Technical

Choose your broker well – don’t leave it to chance 

You may have heard that the insurance industry is entering a “hard market” period, but what does that actually mean? Insurance is cyclical and is very much impacted by supply and demand, just as any industry is. The market fluctuates, and with each insurance ‘cycle’ typically lastsing anywhere between two andto 10 years – but various factors influence the cause and effect of changing conditions.  

Unfortunately, as is common in our industry, the scaremongers make the most noise. If you have read any of the commentary, you’d be forgiven for thinking you should be braced for a business challenge like no other, — just what you need when you might be quite rightly focussed on Brexit impacts, Covid-19 impacts or just bog standard “worst of a generation” recession impacts! 

At Gen2, we don’t scaremonger. We try to provide relevant, informative content and practical steps / solutions to help you navigate the world of risk. We also aren’t scared to say the things that don’t usually get said by our peers – you’ll get the truth from us, regardless of what that means for us because it’s not about us, it’s about YOU.  

What is the difference between a hard and a soft market?  

In a soft market, you are likely to see:                                                             

  • Downward pressure on price, meaning lower premiums can be achieved 
  • Broad appetite and availability of cover from insurance companies 
  • Increased capacity, meaning insurance companies will –  
  • underwrite a high volume of policies 
  • be more accommodating of the type / standard of business they underwrite 
  • give higher cover limits on policies  
  • generally, underwrite higher levels of exposure 
  • be more flexible and competitive with the premium they expect for the risk 
  • the majority risks can be accommodated by a single carrier 
  • Lots of insurance companies competing for your business – including short term opportunistic insurers 
  • Brokers find life very easy as placing business is much more straight forward – even the least capable brokers can compete and provide solutions 

In a hard market, you are likely to see:                 

  • Upward pressure on price, meaning higher premiums can be expected 
  • Less appetite and availability of cover from insurance companies 
  • Reduced capacity, meaning insurance companies will –  
  • underwrite a lower volume of policies  
  • be more selective of the type / standard of business they underwrite 
  • give lower cover limits on policies  
  • generally, underwrite lower levels of exposure 
  • demand a greater amount of premium for the risks they do choose to write 
  • a larger number of risks will require multiple insurers to co-insure the exposure 
  • A much-reduced number of insurance companies competing for your business – longer term, stable and reliable insurers will trade through cycles  
  • Brokers will find getting solutions really challenging. A flight to quality will occur as only brokers with the best insurer relationships and the best technical brokers will provide the right solutions for clients. Gen2 is very well positioned for this.  

Why are insurance premiums rising? 
We mentioned above that in a hard market you typically see higher insurance premiums. Why? During a hard market, insurers place more stringent limits on the cover they can write, which automatically lowers their appetite. This in turn means they are writing less policies and deploying less capacity. 

As the insurers’ capacity is lower, it can be more in difficult to find insurance solutions and that leads to an increase in demand for cover, all of which drives the premium prices up. 

Why is the market hardening? 
It’s NOT because of COVID-19!! Well, not solely, anyway. Do not accept from anyone that it’s because of the pandemic because it’s not – a hard market was inevitable after 15 years of a soft market with depressed pricing. If your broker can’t articulate why it’s hardening, then they are unlikely to be tuned into the tactics in navigating it.  

The truth is there are a number of reasons why we’re heading towards a hardening market, and they combine to create the most unique perfect storm our industry has ever seen. We’ve listed the core issues below, so you can see for yourself how this pressure has arisen. 

Increased Solvency Regulations – As we’re still part of the EU, the Solvency II law continues to apply. This regulatory regime was introduced in 2016 to harmonise EU insurance regulation and to provide policyholders across the EU with more protection, regardless of where they purchase their insurance, and to reduce the amount of insurer failures which were prevalent in the 1980’s and 90’s. However, it has resulted in major investment requirements as insurers need to bolster their solvency margins. In turn, some insurers have had to leave the market, while others have reduced their capacity considerably as it costs them so much in terms of new capital they have to deploy as solvency margin. 

Ogden Discount Rate – The Ogden Discount Rate has changed; this is a government enforced calculation used to work out how much compensation insurers should award someone who has life-changing injuries to cover them for loss of earnings and any care costs. The rate changed from 2.5% to -0.75% in 2017 and then from -0.75% in 2017 to -0.25% in July 2019 in England and Wales, which has resulted in insurers paying out dramatically more on personal injury claims, so insurance prices need to rise as a result. 

Property Rating – After 15 years of downward pressure on property rates in particular, this key class of business was already in the grip of poor profitability. There was already a key need for rates to start increasing in 2020 and, in addition, it was really hoped that large claims activity would not arise …… 

UK Storms – Storms Ciara and Dennis waswere the worst possible start to 2020, as property insurers suffered a combined c£500m claims event just when they needed the weather gods to be kind.   

COVID-19 – Undeniably has compounded issues that were already there. John Neal, CEO of Lloyd’s of London, told the Financial Times back in April that the pandemic is “no doubt the largest insurance challenge the industry has ever faced”. Which is true at a very macro level, but the reality on the ground is that c95% of UK businesses had no cover for COVID-19, so we understand why it’s hard for business owners in the UK to join the dots here.  

But the facts are that in May, Lloyd’s forecast that 2020 insurance losses will cost the industry $203billion (£166billon) worldwide and has recently announced that Lloyd’s of London alone expects to pay out £5billion in Coronavirus-related claims. It is, therefore, likely that COVID-19 will extend the length of the hard market, as the insurance industry tries to recover from the impact of the crisis. 

Global Impacts – It’s been another poor year for the global insurance industry, which does have an impact on you and your business insurance. Climate change is contributing to a worsening natural disaster landscape, which cost the industry $83bn in 2020 according to reinsurer SwissRe. A worse than expected hurricane season, plus further devasting wildfires across the world, were big contributors in 2020 – all have to be paid for and therefore impact on capacity and pricing across the industry. 

Investment Markets – In a buoyant financial market, Insurers can utilise their enormous cashflow in investment markets for significant gains. In previous years (late 90’s, for example), investment returns were so lucrative that underwriting losses didn’t need correcting by premium rises as investment income would catapult the business into profit positions. There is no investment income to speak of now. Financial markets and interest rates are at low points, so underwriters have to write for profit – which is can only be done through careful underwriting decisions and pricing. 

What does this mean for me and my businesses? 
During a hard market cycle, it can be more difficult for businesses to find cover, and also to avoid substantial pricing increases. This cycle will be no different., Iin fact, it could  will be possibly be the most challenging on record.  

What it actually means is that your decision on who you choose to navigate you through these testing conditions has never been more crucial. Your “Trusted Partner”, your insurance broker, is a choice andthat deserves more of your attention than ever.  

What role does my broker doplay for me and my business? 

It’s the role of your insurance broker to guide you through the insurance landscape and achieve the best solutions for you.  

To do this, crucially, they need to fully understand your business and be able to present you in a way that demands attention from underwriters and makes them want to write your business. The more interest they can create the better the solution they will be able to deliver.  

They will be beholden to the variety, strength and quality of their relationships with insurance companies. Insurers have long memories – brokers who have deserted them in times when there is lots of choice will likely get short shrift when they come begging once things are tough. Likewise, when things are easy, some brokers under value the role of the insurer and treat them like suppliers, not partners – again, these things come home to roost when the market gets tough.  

Brokers should also be more than just somebody that provides you with an insurance policy and an invoice once a year. Bringing more to the relationship, like risk management support, claims support and wider consultative support to assist your business. 

Our commitment 

Whether you already work with us, or whether you are new to us, we will dedicate ourselves to you at all times and we strive to give you the very best support and solutions. To this end, here is what we can practically do; 

  • We take the time to understand your risks completely  
  • Our risk presentations are often commented on that they are the most thorough, detailed presentations underwriters receive  
  • We also have invested in our thermographic drones and virtual reality cameras to present your risk to an underwriter in an entirely unique way – there is no other broker combining these technologies and the feedback from underwriters is outstanding and absolutely enhances our ability to get solutions from them 
  • We are engaging with clients between 6 to 12 weeks before renewal – time is our friend and will allow us to get optimum solutions, we will agree between us the right strategy for you and then execute 
  • We have widespread strategic relationships with our underwriting partners. These relationships have been cultivated over decades and we are known to be high quality, respectful partners who underwriters want to support 
  • Our risk management forward approach will help us improve your risk exposure and demonstrate to an underwriter that you are proactive in how you think about and manage your risk – we will help with things like H&S culture and processes, Business Resilience (continuity) planning, Cyber risk management as well as general processes, procedures and reporting in the business.  
  • Understanding your claims experience is also key, if you have had claims. We will ensure that all claims have been proactively managed and we know what the latest position is. If there are trends to spot we will work with you early to ensure these trends are proactively managed and understood. Claims will negatively influence an underwriter if they are not understood and presented informatively. 
  • We are an innovative, forward thinking broker who does the hard yards to get the very best for our clients – always. No short cuts, no easy options, just the right things to get the right outcomes.  

What can you do to help yourself get the best solution? 

We will help you with these, but things to consider would be; –  

  • Risk requirements – if you’ve had a survey, you will most likely have had some risk requirements to undertake. Ensure they have been done promptly and to a high standard. 
  • Following that, sometimes a surveyor would also make improvement recommendations that they don’t insist on – in these circumstances taking a proactive role to these recommendations would be seen favourably 
  • Understand from your broker where an underwriter might perceive issues, and work with them on providing a positive narrative 
  • Have a strong risk management story to tell – a tick box culture isn’t enough;, how are you embedding risk management controls and culture into your business? 
  • Avoid the temptation to cut cover – there could be downstream impacts of this, so work with your broker to understand the implications first 
  • Give yourselves time – restricted insurers doesn’t just mean pricing pressure, it means they will be inundated with opportunities, so time and proper engagement are essential. Last minute desperation will lead to desperate results – avoid at all costs. 
  • You need to invest more time and attention than before. A good broker will help, but you will get out what you put in – they can’t do everything without you. You need to be the most insurable you can be, it’s crucial to create competition to write your business if you want anything like premium stability. 

In summary 

Yes, it will be tough. No, you shouldn’t have budgeted for level premium spend to last year, or, worse, less than last year – in most circumstances that probably won’t be possible. Yes, you will need to spend more time on your insurance discussions this year.  

You will have plenty of other external factors for you to be concerned about. Insurance shouldn’t necessarily be another – but without the support of a trusted partner, and, without some thought and attention, you run the risk of it being something that could really set you back. 

Trust Gen2 Group to navigate you through. We won’t let you down. 

With there currently being no agreement between the UK and the EU following the Brexit transition period, a Green Card will be required for vehicles being driven from the UK (including Northern Ireland) to the EU, Switzerland, Norway, Iceland or Liechtenstein, with effect from 1 January 2021 – unless the European Commission declares otherwise in the meantime.  

Some European countries may also require a separate Green Card as proof of insurance for any towed vehicle, be that a trailer or, say, a caravan, irrespective of registration requirements. Those travelling with a trailer or caravan are advised to obtain two Green Cards, one for the towing vehicle and one for the trailer or caravan.  

What is a Green Card? 

The Association of British Insurers (ABI) defines the Green Card as “an international certificate of insurance proving visiting motorists have the minimum compulsory motor insurance cover required by the law of the country visited.” Put simply, it means a driver can legally use their vehicle in the EU. 

There may be scenarios in which you may require multiple Green Cards. For example, you will need multiple green cards if:  

  • You have fleet insurance with multiple vehicles regularly running into Europe – you will need a green card for each individual vehicle.  
  • Your vehicle is towing a trailer or caravan – you will need one for the towing vehicle and one for the trailer/caravan.  
  • You have two policies covering the duration of your trip – for example, if your policy renews during the journey.  

How do I get a Green Card?  

If you’re planning to drive to an EEA country after 31st December, the simplest thing to do would be to please get in touch with us, so we can obtain a Green Card for you. The guidelines are to ideally do this a month before your journey.  

Remember, if you have multiple vehicles driving to an EEA country, then you will need a Green Card to cover each vehicle, as one card only covers the registration of a single vehicle. 

Although requirements could well change between now and the end of the year, many insurers are currently preparing in readiness for the issue of Green Cards to fleet clients. Many insurers are adopting different approaches to the issue of Green Cards and some have processes that may allow you to access these documents yourself.  

Common methods insurers are adopting include:  

  • Access via insurers online portal, where the policyholder is able to produce their own Green Cards in PDF/printable format.  
  • Completion of Green Card request form or template (hard copy or online version) with the Green Card being emailed to the policyholder for printing.  
  • Email requests to be submitted through an Insurer’s dedicated mailbox and Green Card either emailed or posted to Policyholder by insurer.  

If you have the information and feel confident to go to your insurer directly then please feel free to do so at your convenience. But please do not hesitate to contact us if you are unsure or if you’d prefer us to arrange this for you – it’s what we are here for and are more than happy to help. 

Can I show a digital copy? 

You must carry a physical copy of your Green Card with you when driving in the EU post-Brexit, a digital version on a mobile phone, tablet or laptop will not be acceptable. 

The hard copy of the Green Card will need to be taken with them by the driver when travelling abroad with their UK registered vehicle or trailer. Importantly, the document no longer needs to be printed on green paper or card. A Green Card printed on white paper will be valid. 

What do I need to do if I’m travelling to the Republic of Ireland? 

The ABI has highlighted that 30,000 drivers who travel across the Republic of Ireland border may be caught out come 1st January 2021 if they don’t have a Green Card.  

The ABI said: “However, when the transition period ends then UK motorists will be required to carry Green Cards for driving in the Republic and other EU states, unless the European Commission agrees that the UK can remain in the Green Card scheme.” 

For motorists who drive across the border without a card, the ABI has warned: “This means that you will be failing to comply with the legal requirement in the Republic (or other EU country) to carry a Green Card, and will risk having your vehicle seized, and facing prosecution.”   

Other considerations:  

  • Allowing sufficient time to request a Green Card ahead of your trip – a minimum of 14 days prior to the trip is recommended by some Insurers.  
  • If you are requiring a bulk upload of Green Cards, you should again contact us at the earliest possible opportunity in order to receive the Green Cards in ample time ahead of the trip, particularly if the documents are to arrive via post;  
  • Check whether you/your driver requires an international driving permit (IDP) as this may also be a requirement of your trip. A full list of countries can be found via this Gov.uk link HERE 
  • GB stickers and number plates  
  • You should display a GB sticker on the rear of your vehicle and trailer, even if you currently have a number plate which includes the GB identifier.  
  • You will need a GB sticker even if you have a number plate with the Euro symbol and Great Britain national identifier.  
  • You are not required to display a GB sticker to drive in Ireland.  
  • Renewing your passport before it expires  
  • You need at least 6 months left on your passport to travel to certain countries. Check the entry requirements of the country you’re visiting to see how much time left you need on it.  
  • Travelling to the EU, EEA or Switzerland from 1 January 2021.  
  • From 1 January 2021, the amount of time you need on your passport to travel to the EU, Switzerland, Norway, Iceland or Liechtenstein will change. On the day of travel, you’ll need your passport to both have at least 6 months left on it and be issued less than nine years and six months ago.  

If you have any questions regarding the issue of green cards then please contact us as soon as possible to avoid any delays.  

Did you know? 

It is no longer a legal requirement for you to carry a disposable breathalyser kit in your vehicle when travelling to France? The French Government has decided to scrap the law. 

We are seeing a lot of companies now consider making the switch to electric for their company vehicles. Whether this is based on environmental reasons, financial reasons or both, the technology is there. What’s more, the government incentives make this switch very attractive. So, what’s the downside?  

Well, frankly, insurance is a bit of a minefield. The company motor fleet underwriters have, in general, not had the best of times of late, and they are very nervous when it comes to electric vehicles. Without decades of actuarial data, there is evidence that underwriters are slow to embrace the change and, in some cases, large underwriters are actively admitting to not wanting to underwrite electric vehicles, especially Tesla models. 

We have expertise and detailed knowledge of all underwriters’ specific attitudes and strategies around electric vehicles and this allows us to navigate these discussions for our clients – so that they can make the switch / transition for the right reasons and not be put off by the wrong reasons. Insurance should be an enabler, not a reason why we delay our shift to this new technology.  

The inertia in the motor fleet underwriter is driven by a few key factors that they ‘perceive’:  

  • Significant increase in repair costs in general 
  • The inability for their “repair network” to respond to repairs means that they can’t enjoy the low agreed rates for repairs, also meaning costs go up 
  • Increase in frequency of claims 
  • Delays in repairs and access to specialist parts – further increasing claim costs 
  • More complex builds can lead to more financial write off situations 
  • Nervousness around the driver assist technology – and potentially that increasing claims frequency 
  • Some repairs need to be manufacturer only, which can then incur delays (Tesla particularly) 
  • The ABI categories for motor vehicles is also artificially penal, and as underwriters rate using these, this is also a challenging factor 

These perceived issues mean that underwriters can penalise companies for having electric vehicles, in a few different ways:  

  • Disproportionately high premiums for these vehicles  
  • Minimum driving ages – 25 or sometimes 30 
  • Much higher excesses – commonly £1,000 excesses 
  • Refusal to write a company’s fleet policy – reducing the market for companies who make the switch 

Tesla specifically is cited as being a particularly troubling brand to insure, with some underwriters having extremely negative approaches. One underwriter, until recently, specifically would not insure any fleet of any size if it had a Tesla. This has since softened slightly to less than 10% of the total vehicles being Tesla might be acceptable. And they are not alone, a couple of household names specifically tell us they do not want to insure Tesla vehicles and will price them accordingly. 

All of this noise is just that, but it is real, is does exist, and it makes finding solutions a bit harder than traditional combustion engine equivalents. But we have the knowledge that allows us to access solutions. 

As specialists in the electric vehicle movement, we have our own data, our own dedicated claims process, including relationships with the manufacturers and access to a fleet of replacement like for like vehicles. This also means we can get favourable parts and repair slots. Our underwriters clearly appreciate this and therefore we have the ability to get the very best deals and cover for our clients.  

Make the right decision – go electric, but trust in our expertise to help you find the right insurance partner.  

If you would like to discuss your fleet solutions further, please book some time to meet with Gen2 Founder & Group CEO Jon Nottingham HERE or call him directly on 0754 551 4010 to discuss your electric company fleet. 

“My company is too small to be a target for a cyber attack”

“I already have a computer policy so I don’t need cyber insurance”

“I already have anti-virus software”

These are common misconceptions when considering cyber insurance. Here are 10 reasons you may benefit from cyber insurance and a short video highlighting the risks to you and your business.

BUSINESS MAY GRIND TO A HALT

With most organisations heavily reliant on technology to conduct everyday business, inaccessibility of IT systems due to a cyber attack or data breach can result in severe business interruption to both first and third parties. A comprehensive cyber insurance policy will include cover for loss of profits, internal errors and unexpected technical failures.

A CYBER ATTACK CAN BE COSTLY

In addition to ‘surface’ costs (customer breach notifications, regulatory compliance fines and technical investigation costs), organisations may also incur less visible costs, such as lost contract revenue or loss of intellectual property, for which a cyber policy may offer cover. The average cost of UK cyber crime increased by 31% between 2017 and 20181, costing the UK economy around £11bn.

PEOPLE MAKE MISTAKES

More than a fifth of data breaches occur as a result of human error or negligence, such as loss of a device or a stolen laptop containing sensitive data. Other examples include employees using personal USB sticks or clicking links within SPAM emails.

REGULATORS CAN LEVY HEFTY FINES

With increasing focus on data protection regulation, such as GDPR, cyber insurance may include cover against defence costs, fines and penalties following unauthorised disclosure of personal and/or confidential information.

YOUR PERSONAL OR COMPANY’S REPUTATION MAY BE DAMAGED

Where your personal or company’s reputation is threatened following an attack or breach, a comprehensive cyber policy will cover the cost of a consultant to help minimise damage to reputation and brand.

COMPUTER INSURANCE ALONE WON’T COVER LOST DATA

Computer insurance may cover damage to hardware but not software. A reputable cyber insurance policy will cover costs required to restore data system functionality and lost data, helping to get systems and networks back up and running swiftly.

ANY BUSINESS CAN BE A TARGET

Cyber criminals don’t discriminate by company size or type. In 2018, 31% of micro and small businesses and 61% of large firms identified breaches or attacks. Therefore any business which stores digital data can be at risk of an attack or data breach.

ACTING FAST IS KEY

Cyber insurance may include cover to pay for forensic experts to identify, contain and remove the threat. The sooner this is done the better. Ponemon Institute research4 reported that companies which contained a breach in fewer than 30 days saved over $1million as compared to those that took more than 30 days to resolve the incident.

CYBER INSURANCE REASSURES THIRD PARTIES

Taking out cyber insurance can send a clear message to customers and suppliers that a company takes IT security seriously and has protection in place to manage an incident in the event of a breach. This assurance can be a selling point for companies looking to qualify for bids and tenders.

CYBER CRIME IS INCREASING

The most common fraud in the UK in 2018 was cyber crime and cyber incidents topped the Allianz Risk Barometer 2019 as a key corporate peril for UK businesses. Generally, cyber attacks are on the increase so it’s more important than ever for companies to take measures to protect themselves. Cyber insurance can offer such protection, in combination with robust risk management strategies.

Cyber criminals continue to make headlines by targeting a multitude of companies. More than a third of business owners say they’d been the victim of cyber crimes such as hacking, phishing, and pharming. Watch our cyber risk video below, you’ll learn how every business faces risk, no matter how small, could be exactly the target cyber criminals are looking for.

Please contact [email protected] or call 0330 056 3665 today and a member of our team will be happy to discuss your best cyber solution. If you are limited on time please leave your details below and a member of the team will be in touch. Thank you.

*References: Accenture & Ponemon Institute (2019). The Cost of Cyber Crime: Ninth Annual Cost of Cybercrime Study. [online Available at: https://www.accenture.com/us-en/insights/security/cost-cybercrime-study [Accessed 16 Aug. 2019]. Ponemon Institute. 2018Cost of a Data Breach Study: Global Overview. July 2018. Cyber Security Breaches Survey 2019. https://www.gov.uk/government/statistics/cyber-security-breaches-survey-2019 42018. Cost of a Data Breach Study: Global Overview. Ponemon Institute. PwC’s Global Economic Crime Survey 2018: UK Findings. 2018 ibid.

When considering how to pay a significant lump-sum such as business insurance cover, it’s not as simple as ‘have we got the available cash or credit?’ Specialist premium finance can be a compelling option, particularly where you’d rather reinvest cash into the business rather than depleting your reserves.

The following are a number of reasons why individual consumers and business customers choose to pay for their insurance using premium finance:

  • Improved cash flow – freeing up the lump sum to use elsewhere ensuring customers have the required level of insurance cover without being held back by the upfront cost.
  • Lessens the impact of any increase in insurance costs. 
  • Eliminates the requirement for a large upfront payment to an insurance company, particularly for new purchases.
  • Multiple insurance policies can be attached to a single premium finance agreement allowing for a single payment plan.
  • Avoids the need to liquidate other assets to ensure insurance coverage by using other people’s money (leveraging the premium finance lender’s capital), customer can retain a significant amount of capital known as ‘retained capital’.

Gen2 can provide a simple tool to assess the relative benefit of reinvestment versus the costs of finance. When taking into account the facts that the vast majority of premium finance is off-balance sheet lending and that several policies (with the same inception/renewal dates) can be consolidated under one credit agreement, many opt for premium finance as a smart way to manage cash-flow.

Our partnership with Premium Credit allows our customers to take control over their Finances. Premium Credit is the leading provider of premium finance in the UK and currently helps over two million individuals and businesses spread the cost of their premiums.

Telephone 0330 056 3665  or

Email [email protected]