A not-so-quiet time for the insurance industry
In what is traditionally a quiet month for the insurance markets, in the northern hemisphere at least, it’s been another hot and bothering week for many, particularly in specialty insurance.
Losses from recent high-profile events are beginning to be felt and will no doubt be a source of concern for the markets as we enter the peak of the US hurricane season, normally mid-August to mid-October.
Claims from Hurricane Isaias, which hit the Caribbean and skirted the US eastern seaboard, are coming in to the London specialty market. Estimates vary but insured losses are expected to total around $1bn.
Aviation markets are also braced for significant claims, including the loss of the Air India plane which broke in two whilst attempting to land last week. Elsewhere, claims managers are also standing by for significant marine losses, including the large oil spill in Mauritius. This is on top of the devastating explosion in Beirut, which will impact port, hull and cargo claims to the tune of around $250m and an expected total insured loss of around $2bn.
Less Teams, more teamwork
The Insurance Insider took an interesting snapshot of their readerships’ views about returning to the office post the UK’s COVID-19 lockdown this week. Rather typically, opinions were split with a third not planning on a return until 2021. Another third said that September was the time to reacquaint themselves with the daily commute. The rest of those polled were either already at their desks or planning to return between October and the end of the year.
The majority of The Insiders’ readers mentioned concerns around commuting and a better work-life balance. It’ll be interesting to see how this plays out once the Lloyd’s underwriting room opens.
The results are in
Half year results are still making the news this week, with readers keen to gain insight into how the pandemic has affected returns. The story on the whole has been negative, a good example this week came from Zurich. Their UK GI business reported a loss of £35m and a CR of 103.4% (a deterioration of nearly 18% on H1 2019). The group stated they face £140m in COVID-related claims. CEO Tulsi Naidu was keen to point out however that the underlying business is performing well.
QBE posted a $712m net loss in H1, down from a profit of $531 in the first half of 2019. Their COVID bill coming in at around $600m. The Australian insurer reported strong premium rate growth globally however, with its European operations achieving rate increases of 10% in H1.
Every cloud has a silver lining as they say and perhaps the coronavirus’ lining might be modernisation. For many a long year, Lloyd’s has grappled with the concept, with varying degrees (or lack) of success. This week, the 3-century-old market announced it has decided to increase its targets for electronic placements for the third and fourth quarters of this year.
The target for risks bound will remain at 80%, but the targets for submissions/quotes have been raised to 25% for Q3 and 30% for Q4. Lloyd’s said in July that electronic placement would be one of its three key priorities for H2 2020, alongside delegated authority and claims. Perhaps COVID-19 has reinvigorated this purpose and their chances of driving the modernising agenda.
Slaughtered
And finally, in case you were in any doubt how the wider UK public feels about the insurance industry at the moment, I leave it to the ABI’s Huw Evans who in an interview with Insurance Times this week said in somewhat understated fashion that: “it’s inevitably the case that when you have both a large insured event and a large uninsured event happening at the same time that the headlines focus on the unhappy customers rather than the happy customers..”
The publication was less circumspect, referencing the industry’s ‘reputational slaughter’ around BI claims.
Happy Friday everyone.
With thanks to our friends in the insurance press: