Big question for the New Year – What's in store?

David Newman

Chief executive, Carole Nash

The biggest story of 2017 would be The Ardonagh Group’s scale of ambition and demonstrating that they are a force to be reckoned with. Of course, I have an insight here [Ardonagh bought Carole Nash subject to regulatory approval] but their shrewd dealmaking in acquiring category leaders like Direct Group and Autonet is making them, rightly so, the talk of the industry.

The scale and the impact of the Ogden rate cut on the private motor and motorcycle market will I suspect be felt for some time yet.

As a director of the Insurance Fraud Bureau (IFB) I feel that the way the IFB has been working collaboratively within the insurance industry will help both insurers and customers in the long run. Earlier this year it was agreed that IFB’s remit should go beyond motor and be across the whole of the insurance market. Having that joined-up approach will in the long-run help drive fraudsters away from insurance, which should mean lower premiums for consumers.

As the Brexit negotiations have progressed (or not, depending on your view), the culture of uncertainty around a post-2019 deal with Europe is a concern. As we close 2017 it’s very much in a state of flux, with the implications unclear for our industry.

Looking ahead, clarity on post-Brexit arrangements is vital. This is the elephant in the room with regard to what our relationships with European insurers and the industry will look like as well as the potential impact of planning for ‘no-deal’.

 

Howard Lickens

Chief executive, The Clear Group

What were the biggest news stories of the year? Everything Trump – car crash/nuclear war in slow motion; May vs Corbyn – who knew May would implode so spectacularly? Brexit – how long before those clowns supposedly negotiating for us start to speak the truth and realise they have a problem?

It’s often said that history repeats itself first as history then as farce – there seem to be so many areas where history is repeating itself, yet lessons are not being learned. Consolidators buying for the sake of it; banks hunting in packs, insurers chasing growth. How will it all end?

There has been some improvement in the quality of carriers over the past year as a few of the marginal players have exited due to Ogden & regulation.

But short termism is growing, and insurer cost-cutting is often proving self-defeating.

We’re looking forward to a 17th successive year of profitable, sustainable growth.

 

Andy Fairchild

Chief executive, Broker Network

The Ogden Rate ‘hokey cokey’ was the biggest story of 2017.

The big shock was the decline in Net Promoter Score results given to insurers by brokers in the recent Insurance Times Broker Service Survey. Turning the perceptions around will require long term commitment and leadership that not only delivers great service rhetoric, but backs this up with delivery and day-to-day focus on community-based trading. Insurers need to listen and take action.

The confidence of regional independent brokers to pursue growth plans has been the biggest improvement. Many of our members have announced double-digit growth over the past 12 months and it’s fantastic to see the independent broking landscape alive and kicking. I also believe continuing to grow will be a challenge for independent brokers in 2018, but the SME economy is buoyant, as is the broking world. We should therefore approach the market with extreme confidence.

For the coming year, we’re looking forward to helping other businesses thrive. Supporting the growth and protection of independent insurance brokers is what we do every day at Broker Network.

Personally, I’m looking forward to Peterborough United being promoted.

Mark Cliff

Chief executive, Brightside

Nationally, the Tories’ failure to win the general election created further uncertainty for the UK, already uncertain with Brexit.

In insurance, the decision on the discount rate in February threw the market into a tailspin, although the subsequent increase in motor premiums has given direct writers a reason to be cheerful.

Most shocking has been the continuing erratic treatment by the government of the insurance industry, one of the jewels in the UK’s financial services crown – in France, or Germany, their governments stand full square behind their industries, whereas ours sees insurance as requiring soul-destroying regulation, or as an opportunity to raise revenue through the Insurance Premium Tax.

The industry is wholly focused on the challenge and opportunity of technology in a way that it wasn’t in 2016. Management teams have finally grasped that insurtech is essential as a means of moving the needle for customer service and reducing costs. Whether we have, collectively, moved fast enough to hold the big tech companies at bay is another matter though.

We need to be careful, however, that we don’t create the tech and then find things to do with it. There are plenty of tech solutions looking for a problem to fix. Insurtech needs to be the slave of customer service, not its master.

The insurance industry, collectively, has continued to struggle with public trust, but 2017 marked a significant drop off in reputation, thanks to increasing premiums (as a result of the discount rate) and a number of other headlines. They included the continuing issues over transparency of renewal premiums, APR rates for monthly premium payments and treatment of vulnerable customers. Poor public image detracts from our industry’s ability to provide leadership for bigger issues, such as in the Brexit talks.

Looking ahead, our transformation continues, but I believe the results of our investment in the turnaround will continue next year as we return to profitable growth and ramp up our digital proposition

The broking sector is still in a sweet spot when it comes to interest from investors, including from abroad, attracted by the lower pound and the fact that there are lots of good businesses seeking to create value. I don’t see that changing just yet.

 

Kirsty McKno

Chair, Credit Hire Organisation (CHO)

The snap general election took even the pundits by surprise, and the outcome, it’s effect on Brexit and on the UK, both at home and abroad was the biggest story of the year.

Nevermind your personal view of Brexit being good or bad for the UK, the repercussions have a long reach that is significantly impacting our industry, such as vehicle import pricing.

The business and practice of government has deteriorated into factionalism and infighting. We need our politicians to find the impetus to think beyond narrow party issues and move the country forward.

For the coming year we’re looking for greater collaboration with those within the insurance industry to resolve our shared problems, in particular fraud.

I want 2018 to see us working with big data analytics, blockchain systems and online dispute resolution platforms to reduce friction in time and costs to better serve customers.

 

Ian Donaldson

Chief executive, Autonet

The impact Ogden has had on insurers has certainly affected premiums across all product lines. Insurers are having a huge focus on their own distribution and expenses, intermediaries have to step up their game and show what they bring to the table for insurers in respect of quality and profitable distribution.

Shocking has been the number of MGAs andinsurers that have fallen away, whether that is actually going bust or totally reducing appetite to write business. Solvency II took its own prisoners, whilst those who successfully navigated through that storm had to alter a lot within their businesses to come out the other side, different in their approach to both underwriting and distribution.

Within personal lines, there have been improvements in technology, data and the ability to rate a risk literally on an individual basis: becoming more granular than ever on risk selection; working closely with insurer partners to ascertain not only the risk profiles they feel are within their desired footprint but overlaying our own data and use of technology to bring genuine value to risk selection and placement. Insurers see benefit in broker distribution and have done for many years. However, that benefit is no longer just volume, a genuine need of all insurers through 2017 and beyond is for its broker distribution channel to be able to evidence the value it brings in risk placement.

Along with the demise of some markets we are still seeing consolidation of big names, LV and Allianz being the latest. Although I am confident in them continuing to deliver products, the reduction in schemes is always a concern.

We are excited about more acquisitions, venturing into new product lines but always with the same focus: delivering value to our insurer panel.

We are heavily committed to technological improvements and system integrations and having a holistic view of all our customers.

Distribution is a key focus for us through 2018 and beyond, reaching out to more customers on more products in more unconventional ways, all powered by new technology and allowing clients to engage on a far more seamless platform.

 

Peter Blanc

Chief executive, Aston Scott

What was the biggest story of the year? Undoubtedly the merger of Aston Scott and Lark!

The handling of the change to the Ogden discount rate was pretty shocking. It left us as insurance brokers facing conversations with clients that came completely out of the blue.

Personal service from some of the major brands is clearly in decline. Naturally, all companies are looking to achieve efficiency savings, but I believe that efficiency can go hand in hand with excellent personal service. We hope to demonstrate the achievement of that goal within AstonLark.

We’re looking ahead to the successful integration of two fantastic businesses and the further acquisition of other like-minded insurance broking firms as we create the UK’s most trusted, chartered insurance broker.

 

Nick Garner

Chief executive, Financial & Legal Ltd

The problems faced by non-domiciled insurers, especially in Gibraltar, meant plenty of change in our market. Elite Insurance went into run off in July, which enabled FLI to strengthen its market position in its core after the event market.

The ABI continued to talk up the so-called whiplash epidemic in the teeth of the evidence, which showed a continued decline in the number of personal injury claims. Motor insurers continued their policy of releasing their reserves (in response to fewer claims) to boost their profits

Research by Capital Economics found that the motor insurance market was not as competitive as the ABI would have us believe. Price comparison sites provide consumers plenty of quotes for a motor policy, but in reality, different brands are controlled by a single underwriter. Admiral, for example, employs four different brands on PCs, and in a Capital Economics mystery shopping exercise, nine underwriters provided 31 different quotes.

The claimant industry, through the Access to Justice (A2J) campaign group, has provided strong evidence to debunk many inaccuracies peddled by the ABI, especially on the level of fraud. A2J has shown the ABI’s fraud figures to be unreliable, and even the government has stopped using fraud as the rationale for their proposed reforms to personal injury.

I’m pleased to see a sharp fall in fraudulent PI claims as evidenced by statistics from the Compensation Recovery Unit. If insurers and law enforcement agencies prosecute people trying to game the system, and send guilty people to jail, that is the best possible deterrent.

We would like to see certainty around the Civil Liability Bill, which has been delayed by lack of Parliamentary time, but our strong preference is for the ABI and law firms to come together and hammer out a compromise, which will help a weak government save legislative time.

We want motor insurers to disclose the commissions they pay to comparator sites and for the regulator to explore limiting these charges to reduce motor premiums rather than feeding the profits of PCCs.

 

Charlotte Halkett & Darius Medora

Joint managing directors, Buzzvault

As artificial intelligence and data enable personalisation, consumers can demand ever more tailored products, and insurance needs to wake up to the trend. Smart home devices and home-sharing sites, such as Airbnb, are revolutionising the nature of our relationship with our homes – while enthusiasm for electric and driverless cars further showcases the transitional nature of the age we are living in.

 

I think 2017 has been a turning point for the insurance sector. There have been a number of insurtech start-ups and the investment in businesses such as Buzzmove underline how quickly the sector is re-shaping and the major insurers and reinsurers are all changing their business models to secure their future in the digital revolution. Fundamentally there is an increasing recognition that the customer has to be front and centre and that means utilising data much more effectively to deliver that level of personalisation.

 

2018 will see the launch of Buzzvault Insurance from Buzzmove – targeted specifically at home movers, based on the digital inventory we create when a customer moves home.

 

Richard Forrest Smith

Chief executive, ECIC

The Ogden discount rate decision had to be one of the biggest stories of the year. In addition, the continuing consolidation within the broker market seems to have been one of the enduring themes of 2017.

The Grenfell fire sent shockwaves through the construction industry.

From our perspective, the understanding of the need to create a culture of health and safety on construction sites is translating to a marginal reduction in claims exposure but there is still much more room for improvement. We are also seeing intensifying interest in specialist schemes business from brokers looking to leverage our underwriting expertise in niche markets.

The changes to the sentencing guidelines have made the fines for the mid-size contracting market for health and safety breaches much more severe and perhaps out of kilter with the size of the business. At a business level, the competitiveness in pricing and the capacity available in some market sectors has been greater than expected.

 

Gilles Normand

Chief executive, The Swinton Group

The government’s revision of the discount rate started the year off with a bang in February, and its effects have been felt by every big insurer. As the subsequent review into the proposals roll on, its likely this will dominate the insurance news agenda into the coming year too.

The snap election sent shockwaves through the entire country and showed the danger of resting on your laurels and taking the status quo for granted. There’s a lesson in there for the industry somewhere.

The continued expansion of Flood Re is a very positive trend for consumers. I think there has been a general improvement in how the industry responds to personal lines customers in times of need. As extreme weather and flash floods become more commonplace, there’ll be more demand than ever from consumers for insurers and brokers that offer practical support on the frontline of an incident.

Mirroring this has been the emergence of customer-first models from disruptors like Lemonade. The industry is realising that people’s lives have changed and so too have their insurance needs. This is a change we’ve had to adjust to in our own business, too. More than 90% of our customers now buy their insurance over the phone or online – so we’ve invested heavily in our digital capabilities while making sure our branch network is in the right shape for our customers’ needs.

Many will be waiting to see how the continued increase in insurance premium tax affects consumer loyalty.

2017 was a milestone year for Swinton, celebrating our 60th anniversary and launching our new brand proposition of ‘Nagging Doubt’, so we’re looking forward to building on these foundations as we move into next year. We’ll continue to invest in our digital platforms as we target becoming the biggest digital broker in the UK.

 

Keith Binley

MD UK, Ireland Insurance, LexisNexis Risk Solutions

The biggest story of the year – the sheer number of Insurtech start-ups that have emerged demonstrate how fast the sector is evolving. We were surprised but pleased IPT wasn’t raised again in the Autumn Budget. Like most of the sector we were also shocked by the Ogden rate decision.

We conducted a detailed study of the sector and found that while legacy systems have made digitisation across all operations challenging, the desire to change is there and insurance providers understand this will be key in leveraging the growing number of data sources available to the sector in order to help them better understand risk.

In terms of a challenging situation, motor insurance pricing has been a major hurdle for the sector and one that may continue to be for some time.

Big data is a term that’s been overused – big data is pointless if you can’t derive value from it. We exist to enable insurance providers to reduce risk through data and analytics and next year we will continue this path, that will vastly improve their ability to rate for risk on motor, property as well as in the vehicle rental market.

 

Penny Searles

Chief executive, Smartdriverclub

The government’s decision to change the Ogden rules was the biggest story. Also, the government amending legislation to make it easier for autonomous cars to be launched on our roads.

Most shocking news? The government’s decision not to increase IPT.

The understanding that the insurance sector needs to get ready for autonomous vehicles and AI.

What has declined the most? An appreciation of the skills of traditional underwriting. Insurtech is not a replacement, it should work in harmony.

Next year we’d like to see the government deciding that IPT should be reduced/discounted if telematics is being used to improve driving behaviour.

 

Sarah Vaughan

head of pricing, Insurethebox

Biba’s research on the telematics market at the start of the year showed a significant jump in telematics insurance policies across the market. For us, this was real vindication of all our hard work and commitment to make telematics work over the past seven years. Coming right up to date, the speculation around Amazon’s entry into the insurance market has been entertaining! Why does everyone seem so surprised?

There is a much wider appreciation of the power of behavioural data and AI in underwriting and reducing risk. Motor has led the way and we are now seeing advances in technology to enable us to think about including Advanced Driver Assistance Systems (ADAS) as part of the telematics solution. This will be a real step change in lowering insurance costs and reducing road accidents.

The reputation of the sector took another battering this year as insurance pricing reached record levels thanks to the Ogden and IPT rate changes.