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Identifying the Best: How do Brokers Select Insurance Providers for their Clients?
23-Oct-17
Identifying the Best: How do Brokers Select Insurance Providers for their Clients? Insurance brokers rely heavily on a good reputation in order to attract and retain custom. Therefore, the choice of insurance policies that they offer their clients is vital to their business. Recommending comprehensive, affordable products with a trouble-free response in the event of a claim, can gain the broker a reputation of excellence. Equally, a bad customer experience for a client can be very detrimental to the broker’s own good name. A recent series of interviews by Insurance Age, Insurance Post and Insurance Hound, investigated the ways in which brokers choose insurers for their customers. The group documented their findings in a paper entitled “Broker Insight.”[i] They found that many brokers repeatedly used a small selection of insurers and examined the factors used by brokers to decide upon their selection. Quality of Experience and a Positive Claims Process Today, customer experience professionals are recognising that customers are putting experience above product and price in their purchase choices. Walker’s in-depth study about customers suggests that by the year 2020, the balance of importance will be 50% experience, 34% product and 16% price.[ii] The “Broker Insight” findings suggest that insurance brokers have anticipated these customer priorities, with most brokers stating that the quality of the insurer’s cover is the most important consideration when identifying insurance providers to recommend to clients. Brokers don’t like policies with numerous exclusions and they prefer policies that have a good breadth of cover. Brokers are extremely keen that their clients should have a positive experience in the unfortunate event of a claim. The public perception of the insurer claims process is regrettably very negative in the UK, with a recent poll by Dewberry Insurance finding that people tend to believe that only 50% of life insurance claims are paid ...

Millennial Falcons
18-Jan-17
How many Millennials does it take to change a light bulb? And are they adequately covered? Despite all the Brexit bluster, more than a 100,000 business entrepreneurs decided 2016 was the right time for a start-up – that’s 4.3% up on the previous year according to the Office of National Statistics. In years gone by, much thought, reputation and capital was required for such a venture, but not anymore, it seems. Millennials (also known as Generation Y, Generation Me, Echo Boomers, Peter Pan Generation) are the demographic cohort following Generation X. Consisting of individuals born between 1982 and 2004, this much maligned, but largely creative bunch need little more than an idea, a laptop and a coffee shop with Wi-Fi to get their new money earner underway. Some of these ‘companies’ enjoy staggering success, so how has the insurance industry reacted to a collective who pretty much does everything by the click of a mouse - especially in the field of Cyber risks where they are surely most vulnerable? For years, security professionals have been saying “you either have already been data breached or you just don’t know you have,” as they have become as inevitable as death and taxes. Again, according to the ONS, almost six million fraud and cyber-crimes were committed last year in England and Wales. Under-reporting and the speed of ‘criminal capability development’ is also an issue, all of which has prompted the National Crime Agency to call for a stronger law enforcement and business partnership going forward, as they estimate that the costs to the UK economy is billions of pounds per annum – and growing. Since the cyber threats of today are undoubtedly the insurance claims of tomorrow, traders that don’t have adequate cover in place will find out the hard way the impact an attack will have on their ability to trade. Part of the current problem is that those insurers who have made the digital leap are still ...

Computers Replacing Humans: Risky Business
10-Jan-17
It is basic human nature to mitigate the potential negative outcomes in the things we do. The first methods of spreading risk were practised by traders as far back as the 3rd millennia BC. Chinese merchants, tasked with navigating treacherous river rapids, would redistribute their wares across many vessels to limit the loss due to any single vessels capsizing. The 14th century saw for the first time distinct contracts, which allowed insurance to be separated from other kinds of investments (loans, for example), which proved to be a game changer in the maritime industry. The Great Fire of London consumed some 13,000 houses in 1655, thereby changing the matter of Property insurance from ‘one of convenience to one of necessity.’ From its inception, man used insurance to protect itself against loss. Unfortunately, the industry, or rather those who work in it, can no longer expect the same, as it seems man - or rather man’s creation, the machine – is turning against its creator. Slowly but surely, many of the GI roles once thought of as solid job options fall foul to automisation – of the top 20 currently thought to be the most vulnerable, the role of the Underwriter is currently number 5. Of course, developments in technology in any industry bring change; it’s inevitable. Change, although sometimes resisted, is for the most part positive; it improves productivity, which invariably reduces costs. But as various ‘disruptive changes’ affect the general insurance industry (e.g. the advent of driverless cars, drones and so on), insurers are increasingly using algorithms to assess risk and the costs applied to it, rather than using people. Starting this year, the Japanese insurer, Fakoku, is rolling out a plan to replace 34 Claims Handlers with IBM’s ‘Watson Explorer’. Scanning hospital records and other documents in a fraction of the time, it will enable the remaining human workers to process claims much ...

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07/02/2020
Insurance Brokers – how proposed changes in Entrepreneurs’ Relief could affect the value you realise from your business: Insurance Brokers – how proposed changes in Entrepreneurs’ Relief could affect the value you realise from your businessWhether it was the nationals sweeping up smaller concerns, or in-house consolidation as globals streamlined a number of brands within their portfolio, 2019 was another interesting year on the M&A front for the UK insurance broking market. With persistent rumours regarding a “mega-merger” between two of the biggest global names, and the war chests of the consolidators showing no sign of running empty anytime soon, I cannot see any change of pace in M&A activity in 2020.As you’d expect, I have longstanding engagements with all the ‘usual suspects’ that have well-publicised appetites for acquisitions, but I am being increasingly asked by smaller, independent brokers who are considering making complimentary, strategic acquisitions too.A Waiting Game?With M&A market appetite showing no sign of waning, and rumours regarding increasingly generous terms, now is clearly a good time to consider realising the value in your business.Market confidence is up, and regardless of what you make of him or ‘it’, Boris’ Johnson’s overwhelming Commons majority, and our departure from Europe last Friday, has at least given us a degree of economic certainty.I do appreciate that the decision to sell, or not, is a massive one. For most Broker Principals, their business is their life’s work; they want to be sure that they are achieving the best possible terms and that longstanding clients and colleagues are going to be well-looked-after, post-sale.Broker Principals - you may well be thinking “why not hang fire?” Give it a couple of years and see what this brave new post-Brexit world brings, and then start the beauty parade of potential suitors. I fully appreciate that it is not a decision to be taken lightly. Danger Lurks!But a new downside of not acting now is potentially looming around the corner - in the shape of the Chancellor ...
19/12/2019
Think you don’t need Terrorism Insurance? Think Again!: Think you don’t need Terrorism Insurance? Think Again!Following recent tragic events in London, I’ve been thinking about the effect of terrorism on business; more specifically on SME’s and also on the insurance industry. Several of my contacts have posted on LinkedIn, pointing out that denial of access to bars, shops or places of work have bankrupted many firms (often SME’s operating on small margins) following terror incidents. This sparked my interest and I decided to do some research.Approximately 80% of businesses do not have any form of insurance against loss in the event of a terrorist attack.[i] Insurance brokers will want to ask; why are so many businesses missing out on this important aspect of their insurance cover?The fact that only around 1 in 5 businesses have terrorism insurance is concerning. Insurance specialist, James Woolerton, at Tristar Special Risks, suggests that Terrorism Insurance is bought by two types of people; the “informed and the obliged” – or in other words - those who understand how important it is, due to having a clear understanding of the risks; and those who are forced to purchase terrorism cover, for example by a mortgage provider.[ii] To get more SMEs responding to this risk, it is important that more companies join the ranks of the “informed”.What is terrorism insurance?Insurance against terrorist attacks can be difficult to define; because terrorism itself is difficult to characterize. While there are varying definitions available, it is important to remember that though the most common perception of “terrorism” is that of bombings carried out by recognised extremist groups, the description is actually far wider than that. Terrorism can include an attack by any group seeking to cause fear or disruption through violence and force in order to create change. Therefore, even situations, such as violent interruption of transport by political activists, could be considered a terrorist event. This decade has also seen a ...
28/08/2019
Life Insurance Industry: Is your Data Deceitful?: Life Insurance Industry: Is your Data Deceitful?With the rise of InsurTech, insurance companies have been launched into a race to incorporate technology into their strategies and services to avoid being left behind by their competitors. InsureTech has produced – among other things – the opportunity to collate vast quantities of data, opening up new revenue streams and offering access to many more potential clients. However, as legitimate technology start-ups have disrupted the insurance and financial markets, so less discerning companies have found ways to take advantage of this race for technological advancement – making money out of business clients in fraudulent ways. Life insurance companies rely heavily on having access to vast quantities of data. This information can be gathered in numerous ways – but the rise of fraudulent data (including fraudulent data that has been purchased honestly) is putting a strain on many otherwise healthy companies.In fact, statistics suggest that up to 50% of the contact details held within a life insurance company’s Customer Relationship Management (CRM) database will be uncontactable. This is costing the industry up to 75 million pounds per year.[i] Therefore, questions about the accuracy and reliability of customer data is not simply academic. It is highly significant and could make or break a life insurance company.What’s the problem?There are a number of different issues with data that a company holds in its CRM system.· Fraudulent Lead Generation - Fraudulent bots are now commonplace, meaning that clicks and enquiries are no longer guaranteed to be genuine leads. In fact, data suggests that $1 of every $3 paid for online advertising is wasted due to fraudulent information.[ii] When a company is spending money to generate contact details for people who may have an interest in the company – and then spending additional money on marketing to those individuals, it is vital that ...
12/06/2019
Machine Learning in Insurtech – a fuzzy and probably approximate science!: Machine Learning in Insurtech – a fuzzy and probably approximate science!We have looked previously at the huge opportunities provided by the rise of Insurtech within the insurance industry (https://www.astoncharles.co.uk/news/blog/insurtech-competitors-or-collaborators). Insurance companies have been notoriously slow to embrace the lucrative changes provided by the rise of technology, with 74% of leading worldwide insurers agreeing that the sector as a whole has been lagging behind in the digital revolution.[i]While Insurtech is wide and far reaching, one particularly poignant area is in the rise of Big Data and the opportunities that speedy interpretation of this can provide.A new concept?Of course, collating, organising and interpreting data to get accurate measurements of risk is by no means a new science. In fact, some 17th Century Underwriters specialised in this field, analysing statistics to quote insurance premiums for merchants and tradespeople of 1690s London.To quote Agile Risk Partners MD, @James Poole’s blog ‘The Big Data Paradox’ (https://www.linkedin.com/pulse/big-data-paradox-james-poole/) of December last year, “Lloyd's of London has got to have been one of THE VERY FIRST big data plays hasn't it?! The principle then, just as now, was that the premiums of the many, covered the claims of the few. And ‘many’ is significant here, because ‘many’ implies that underwriters were using big data as it was then, back in the 1690s!”Data is no more important now, than it was then. However, what the rise of technology has done to information, is create more and offer the potential for almost instant analysis. Statistics that took weeks to study can now be done in seconds, thanks to the rise of machine learning and Artificial Intelligence. Data scientists are now able to program computers to capture data from a vast range of different sources; from meteorological conditions, to geographical and historical data; as well as person specific data ...
12/06/2019
Money is Not Enough in Search for new Financial Services Talent: Money is Not Enough in Search for new Financial Services TalentA worrying trend within financial institutions indicates that bright young people are less and less inclined to enter the financial services market – with new blood tending to opt for other types of workplaces and industries. Recent statistics suggest that 65% of people would not consider working in the financial services market. There are a number of factors in play, but one of the overriding issues appears to be with the image of the sector - with almost half of young people under the impression that working in financial services is “boring.”[i]The percentage of 22 to 29-year olds with administrative jobs in financial services has dropped from 3.1% in 2011 to 2.7% in 2017. [ii]In addition, it would appear that of the 16 to 24-year-olds who have seen fit to enter the world of financial services, a huge 55% have parents who have or do work in the industry. This indicates that having a parent in financial services either encourages young people to enter the sector or gives them an edge when it comes to accessing it.[iii]This is a concerning realisation, with industry experts believing that the drop in new blood within the sector could have serious knock-on effects. The lack of interest from young people who currently have no link to financial services, means that the talent pool is becoming narrower and less diverse.There are a number of ways that new talent can be attracted into the industry. It will require some strategy and effort on the part of financial services companies but will reap dividends in terms of the future of the financial services sector.An interesting ...
17/05/2019
Insurance Benefits as Volvo Tackles Drink Driving: Insurance Benefits as Volvo Tackles Drink Driving In their continued efforts to maintain a reputation for producing the safest cars in the world, Volvo have announced plans to reduce drink driving - by manufacturing cars that can detect and respond when a driver has been drinking alcohol. The cars will be designed to react to a drink driver in one of a number of ways, with the aim of making the vehicle, driver and other road users safe.In the UK an estimated 230 people were killed in accidents involving a drink driver in 2016; a number which accounts for around 13% of all road traffic fatalities in that year. Over consumption of alcohol also causes approximately 5% of all reported car accident casualties.[i] Therefore, the prospect of eradicating drink driving related injury and fatalities is enormously significant.While the devastating human cost of drink driving remains the main motivating factor behind the push to stamp out this dangerous habit, there is also a financial cost to driving under the influence of alcohol.Insurers pay out figures in the millions to cover the financial claims resulting from drink driving accidents. While many insurers have clauses that exclude pay outs to drivers who are under the influence of alcohol, the companies still remain legally obliged to cover any third-party costs; which could run into the hundreds of thousands in the event of very serious injuries. While they may attempt to recoup these costs from the driver, the reality is that in all likelihood, the insurer will remain out of pocket. For insurance companies, the financial benefits of a reduction in drink driving are huge.“Big Brother” or big benefit?The technology would not only target drivers that are drunk. The system involves cameras and sensors that will be able to assess a number of types of erratic driving. This means that other problems that cause dangerous driving; such as driving under the influence of drugs, excessive tiredness and driving while ...
03/04/2019
Insurtech: Competitors or Collaborators?: Insurtech: Competitors or Collaborators?Just as Fintechs have disrupted the financial industry in recent years, Insurtechs are now making a very visible impact on the insurance market. Grappling with these new companies is vital to the survival of existing, traditional insurance providers. One survey suggests that as many as 74% of incumbent insurance companies accept that Insurtechs are a challenge to them. In spite of this, only 28% are looking at the possibility of partnering with these new companies, and less than 14% are involved in Insurtech programs.[i] These are worrying statistics, as a refusal to engage with these emerging technologies could spell the end for traditional incumbents. However, with foresight and a willingness to change, insurance companies can benefit from the products and services of Insurtechs, utilising them to complement, promote and extend the services that they already provide. Working with these companies is a way to not only survive the disruption caused by the rise of Insurtechs; but to grow and develop through strategic collaborations. Insurtech companies provide innovative products that are able to improve on every part of the value chain within the insurance sector. Insurtech can also help to identify and then market to gaps in the insurance market, opening up revenue streams that were not previously available. · DistributionMcKinsey Panorama conducted an analysis of Insurtechs, using their own database which holds records on over 500 Insurtech companies. They suggest that 37% of Insurtechs are involved with the distribution of insurance, with 75% of these having a specific emphasis on the enabling of distribution; such as allowing easy access and simple comparison of products for consumers.[ii]This allows existing companies to promote their products and services in a marketplace that they may not otherwise have had access to. There is opportunity for companies that are smaller or ...
12/03/2019
133% Increase in Compensation for Financial Clients: 133% Increase in Compensation for Financial ClientsThe 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]OpportunitiesWhile this increase in the limit may initially appear concerning to financial service companies, it would be a mistake ...
12/03/2019
Cheltenham Gold Cup – Free Sweepstake: Once again, we’re running our annual Gold Cup competition. Simply, make sure you follow the Aston Charles company LinkedIn page, like the relevant status and name your preferred horse- a full list is below. The winner gets £50, 2nd place £30 and 3rd £20. If two people pick the same horse, we will draw names from a hat. For full T&C’s contact Richard Jones – 077250 41848 AL BOUM PHOTO ANIBALE FLY BALKO DES FLOS BELLSHILLBRISTOL DE MAI CLAN DES OBEAUX DEFINITLY RED DOUBLE SHUFFLE ELEGANT ESCAPE FRODON INVITATION ONLYKEMBOY MIGHT BITE MONALEE NATIVE RIVER PRESENTING PERCYROAD TO RESPECT THISTLECRACKYALA ENKI SHATTERED LOVEGood luck!!...
07/02/2019
Three Ways that Millennials will Shape Financial Services by the Year 2030: Three Ways that Millennials will Shape Financial Services by the Year 2030 Today’s young people in their 20s and early 30s are about to have the highest spending power of any generation.[i] These are the millennials; people who reached adulthood in the early 21st century and are now approaching the height of their careers, buying houses and starting families. They entered their employment in the midst of the financial crisis and are growing up in a world full of environmental, economic and social concerns. Their voice will have a strong impact on the direction in which many industries will need to move and the financial sector is no exception. In order to stay competitive in a crowded market moving towards the year 2030, financial institutions need to ask, “What do millennials really want?”1) Digitisation and Artificial IntelligenceOver the past decade, disruptive technology has ushered in huge changes in financial services, with a move to digitisation, mobile banking, online lending and personalised marketing. There is no indication that millennials will be slowing down the rate of technological advancements. Indeed, statistics show that millennials spend an average of 25 hours a week on the internet, with one in three people in this age category making at least one weekly purchase via their computer (as well as many via smartphones)[ii].Millennials are a generation that expects instant results. Recent years have seen the ability for an individual to make on online purchase in the morning and have it delivered in the evening. Speeding up processes and being convenient will be vital to appealing to the customers of 2030. In addition, clients will want to see an increasingly personalised service. Advances in AI are making this possible, with marketing and products being tailored to fit an individual, rather than grouping people together by demographics such as age, income or career. 2) Social responsibilityIt is ...

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