Will New Vehicle Risk Ratings Disadvantage Electric Fleets?
20-Nov-24
Will New Vehicle Risk Ratings Disadvantage Electric Fleets? Recent decades have seen a global push towards net zero and sustainability, with lots of large companies looking for ways in which they can become more environmentally friendly. More recently, many businesses that own vehicles have started building up fleets of electric vehicles, with a view to reducing their carbon outputs. However, a recent update in the way that insurance is categorised may have an impact on decisions around new EV purchases, with some concern that there might be an increase in costs. But is this really an issue? What are the new Vehicle Risk Ratings? In 2024 the car insurance industry, led by Thatcham Research, announced a new system for categorising insurance ratings, with the former Insurance Groups Ratings Scheme being replaced by a new Vehicle Risks Ratings (VRRs) System. The idea of the new system is that a car purchaser will be able get a clear picture of the cost of insurance prior to making a purchase. Under the new system, a car’s ranking may change after purchase has been made, leading to the insurance category of a vehicle changing over time. The VRR system will assess cars over five key elements; performance, damageability, repairability, safety and security.[i] Each of these five assessments will be given a score between 1 and 99. [ii] This is almost double the score of the current Insurance Groups Ratings Scheme (which is from 1 – 50). Will this increase the insurance for Electric Vehicles? Some commentators on the new model have pointed out that the new “repairability” aspect of VRR will disproportionately affect Electric Vehicles. The repairability category has the highest weighting for insurers, so this is really key. [iii] The assessment of repairability will take into account the ease and expense with which a vehicle can be repaired; with electric vehicles likely to take a hard hit in this area, due to a variety of factors, including the current ...
The Insurance Industry: Reacting to a Disrupted Market
16-Apr-24
The Insurance Industry: Reacting to a Disrupted Market As the insurance sector surveys the landscape for 2024 and beyond, there are a number of changes in sight. New technology, extreme events and changing cultures are all shifting the way Property and Casualty insurance needs to operate. Some of these new factors create opportunities, while others create risks; many offer both. Responding to market disruption is nothing new for P&C insurance. While the specific factors may be unprecedented, the insurance sector has always been at the forefront of predicting and responding to new risks. In this article we will look at some of the key elements that are changing (or are set to change) the industry within the next few years. Artificial Intelligence It is impossible to discuss disruptive markets without talking about AI. Artificial Intelligence has been on the scene for a few years now, but as it continues to develop, it brings about innovation and opportunity, while also creating risk, uncertainty, and potential problems. Almost all industries need to adapt to a world where AI is commonplace. AI offers massive opportunity to the insurance industry. It can reduce risk, increase speed and refine processes across the board. AI can interact with clients in a more supportive way than ever, meeting their requirements and even anticipating their needs in a way that has not been possible before. At the same time, lots of clients struggle with the impersonal nature of AI – although this is improving all the time, as it becomes more adept at mimicking human emotional responses. Of course, there are dangers that come with computer learned behaviours. One recognised risk is that AI is vulnerable to using data to inadvertently create an illegal or unethical bias – for example, a bias against a protected group. This could result in fines and legal sanctioning, as well as a significant loss of trust in the methods being used by the industry. As this is already a recognised risk, ...
The MGA Model: Reliable or Redundant?
27-Feb-24
The MGA Model: Reliable or Redundant? Placing over 10% of the UK’s insurance premiums, Managing General Agents have become a fixture of insurance in this country. While MGAs enjoyed a number of years of expansion through recent decades, over the past three years, they have seen a small amount of decline. Some companies may be questioning whether use of MGAs is still a business model that works as we move forwards into 2024. Are there more opportunities for the future of MGAs, or is it time to move on and look at different models? What are MGA’s? MGAs are insurance agents, authorised by insurers to carry out a variety of roles such as underwriting and negotiating contracts on behalf of that insurer. They may also be involved in settling claims or appointing brokers. They work within parameters agreed with the insurer.[i] The partnership between insurers and MGAs can be a very beneficial one. MGAs tend to have specific strengths in their field of expertise, and they can offer insights into particular markets that large insurers may not be able to access as efficiently. Meanwhile, the large insurers can offer capital, flexibility and resources that maximise the insurance offerings for clients and the profitability of the programme. [ii] Is the model declining? Although it is acknowledged that there are lots of benefits to the MGA model, the past three years has seen their growth declining. Insurance DataLab revealed the preliminary findings of its 2022 MGA performance report exclusively in Insurance Times, rating the performance of MGAs based on their financial performance. It showed that while 2020 saw an average growth score of 53.8%, this decreased to 51.6% and 49.4% in 2021 and 2022 respectively. [iii] While this will be of concern to those investing in and managing the MGAs, at the same time it’s important to recognise that the past three years is not a neutral sample to analyse. The insurance industry has had a very challenging few years across the ...
Can a Career in Insurance Appeal to the Next Generation of Our Workforce?
11-Sep-23
Can a Career in Insurance Appeal to the Next Generation of Our Workforce? Sadly, the insurance industry appears to have developed a reputation for being old fashioned, or boring. We asked a Generation Z child their opinion about working in the insurance industry. She said “it sounds like one of those jobs that I just associate with boredom. I picture falling asleep at a desk.” Where has this perspective come from? How can the insurance industry make themselves appealing and relevant to the workforce of the next generation? Do young people want to work in insurance? Our interviewee is not alone in her opinions as a young person. It appears that this attitude may persist through childhood into being a young adult, judging by the unfortunately low number of people in their 20s and 30s currently looking at insurance as a career. A study by ACORD showed that only 4% of millennials (born between 1981 – 1997) would think about working in the insurance sector. This is concerning, given that millennials are likely to be 75% of the UK workforce by 2025. [i] Of course, in 2023, as we look towards the future of insurance, we are not only talking about recruiting millennials, who are now aged 25 plus and may be already on a chosen career path. Now is the time to start appealing to Generation Z (born approx. 1997 – 2012) and then Generation Alpha (born 2013 onwards). A new generation Recruiting young people into careers in insurance is vital to the general insurance sector. Not only are they needed for future numbers, as previous generations look to retirement, but their ideas and skills are needed now. Generation Z are the first generation that grew up from childhood with social media as a normal way of communicating. They have seen huge growth of technology and a lot of political and economic upheaval. They lived formative years through the Covid epidemic, with all the complexities that brought. All this makes generation Z an adaptable, technologically-adept generation, ...
Lloyd’s at the Movies!
19-Jul-23
Forever annoying his friends and family by spoiling films when pointing out various ‘insurance landmarks’ such as Leadenhall Market, the Walkie Talkie and the Gherkin, Richard thought to challenge Artificial Intelligence to re-imagine the Lloyd’s of London Building on the set of various Hollywood Blockbusters – with somewhat mixed results. The insurance industry has been asked to try and guess the films, and you are welcome to take part – the quiz can be found at the following link. Please submit your answers to richardjones@astoncharles.co.uk https://www.linkedin.com/feed/update/urn:li:activity:7084439093694062592/?commentUrn=urn%3Ali%3Acomment%3A(ugcPost%3A7084439092540665856%2C7084516156388036608)&dashCommentUrn=urn%3Ali%3Afsd_comment%3A(7084516156388036608%2Curn%3Ali%3AugcPost%3A7084439092540665856)...
Platinum Jubilee Celebrations
09-Jun-22
Platinum Jubilee Celebrations As the nation drew together to celebrate the Queen’s historic Platinum Jubilee, the Team at Aston Charles thought we’d do our small part to help the insurance industry’s extended Bank Holiday go off with a bang – or perhaps that should be a pop! We organised a picture quiz, with all the images relating to the life and times of Her Royal Highness, with a bottle of fizz going to the winner. As with our other LinkedIn based quizzes and competitions, our network really got behind the idea, and the post received thousands of views and countless people writing in with their answers. The winner was Daniel Gaunt who works in Quality, Health, Safety & Environmental. Daniel not only got the most answers correct, but spotted Richard’s ‘deliberate mistake’ (as he calls it) with one of the questions! As well as asking for a charity donation in lieu of his Champagne, Daniel has even kindly matched this amount personally! Daniel’s chosen charity is the West Yorkshire Community Chaplaincy Project. WYCCP’s resettlement service aims to create a better society for us all by working alongside people who have been in prison to help them achieve settled and productive lives back in our community. More information can be found at www.wyccp.org.uk...
Is there an increased appetite for ‘In-house’ Insurance Practitioners?
31-Mar-22
Is there an increased appetite for ‘In-house’ Insurance Practitioners? As specialist insurance recruiters, the team at Aston Charles have always covered all insurance disciplines; broking, underwriting, claims & adjusting, reinsurance and InsurTech etc, but it’s fair to say that ‘In-house’ or ‘Group Insurance Manager’ style positions are perhaps one of the niches in which we are perhaps best known. We’ve been extremely fortunate to have partnered with some very high-profile firms (high street retailers, complex construction giants, global automotive firms, public sector bodies & housing associations, as well as some of Britain’s best-loved charities). We’ve built up a formidable network within the niche - both of incumbent Group & In-house Insurance Managers, as well as Underwriters and Brokers keen to explore this fascinating, challenging and rewarding sector. It’s perhaps a coincidence, but since the start of the pandemic, the team have seen a definite surge in the amount of companies looking to establish a new, or expand their existing, inhouse insurance function. Richard Jones, Director, goes on to explain, “We’ve always enjoyed a steady flow of companies from outside of the insurance sector, asking to help them explore their options with regard to establishing an in-house insurance function, and it’s only natural to expect this to increase when other firms learn how successful we have been in this area, but over the past two years, there’s been exponential growth in requests for help – indeed last week, we were exclusively appointed to not one, but two inhouse roles.” Case Study – Group Insurance Manager In January of this year, the team were retained by a £0.5billion turnover Leisure company from the North of England. This firm was seeking to appoint its first ever Group Insurance Manager to assume control of its £2.5M GWP premium spend. Aston Charles were able to help in record time: 14th January 2022 - Aston Charles (‘AC’) ...
Aston Charles Sponsors Leeds Insurance Institute 133rd Annual Dinner
22-Mar-22
Aston Charles Sponsors Leeds Insurance Institute 133rd Annual Dinner The Team at Aston Charles were honoured to be invited to sponsor the Insurance Institute of Leeds Annual Dinner. In its 133rd year, the ‘Annual Do’ as it’s affectionally known in some quarters is very much a highlight of the Yorkshire insurance community’s social calendar, with many guests coming from across the region and even further afield! Following an enforced break (Covid, say no more!) of over 2 years, it was fantastic to catch up with so many of our friends from within the industry. The team were joined by their guests from McCarron Coates, UK Global, Edison Ives and TriStar Special Risks, and were treated to some fantastic speeches by fellow insurance professionals, as well as guest speaker, Amar Latif the inspirational Adventurer, Entrepreneur and TV personality who is known for competing in major challenges despite being registered blind. The event, held at the prestigious Royal Armouries, was raising funds for The Insurance Charities, and Leeds CII President, Melanie Jordan’s, chosen charity, Touchstone. Thanks to all the team at the Insurance Institute of Leeds for arranging such a fun evening. We look forward to seeing you again next year!...
133% Increase in Compensation for Financial Clients
12-Mar-19
133% Increase in Compensation for Financial Clients The Financial Conduct Authority have announced plans for the Financial Ombudsman Service to increase the amount of compensation that they can demand a firm pays to a client. It is set to more than double the limit – from the current £150,000 to £350,000 in April 2019. The FCA has recently completed a consultation on the proposals. This new amount will only apply to transactions that take place from April 2019. However, they are proposing that the amount be increased to £160,000 for claims made about business that took place prior to April 2019. In addition, both limits will increase annually in line with inflation from 2020 onwards. Why the change? There are a number of reasons that the FCA believes the changes are necessary. Many clients (which includes those with pension investments) may be set to lose far more than the £150,000 that is currently the limit if an investment goes wrong. Each year, around 2,000 complaints are upheld by the FOS that are above £150,000 in value.[i] Almost 75% of these claims are between £150,000 and £350,000. [ii] Currently, the FOS can request that companies pay the complete amount but cannot enforce any amount above the £150,000. While some companies do choose to accept the larger amount and pay what is requested, this can create a discrepancy between large companies that can afford to pay the extra and smaller companies that may not. While clients can take companies to court for the larger amount, the FCA points out that many clients may be unable to afford to pursue legal action. In addition, a complex drawn out legal process may not incentivise companies to keep standards high in their interactions with clients. They believe that an easy recourse to compensation through their service is far more compelling in terms of keeping up standards.[iii] Opportunities While this increase in the limit may initially appear concerning to financial service companies, it would be ...
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