MGAA Newsletter – May 2017

Dear Colleagues,

Welcome to the second MGAA newsletter of 2017; and what an interesting 5 months it has been, what with the UK general election being called and the bombshell regarding the discount rate, but more about that later.

Have you signed up yet for the 2017 Conference?

Alongside the ever popular Capacity Exchange, this year there will be two exciting panel debates and we have a great line-up of speakers.  The 2017 Conference and Capacity Exchange will take place on Tuesday 4th July at the Grange Tower Bridge Hotel.  For further details and to book, click here.

The MGAA are pleased to announce the 2017 Annual Sponsors

Principal sponsor is Tokio Marine Kiln, the leading international specialist insurance business; ArgoGlobal, the Lloyd’s insurer and member of Argo Group; ERGO, one of Europe’s major insurance groups; BLM, a leading insurance and risk law specialist; and Arch Insurance Company Europe, a specialty lines Lloyd’s and London market insurer.


The Insurance Charities
The MGAA and its members are active supporters of numerous charities. As MD of the MGAA I sit on The Insurance Charities board and evidence the enormous amount of work the charity undertakes on behalf of members of the insurance industry, and their loved ones, who have fallen on hard times or suffered illness or disease.  Read more about The Insurance Charities work in their newsletter.

Tokio Marine takes a haircut
Members of Tokio Marine Kiln (TMK) are raising funds “as a team”, which hopefully will bring a smile to your face, but at their expense. Some of you will be aware, insurance dignitaries are raising funds for a cancer charity called St Baldrick’s by shaving their heads.

As we don’t have St Baldrick’s in the UK, TMK have selected the Teenage Cancer Trust as its nearest equivalent. Around seven young people aged between 13 and 24 are diagnosed with cancer every day in the UK. They need expert treatment and support from the moment they hear the word ‘cancer.’ This is the only charity dedicated to making this happen. If you would like to donate please visit their Just Giving page at

New Members:

Full Members:
Vibe MGA Management Ltd
MGAM Limited
The Underwriting Specialist
Platinum Underwriting Ltd
Eridge Underwriting Ltd

Market Practitioner
Ecclesiastical Insurance
JLT Speciality
Ed Broking LLP
AON Benfield

Buckhill Ltd
Caytons Cyber Limited
EC3 Consultants
Ethics & Insurance Hub

Cyber insurance solution now available for mid to high net-worth homeowners
HSB Engineering Insurance (HSB) has developed a homeowners cyber solution for MGAs.  The offering enables MGAs to include cover for cyber-attack, cyber-crime and online liability as a section within their mid to high net-worth homeowner’s policy. 

The HSB home cyber solution has been developed in response to the increase in cyber-crime experienced by individuals.  In 2016 the National Crime Survey indicated that incidents of Cyber-Crime now outnumber burglaries by approximately 3 to 1 , which according to Action Fraud is costing the UK £11bn.   Incidents such as the hacking attack in 2016 (which infected hundreds of thousands of devices) and the recent WannaCry ransomware attack are highlighting the vulnerability faced by individuals.

Today’s homeowners are more connected than ever; from computers, tablets and phones to entertainment systems, heating controls and even household appliances.  As Paul Cullum, Alternative Distribution Manager at HSB explains: ”Wi-Fi used to be the exclusive domain of our home computers, but now most gadgets we buy have some form of Wi-Fi connectivity.  Wi-Fi connected heating controls, security cameras, washing machines, fridges, kettles and smart speakers like Amazon Echo all provide convenience but also introduce new vulnerabilities into our home.”

HSB home cyber insurance provides cover for cyber home systems damage including restoration and virus removal; protection for cyber-crime such as fraud, telephone hacking and cyber ransom; and cyber online liability which covers the costs relating to data privacy, virus transmission and defamation and product disparagement claims. In addition the cover provides access to specialist support from experts such as IT forensics, credit rating, public relations and legal professionals.

Simon Hawksworth, Head of Strategic Partners at HSB commented: “As technology in the home has become more sophisticated and connectivity a standard requirement, our lives have opened up to a whole range of cyber risks.  Home cyber is the next evolution of our cyber insurance offering; enabling individuals to include a level of protection alongside their traditional home insurance covers.”

For more information on HSB Home Cyber Insurance contact Simon Hawksworth.

NHS Cyber attack
The message below has been sent out by FCA Supervisors to “Fixed firms” with a request that they confirm they have followed their advice.

FCA realise that the smaller, “Flexible” , firms may also need advice so are sending out this message via the MGAA so our members too can be aware.

“NHS and global ransomware attacks-message for firms
You will be aware of the recent ransomware attacks on 12 May against the NHS and globally. The ransomware, known as WannaCry, encrypts files of the user who clicked on the email, and takes advantage of unpatched operating system vulnerabilities to actively spread from computer to computer, greatly expanding the reach of its attack.

There have been no further attacks reported and there is still no reported impact on the finance sector.  But there is a risk of new variants appearing.  Ahead of business start Monday 15 May, the NCSC have updated their statement: “as a new working week begins it is likely, in the UK and elsewhere, that further cases of ransomware may come to light, possibly at a significant scale”

The NCSC have also updated their detailed technical guidance of how organisations can protect against ransomware and stated that “It is therefore absolutely essential that any organisation that believes they may be affected, follows and implements this guidance”  [See below footnote for technical details]

In support, the FCA has issued advice on their website:  “If your firm does identify any cyber-attack they should report to Action Fraud  or 0300 123 2040 and let their Supervisor(s) know through the usual contact route”.

NCSC Technical Mitigation advice to Firms:
The NCSC advise the following steps be performed in order to contain the propagation of this malware:

Discount Rate – What it means to you
The Ministry of Justice’s short consultation about possible new approaches to the personal injury discount rate closed on 11 May. This followed the rate being lowered from 2.5% to minus 0.75% in March. The rate change produced significant step-change increases in damages in catastrophic injury claims involving future losses. These increases may prompt a need to review limits of indemnity in casualty policies. MGAA Silver Sponsor firm BLM arranged a number of briefings about the consultation and filed a detailed response, copies of which are available on request from Alistair Kinley

Clyde & Co in association with Vericlaim have issued a briefing paper regarding damages for late payment of insurance claims, click here for more details.

REG (UK) has issued a press release regarding the investment they have received from Disruptive Capital Investments Limited, a fund focussed on investing in business that create value through innovation and technology.  The press release is available here.

Browne Jacobson recently carried out a survey of insurance market participants to assess the likely impact of the Enterprise Act 2016.  This was a study to understand any concerns in relation to how the Act affected MGAs and the wider insurance market.  
Browne Jacobson will produce a report based on the results of the survey, which will include their own analysis of the Act and discussions with market participants, and we will share the results of the survey with members once this is received – watch this space

Legal roundup for 2016-2017
Browne Jacobson have issued an insurance annual review 2016-2017.  They have undertaken a comprehensive review of the common law, statutory and procedural changes that occurred during 2016 and, they summarise some of the most important legal developments for the insurance market including the policyholders as well as looking ahead to changes on the horizon in 2017 and beyond – clickhere to view.

Legal roundup for 2016-2017
Browne Jacobson have issued an insurance annual review 2016-2017.  They have undertaken a comprehensive review of the common law, statutory and procedural changes that occurred during 2016 and, they summarise some of the most important legal developments for the insurance market including the policyholders as well as looking ahead to changes on the horizon in 2017 and beyond – clickhere to view.

Construction has been a core element of Kennedys’ insurance practice over the past 40 years and they have a substantial and well regarded practice handling all forms of highly specialised insured and non-insured construction work including acting for Architects, Contractors, Engineers, Monitoring Surveyors, Property Managers, Surveyors / Valuers, and Sub-Contractors.  Please click here to view articles and case reviews.  Further details on upcoming Events can be viewed here.

At the recent MGAA Lloyd’s Market Forum meeting, the MD of PPL provided an update on the project.

Over recent weeks, the focus of the PPL Board has been to make the platform available for Marine, the 2C release and the preparation of Property & Casualty coming on-line.

The market has stressed the importance of the PPL board listening to its concerns and, in light of this, they have had discussions with Ebix senior management to look at how it can better accommodate the market’s needs. 

It has become clear that there are concerns that the timescale for 2C is too ambitious, particularly as regards Market Acceptance Testing, and PPL have taken on board that the market wants faster integration. It is felt that it is prudent to look at options for change without distracting from the hard work and momentum the market has built up so far. 

The PPL board is demonstrably listening to the market and has decided to bring phase I of the carrier integration forward and push back Release 2C. This phase of integration will provide electronic delivery of the Signed Line Advice including the MRC and supporting documents to carriers, as well as sending the post-bind MRC to SDC. Release 2C contains a wealth of improved functionality and usability with improved workflow and performance.

By bringing the two deliveries together, this will give the market the extra time they wanted to review 2C and ready themselves for the next release of PPL in June.

In the meantime, elements of 2C are being shared with the market and initial feedback has been very positive. PPL weekly “Open House” sessions will showcase elements of 2C with workshops dedicated to the new facilities functionality on the platform. PPL’s Learning Management system will be updated and available to the market from mid-May in readiness for the June release.

The PPL Board remain cognisant of market concerns and, by delaying the release of 2C and bringing forward carrier integration, this also allows the alignment of PPL with the TOM SDC initiative. This will give earlier realisation of benefits through reduced re-keying and place the market in a better position of readiness for the first SDC release targeted for July this year.

Brexit comes with some ethical steps to climb
Brexit has many implications for MGAs and one of them, you might be surprised to learn, is ethics, writes associate member Duncan Minty of Ethics and Insurance Hub.

And two of those ethical implications of Brexit are pretty fundamental.  Take professional ethics. “We’re good people, so no problem there” you might think, and that’s great, but some countries require some hard evidence that you know what ‘doing the right thing’ really means. So if you’re thinking of opening up an office or operation in an EU member country, watch out for compulsory ethics training for insurance people. In Ireland for example, the insurance regulator requires one hour of certified CPD a year on ethics.

Another box to tick, you might think, and that’s right, but also think why some insurance markets have compulsory ethics training in the first place. It supports trust in the market and makes insurance people better at handling tricky decisions in which ‘doing the right thing’ really does matter. Those type of decisions are more common in insurance than you might think.

Many MGAs do business in EU member countries and so must comply with EU regulations. A lot of attention is being given to the implications of the General Directive on Data Protection and how customer data is gathered and used. Yet privacy is far from the only ethical issue to have on your EU radar. It could turn out to be an easy one compared to the proposed Equal Treatment Directive. That will prohibit discrimination based on age or disability. Think Test-Achets Mark 2.

The Equal Treatment Directive will apply to insurance, but it also gives insurers the option of continuing to differentiate on age and disability, so long as proportionate differences of treatment are used. Yet an MGA will need to have actuarial analysis ready for public consumption in order to benefit from that option, and the burden of proof lies firmly with the insurer to justify it.

Different insurance markets handle ethics in different ways. And that’s not surprising: there’s no one way of doing ethics, just as there’s no one way of organising an insurance business. For MGAs who have taken the ethical themes underlying much of UK insurance regulation to heart, these differences can be taken in their stride.  Brexit means change: understand it, grasp it and make the most of it. The same applies to ethics.

Will Autonomous Ships Set Sail?
We all know that modern aircraft are generally flown by a computer autopilot that tracks its position. Already, there is talk of replacing the co-pilot, perhaps both pilots, on cargo planes with robots or remote operators. We have also heard of progress with regard to the development of driverless cars.

But what about driverless ships? Alan Jervis B.A. Hons., D.E.S., F.C.I.I., Chartered Insurer looks at Autonomous ships and asks the question – Are they on their way?.

Crewless ship technology involves controlling and piloting the ship remotely from a control centre in another part of the world. It is anticipated that within the next 5 years, the first commercial vessel to navigate itself entirely will be a short crossing ferry or a tug. It is possible that within a period of 15 years, crewless technology will be expanded to the large ocean going container ships.

The European Union’s MUNIN (Maritime Unmanned Navigation through Intelligence in Networks) project is an initiative to assess the legal, technological and economical feasibility of operating an autonomous ship during a sea voyage across the great oceans.

However, there are possible obstacles to consider. Firstly, such technology is likely to be very costly, particularly in its early stages and one must consider whether shipowners are in a position to invest in this initiative. Secondly, there are compliance and legal challenges that need to be overcome

One must also consider whether such ships should retain at least one crew member to handle maintenance issues and emergencies such as an oil spill. Lastly, ports and harbours will need to consider what changes are required to accommodate crewless ships entering the port.

On the plus side, it is suggested that savings could be achieved through the replacement of crew and crew related quarters (galley and sleeping quarters) with additional cargo space.

From an insurance perspective, there is also an advantage that crew related injury claims could be eliminated.

But the era of autonomous ships must address risk management concerns over the safety of cargo, the failure of technology leading to disasters at sea without the benefit of immediate human intervention to help mitigate losses and, of course, such matters as the threat of piracy.

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