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Insights on Commercial Lines Transformation

Commercial insurance is a complex market, but inertia in the name of complexity or tradition is no longer an option. As cutting-edge technologies disrupt age-old ways of working across underwriting, distribution, operations and claims, it has never been more important for insurers to embrace the pace of change sweeping the market. How can insurers and their distribution partners prepare for this change? Which technologies should they be investing in? And what will it take to achieve the perfect blend of human and machine or art and science?
Posted on Friday Jul 1

Protection is back

The recent rise in the rate of inflation is causing huge problems for families all over the UK. Many are worried about how they are going to make ends meeting; basics such as heating and food are taking up ever-higher proportions of household incomes. The situation is only going to get worse; central banks worldwide are raising interest rates as they try to dampen down the rocketing rates of inflation. The costs of these higher interest rates are being pushed onto consumers as well, with higher mortgage payments and increased costs of consumer goods.
Posted on Thursday Jun 30

Cognitive bias as a barrier to tackling climate change

There is growing concern among activist groups and across the public that companies will not react quickly enough to mitigate the effects of climate change and reach the agreed targets of the Paris agreement. As regulation and general cultural trends head more towards a net-zero world, this raises the question of why some companies and investors may be slower to react than others. In this blog, we focus on some of the underpinning psychology for this and how we can use this knowledge to identify biases in facilitating the journey to net-zero.
Posted on Tuesday Jun 28

Using market wide data to spot signs of quote manipulation

The push for data driven solutions to tackle quote manipulation is reaching top of the agenda for insurance professionals as the cost-of-living crisis deepens and the risk heightens for fiction instead of fact in insurance applications as consumers search for a cheaper premium. Indeed, in a study by LexisNexis Risk Solutions Insurance conducted amongst 1500 motor insurance buyers in April 2022, 1 in 5 thought it completely acceptable to manipulate the details they provide for a cheaper motor quote .
Posted on Monday Jun 27

CBES report and five key indicators for insurers

The results of the 2021 Climate Biennial Exploratory Scenario (CBES) were published by the Bank of England (BoE) on 24 May 2022. What information can we glean from these results? The report covered an exercise carried out by large insurance companies and banks exploring the potential impacts of three climate change scenarios – “early transition, late transition and no additional action.” The BoE has promised individual feedback to firms who participated as part of their SS3/19 supervisory regime of management of climate risks.
Posted on Friday Jun 24

New Insurance Institute of London book on cyber insurance

A new study of the cyber insurance market by the Insurance Institute of London (IIL) has been sponsored and co-authored by cyber risk analytics specialist CyberCube. Yvette Essen, Head of Content and Communications for CyberCube, talks to guests about the book, Cyber Insurance Research Findings, Research Study Group 266, which has been written for insurance professionals and other interested parties as a guide to both cyber risk and cyber insurance.
Posted on Thursday Jun 23

Higher inflation makes pensions work harder

There can be very few of us who are not beginning to feel the effect of rising inflation on our daily spending. It might be small changes – like this week, when I noticed the £10-meal-deal in my local supermarket is now the £12-meal-deal. Or bigger things, like the price of petrol seemingly to be more than it was before the cut in duty announced in the Budget. When price rises are this noticeable, you do not need the official ‘basket of goods’ figure to tell you that inflation is a problem and that household budgets are stretched.
Posted on Thursday Jun 23

Creating a Sustainable Pensions System

The pensions system in the UK and many other countries was set up at a time when expectations over life expectancy, investment returns, inflation and general views on government and companies were all vastly different from where we are today. Adjustments over time go some way to address these changes but generally have other unintended consequences and our current system is unlikely where we would have ended up if we had designed something holistic from scratch. One of the themes for the Frank Redington Prizes is “What would be a sustainable and effective UK pension system for the people?” and this webinar will explore some of the themes around this question.
Posted on Wednesday Jun 22

Long term Investment Returns in a Net Zero World

An IFoA video from Hugh McNeill from the Professions Economic Member interest Group and Partner at Cabot Square Capital LLP talking about long term investment returns in a Net Zero world
Posted on Tuesday Jun 21

What do planes landing and reserving have in common

Not a lot, at first glance! But both can be affected by “plan continuation bias” – the tendency for us to continue with a pre-existing plan, even when the situation changes and makes that plan unsuitable. Back in February, a video of planes landing at Heathrow during storm Eunice became a viral YouTube sensation. Planes that arrived before the storm landed safely, and planes that arrived after it was in full force were safely diverted. But planes that arrived just as the storm was breaking landed in an increasingly precarious manner – ending up on YouTube in the process.
Posted on Tuesday Jun 21

High inflation highlights limitations of Investment Pathways

One of the stated aims of Investment Pathways was to ensure that non-advised investors did not leave their retirement funds in cash unless it was a deliberate decision to do so. Given increasing rates of inflation this would seem to be very much in their interests, however a quick look at the investment strategies run by those offering these pathways shows they are certainly not designed to cater for inflation rates of 9% p.a.
Posted on Monday Jun 20

See who is attending Claims Innovation USA 2022 hybrid event

No other conference on the insurance calendar brings together so many claims experts to focus purely on transforming your claims customer journey. Throughout the 3-day event we will be sharing exclusive tips, tricks and innovations designed to tackle even the most challenging issues currently preventing your claims function from providing a truly seamless customer experience.
Posted on Friday Jun 17

Flourishing in challenging times

Newly inaugurated IFoA President Matt Saker delivers his Presidential Address, 'Flourishing in challenging times'.
Posted on Thursday Jun 16

All the pensions low dependence throw your hands up at me

In general, large corporate DB schemes have had a good decade. Despite yields generally falling, increased hedging and strong growth asset performance have allowed many to take advantage of higher funding levels, hence reducing their risk. But the question is, when should you stop and what should you do once you’ve reached the end of your flight plan? It’s worth noting that while buyout is likely to be the best option for most schemes, it isn’t necessarily the holy grail for all.
Posted on Thursday Jun 16

Pensions Dashboards Regulations 2022

Barring ‘regime change’ at the DWP, the political will driving the dashboards project seems unstoppable. The goal is admirable but it remains to be seen how much administration costs will have to increase in order to deliver it, and the worry is that the simplification needed for users to grasp the meaning of the information will make the information unreliable. In time, that may undermine the credibility of the dashboards – and possibly pension saving in all its forms.
Posted on Tuesday Jun 14

Five tips for success on 2022 funding valuations

For companies tackling a defined benefit (DB) funding valuation in 2022, it is helpful to start with the Pensions Regulator’s 2022 Annual Funding Statement (AFS). This contains many of the themes that are familiar from recent TPR guidance but there are also lots of nods to the current backdrop, with the Russian/Ukrainian conflict, the lingering effects of Covid-19 and Brexit being notable themes. The challenges of high inflation, greater volatility in the investment markets and uncertain longevity all feature amongst the key issues to wrestle with.
Posted on Monday Jun 13

Reporting on climate a challenge but an opportunity

Over the coming months we expect around 100 schemes to publish their first reports produced in line with the Climate Change Governance and Reporting Regulations. We know significant work has been carried out by many trustees and some have faced challenges relating to: the availability, quality and consistency of data, the identification and selection of suitable scenarios, striking the balance between the level of disclosure necessary to meet the requirements in the regulations and the expectations set in the Department for Work and Pensions’ (DWP) statutory guidance, while keeping the disclosure accessible and useful to readers
Posted on Friday Jun 10

Pensions policy how far have we come in the last five years

As the current DWP pensions minister, Guy Opperman, gets ready to celebrate his fifth anniversary in post, it seems like a good time to take stock of how pensions policy has developed over that period and what the priorities should be for the next five years. Before getting into the policy detail however, it would only be right to congratulate Mr Opperman on his long reign. It has to be good for policy stability to have one person in charge for a sustained period, especially after the ‘revolving door’ of pensions ministers which was the norm prior to 2010.
Posted on Thursday Jun 9

Pensions industry doubts triple lock will exist in 5 years

More than three quarters (81%) of respondents are not confident the Triple Lock will exist in its original format in five years. Fewer than half (49%) of respondents are satisfied with the direction of pensions policy over the last six months, down from 61% in June 2021. However, more than half (58%) have been satisfied with the work of the Pensions Regulator over the past six months and two thirds (67%) are confident that it will focus on the right areas in the next six months.
Posted on Monday Jun 6

IFoA welcomes proposals on a regulatory regime for actuaries

The IFoA has commented on the Government’s response to its consultation on ‘Restoring trust in audit and corporate governance’. Matt Saker, President-elect at the Institute and Faculty of Actuaries (IFoA), said: “We welcome the decision to have the newly established Audit, Reporting and Governance Authority (ARGA) oversee and regulate the actuarial profession, focused primarily on individuals, by reference to a clearly defined list of public interest actuarial activities.
Posted on Tuesday May 31

PLSA Investment Conference 2022 Round Up

Highlights from PLSA's 2022 Investment Conference in Edinburgh.
Posted on Tuesday May 31

Do insurers adjust prices for adoption of loss prevention

In theory, loss prevention should, as the name implies, reduce the loss for the risk carriers and the expected present value of losses. In a competitive insurance market, where the premium is given through market bidding, expected potential savings from investing in loss prevention technologies should become measurable in the insurance price. Based on a new PhD study, this article conveys the main results of the question: What influence has the use of property loss prevention technology on property insurance pricing?
Posted on Monday May 30

Workplace emergency savings

Nest Insight event dedicated to workplace emergency savings, where we’ll share the latest findings from our research trials and hear from other practitioners and experts in this space.
Posted on Friday May 27

Inflation risk premium why think about it now

An inflation risk premium (IRP) is nothing new. Market-implied inflation has historically been higher than actual realised inflation. There is only a limited supply of inflation-linked assets and investors have, up until now at least, been willing to pay a premium to get their hands on them. As an example, if market-pricing implies inflation is 3% in 20 years, but we actually expect it to be 2%, then the inflation risk premium is 1%.
Posted on Friday May 27

How to identify the key issues early in reserving

This article looks at how an analytical approach to reserving can help actuaries focus on what really matters, right at the start of the process. We start simple and then tackle the limitations of the simple approach to build up to the full approach. Doing reserving well can be hard. There are lot of things to consider and it can be difficult to know what to focus on. Or you only realise what you should have focused on too late in the process.
Posted on Wednesday May 25