation and group litigation mechanisms.
During the past 18 months, DAC Beachcroft has conducted a study into how these GDPR measures will change the compensation and regulatory sanctions regime across Member States. Contributions were obtained from data protection experts across all 28 Member States. The report offers insights into which European countries will face the greatest changes as a result of the GDPR. The report also reveals that over 80% of countries expect compensation claims for data protection breaches to increase from May 2018. Click here to download a copy of the report.
Members BLM have issued a paper on Product Liability in a post Brexit entitled, “Legal unpredictability and technological challenges” it explores how insurers underwriting product liability and recall risks face an unpredictable future. In addition to uncertainty as to the post-Brexit legal framework, rapidly changing technology is transforming every product sector and throwing up new insurance and legal challenges. The recent roundtable Global Insurance Law Connect member firm, BLM, hosted in conjunction with the London Market Claims Club (LMCC) considered both the potential issues raised by Brexit for product liability insurers and also the legal framework struggling to keep pace with technological change – is the law still fit for purpose – To read more click here.