Insurance Covered

Welcome to Insurance Covered. In this episode we discuss the role behavioural science can and does have in the insurance industry. Our guest is Ella Morrison, Senior Behavioural Designer at Cowry Consulting.  We start by exploring what behavioural science is. "It's the study of human behaviour. It's made up of the different aspects, from cognitive psychology, social psychology, behavioural economics, neuroscience, but what it boils down to is understanding how humans make decisions and how we can use that to improve products, services, procedures, so that they're more in line with how we think". The idea that getting into the mind of the consumer, seeing their perspective can help you tailor a proposition to their specific needs and requirements, a strategy that has become increasingly popular in the last 10 years.  Ella then gives some examples of how it works in a business environment. She explains the work Cowry Consulting do is working with private sector companies to develop their behavioural science capabilities internally. The idea of creating 'exceptional experiences' for both the end customer and employees. Fixing the user / customer journey, making sure that the products and the services that businesses are developing are actually in line with what motivates us and what appeals to us. We go on to look at it in the context of insurance. Ella explains Cowry Consulting have worked with a number of insurers to build their own behavioural science capabilities. She gives an example of working with Saga. "We worked with Saga in their contact centres, they were really struggling with customer retention. We needed to help the customer understand why their premiums are going up. Saga's client base is typically the older generation, so we needed to redesign the process to be user friendly and easier to understand, to prevent the customers feeling unsure and overwhelmed by the information they were being given.  we wanted to make sure that they fully understood why their premiums were changing and to help them guide them to the right policy for them. So we used behavioural science to redesign the conversation so that it was clearer and easier to process, the type of content and explain the policy details in a way that they could understand." Ella goes on to explain that it's crucial to change the process to meet the customers needs rather than make the customer change to fit the process. Finally, we briefly touch on what the future of behavioural science might look like in the next 10 years. Ella believes that we will see the behavioural sciences intertwining with data science which will result in both technological and psychological innovations, for example being able to have a fully bespoke and tailored 'nudge' for each customer depending on their own personal behaviours. Ella also suggests that behavioural design will become a key part of every business, ensuing that processes used are effective in meeting the needs of customers. We hope you enjoyed this episode of Insurance Covered, if you did please subscribe to keep up to date with future episodes.  Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered. In this episode we discuss space insurance, these policies cover and why companies take these out. Peter is joined by David Wade, Underwriter at Atrium Underwriting where he specialises in Space insurance. We discuss, the insurance of space projects, satellites and the future of space exploration.We start by talking about the history of space exploration, the key projects and achievements and where that has left us in the present day. David explains space exploration as we know it came from advancements in rocket weaponry in the second world war. Following the end of the war the science was used to create ships that could break out of the earths atmosphere with the overriding goal of exploring the solar system. David also mentions satellites, and how they are crucial to life as we know it and made fast paced communication a reality. There have been around 12,000 satellites launched and 4000 of those are currently still active.   We then discuss how insurance of satellites works. David explains that some of the first satellite policies came through Lloyd's in the mid-1960s. Most of what Atrium cover is the more commercial space activity, satellites used for television and different policies are taken out at different phases of a satellites life cycle.  "Typically, separate policies for each phase, so, before the satellite is launched there's a pre-launch cover that is available, this is really offered by the cargo markets. At this, at that stage a satellite is just another piece of equipment being transported from a factory to a place of use. That policy ceases when the launch cover starts, that usually really means the first year of life of the satellite. So that policy attaches at intentional ignition or lift off, or launch. So that would cover the satellite whilst it was on its, on its rocket going into space. Once that first month has passed and the satellite has been thoroughly tested and it starts commercial operations that would be a different policy". Finally, we discuss what the future of space insurance holds. David indicates that with the likes of Elon Musk and Richard Branson, commercial space travel will eventually be available to the public and with that a whole new type of space insurance policy. We hope you enjoyed this episode of Insurance Covered, many thanks to David for joining us. If you did enjoy, please subscribe to be notified when new episodes are released. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered. In this episode we discuss micro insurance with Rose Goslinga, co-founder of Pula, a micro insurance company based in Kenya. We will look at why micro insurance exists and why it has become a vital source of cover for so many people in Kenya and beyond. We start by discussing how Rose found her way to founding a micro insurance company in Africa. Rose moved to Rwanda to take up a job in the Ministry for Agriculture and worked with a team to implement 'the green initiative' with plans to help farmers increase their crop yield in order to ensure there was enough food to feed them and the villages they belonged to. It was in this role the need for insurance was clear, when such investment into agriculture was highly dependent on their being a good amount of rainfall. Rose goes on to explain what micro insurance is explaining that it is exactly what it sounds like, small premiums and the limits of indemnity are also small " the average farm size that we deal with is maybe half an acre, our average premium, I think this last year, was $8". Rose goes on to explain that with the micro insurance they offer it is essentially a form of parametric insurance. To visit every individual farm would be logistically and financially very costly (and would drive the premiums up making it unaffordable to the farmers). So instead they rely on technology and sampling in different areas to provide data on a good harvest, if there have been issues (flooding or droughts for example) and pay-outs are based on data received back.We then go on to discuss how Pula 'sell' insurance policies to farmers. Rose explains it comes down to behavioral economics and the value proposition but forward. It is heavily built on trust. "You are now telling people, give me money first, and then if something goes wrong, you have to trust me but I will pay you compensation". One way Pula have sold policies is through credit providers or through fertilizer providers or seed providers that the farmers are using. Working with the companies providing the credit to build and work the farms almost mandating that they take insurance cover to protect them and the harvest should anything go wrong.  We then discuss how the claims side works. Rose explains the farmers don’t make claims, the technology in place calculates claims based on historical data and sampling. If a harvest in a district in lower than historically measured a payment is calculated. If the areas have been affected by adverse weather a payment is automatically calculated and paid. As soon as a trigger happens a payment to the farmers is made. Finally, we discuss the future plans for Pula. She explains last year they had 1.7 million policies in place a number they expect to grow as they expand across Africa and beyond, with Asia and Latin America being other continents to focus on. We hope you enjoyed this episode of Insurance Covered, if you did please subscribe to keep up to date with future episodes.  Hosted on Acast. See acast.com/privacy for more information.

In a special cross-over episode with our sister podcast Taxing Matters, this episode looks at the tax liability insurance. Peter is joined by Alice Kemp, host of Taxing Matters and Giles Hambly, Tax and M&A insurance specialist broker at Gallagher. We discuss what tax liability insurance is, how it works in practice and why many businesses are now choosing to take it out.We start by discussing what tax liability insurance is, Giles explains it is a form of cover taken by a business to protect them if the tax authority challenges a transaction. What that means is if you undertake a transaction or you sell a product in a certain way, you need to meet certain thresholds to qualify for an exemption, such as capital gains exemption, corporate tax exemptions or VAT exemptions. Those rules are highly complex, and, in many cases, there are uncertainties about how it applies to your fact pattern. And so typically what you would do is you would go and get advice from a tax advisor, on whether you meet the thresholds for an exemption and they will judge whether they believe you are able to qualify for it. However even with expert advice there's still a risk that the tax authorities would disagree with the position taken and dispute it. So, a tax liability policy would cover the individual or business in that scenario.   We then look at some of the practicalities of tax liability insurance, working through an example of the risks and exposures this kind of policy would cover in an M&A scenario. We also discuss the structure of the tax liability insurance market and how they need to consider the different jurisdictions involved when underwriting the policy. Finally, we explore if there are any ethical issues that could come into play in this kind of policy. Giles explains that there are not these kind of issues. These policies are designed to protect against uncertainties in the rules and that if you were trying to achieve a tax advantage, it would be very challenging to get that position insured. We hope you enjoyed this special crossover episode of Insurance Covered, many thanks to Alice and Giles for joining us. If you did enjoy, please subscribe to be notified when new episodes are released. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered. In this episode we revisit the 1980s crisis in the Lloyds market, examining the factors that led up to it and how it was ultimately resolved with the help of Lloyd's veteran Reg Brown. We start by briefly discussing the Insurance Museum initiative, which was our topic last time Reg joined us on the podcast. Reg explains that the pandemic has impacted their initial plans of having a physical premises, with tourists not expected back into London in their masses for a number of years. Instead they are pushing ahead with plans for an interim virtual museum, designed to explain different classes of business and examine some of the key cases for each class. We then move on to our focus for the episode, the crisis at Lloyd's in the 1980s and 1990s. We start by discussing the different 'building blocks' that provide context for the crisis that was to come. These were:The structure and hierarchy: "At the top of the pile you have the underwriters and at its simplest, those underwriters would bring in premium and would pay out claims and that either resulted in a profit or a loss. The underwriters did this underwriting on behalf of a syndicate of investors who were known as Names with a capital N, and if there was a profit, it was distributed amongst the Names and if there was a loss then obviously it had to be paid by the Names".Accounting practices: Reg explains that the used a 3 year accounting period to attempt to be accurate, sometimes claims would take time to develop. Even with this 3 year period some claims would still be outstanding so there was still a need for estimating, which runs the risk of syndicates over or under estimating and being inaccurate. Reg goes on to explain that there was also a buffer known as IBNR (Incurred But Not Reported claims). These outstanding claims were then reinsured (RITC – reinsured to close). The problems with this system came when over optimistic reserves were in place.Baby syndicates: Reg explains " Baby syndicates came about because of the complete understanding at Lloyd's of the law of agency. Underwriters at Lloyd's did not see themselves as agents of the Names, and they saw nothing wrong in creating a baby syndicate that would cream off in their mind the best risks. For the benefit of themselves and favour brokers and people like that. The practice was so widespread that even the committee, the members of the committee at Lloyd's, and even the chairman of Lloyd's had his own baby syndicate". LMX spiral:  A number of syndicates had no real product lines to sell so began to reinsure other syndicates in order to get some income. As a result, there was a lot of double counting there. So, when a loss came in, it was a game of pass the parcel. So, for example if syndicate one passes some of its loss to syndicate two, syndicate two then passes some of its loss to syndicate three, onto syndicate four, five, six and when it gets to syndicate ten, it comes back to one again. Because syndicate one is reinsuring syndicate ten. So, the loss was magnified.With the building blocks covered we then go to the crisis, summed up in one word 'asbestosis'. Claims coming in as a result of asbestos damage came in from as early as the 1920s. The courts held that every insurer throughout that period, every single exposure of asbestos had a duty to defend and to indemnify, meaning that the number of claims were in the tens of thousands all funnelling into Lloyd's, through direct insurance or reinsurance. The courts also ruled that compensation was due for every year a victim had suffered exposure to the disease, so the aggregation of the claims made them even bigger. With the approach to accounting a Lloyd's the risks rolled to the current year and the 'Names' took the risk.  On top of this the 80's also saw a series of disasters, which added to the strain on Lloyd's. You had the Piper Alpha disaster, the Exxon Valdez oil spill, and two huge hurricanes. The amalgamation of the disasters and the building blocks in place at Lloyd's resulted in huge losses, between 1989 and 1991 Lloyd's suffered losses of over £8 billion and in 1991 almost 100 syndicates closed.   Finally we discuss how Lloyd's were able to rebuild from this, with the work of new chairman David Rowland and the process known as 'the reconstruction and renewal of Lloyd's which looked to correct the systemic issues that led to the initial crisis, including ways of increasing capital in the market, more structured annual accounting requirements.We hope you enjoy the podcast! Please subscribe to stay up to date with the latest episodes. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered! The podcast that looks at the inner workings of the insurance industry with the help of expert guests. This week we are joined by Samantha Peat, Chair of the professional indemnity insurance group at the Construction Leadership Council (CLC) and we will be discussing the current state of construction insurance, focusing on findings from a recent survey. We start by discussing who the CLC are and what they do. Samantha explains that they are a group that aim to provide sector leadership in the construction industry by working with the government and construction companies to develop solutions and initiatives to help with any issues they currently face. We go on to look specifically at the PI insurance group that Samantha chairs. She explains her group consists of professionals from across the construction industry as well as representatives from brokers and insurers. We discuss a recent survey carried out by the CLC that looked at PI insurance within construction aimed at identifying what the major concerns of the industry are, with the assumption that it would identify the impact COVID-19 was having on the industry. "What the survey did reveal was that COVID-19 was the least of peoples worries and the cost and scope of cover as well as exclusions were the major issues". It identified that following the Grenfell tragedy restrictions on cover were introduced on PI cover, initially very specific exclusions around combustible cladding but as time went on these exclusions became more general and made the scope of cover far too limited. Samantha goes on to explain that they felt the need to take this problem to government for their intervention to solve this issue at a much higher level. The survey acted as a way of identifying these kind of issues at a wider level and give the government data to act on. Samantha then takes us through the 3 key trends highlighted from the survey, these are: Premiums set at unsustainable levels. High excesses being imposed on insureds.Restrictive exclusions on cover relating to cladding or wider fire safety, preventing firms from operating with full protection.She goes on to explain why these are creating so many problems for the industry. "The important thing is to get the remedial work done on buildings with cladding, people are being asked to sleep in places where they do not feel safe, which is unacceptable... The question is who can do this work with the restrictive exclusions, are firms expected to do this uninsured? It's clear that a solution needs to be found that protects all parties involved. Finally, we discuss the potential outcomes from this survey. Samantha explains the reception of the data from government has been well received and they are actively engaging in coming up with a solution for the issues it highlights. We hope you enjoyed this episode, and if you did please subscribe.  Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered! The podcast that looks at the inner workings of the insurance industry with the help of expert guests. This week we are joined by Rob George, Head of Corporate Governance and Risk at the RSPB and our topic for discussion is the role insurance can (and does) play in environmental conservation. We start by looking at who the RSPB are and what they are trying to achieve. The RSPB or Royal Society for the Protection of Birds, are a nature conservation charity based in the UK that focuses on the protection of endangered bird species. They have about 2,000 paid staff, around 18,000 volunteers, and a net charitable expenditure of around £100 million a year which provides essential funding to conservation projects across the globe. They have over 200 protected wildlife reserves that provide endangered species a habitat that protects them from extinction and helps them to thrive.  When a species is identified as being at risk or endangered the RSPB plan and carry out projects to protect birds with the help of Governments, their members, who help fund the projects and of course insurance companies, which will be the focus of this podcast. We go on to explore the impact insurance has on environmental conservation, focusing on key projects undertaken by the RSPB. One project discussed by Rob is an international project on Gough Island which in the South Atlantic, between South Africa and Brazil and is an important site for breeding endangered birds like the Albatross. The RSPB as well as working with mainland UK also conduct conservation projects in other UK overseas territories, however remote they are. Rob explains "around 2 million chicks are born on Gough island each year, but they are at risk due to a non-native mouse population accidently introduced by passing ships". The project to eradicate the invasive mouse species involves flying helicopters over the mountainous terrain in often difficult decisions and drop poison traps using hoppers. The difficulty of the task meant specialist pilots and ship captains were needed which meant getting pilots from New Zealand to come across to the remote island to help.  "The insurance requirements are pretty bespoke, so it's not just marine and air cargo which I mentioned earlier on but abandonment insurance. So, we were concerned about whether we would have enough flying days to get the project done in a season given the conditions that you get in the South Atlantic and we needed to be able to at least clawback some of the costs if we have to give up during the year of operation because of the weather conditions so we had abandonment insurance when we tried first during 2020".When the COVID-19 pandemic hit and restrictions were imposed the project had to be abandoned, the abandonment insurance helped to cover the losses. In 2021 the project was resumed and the work to save the Albatross natives of Gough island is well underway. In this kind of scenario, without the backing of Insurance companies' projects like these would not be able to even be attempted and conservation efforts would be far more difficult to undertake.We finish the podcast by discussing what more insurance companies can do to aid conservation projects and how that relationship is likely to evolve in the future. We hope you enjoy the podcast! Please subscribe to stay up to date with the latest episodes. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered! The podcast that looks at the inner workings of the insurance industry with the help of expert guests. Our guest this week is Christopher Croft and we will be looking at the London and International Insurance Brokers Association or LIIBA and the role they play in the insurance market.We start by discussing some of the projects Chris has been involved in, he highlights three key projects, producing the first London Matters report in 2014, filing the form that incorporated Placing Platform Limited which is now the predominant electronic trading platform in London and convening the first meeting of the working group to try and develop a way in which insurance linked security business could be written in London.  We go on to discuss the role LIIBA play. Chris explains there are two main roles. "Our role splits more or less neatly into two halves is part lobbyist and part expert analyst and input into market debate". The lobbying aspect is the crucial role of representing the interests of their members to government. One example Chris draws on is during the pandemic they have been talking to the government around the possibility of having some sort of private/public partnership that will allow event cancellation insurance to be written again so that live music events and conferences and weddings even can start happening again. The role of expert analyst relates to them playing a role in shaping regulation that will impact the market and weighing into debates with the interests of their members and the market as a whole in mind.We then discuss the three biggest issues facing Lloyd's brokers from the perspective of Chris and LIIBA. Chris identifies them as; maintaining the efficiencies post-COVID, Brexit and the changes that brings and finally the modernisation of Lloyd's.Chris goes on to mention the overarching importance of insurance. "there is a theory that if you were to start again from scratch to create a global economy the first thing you'd do is open up a patent office and the second thing you'd do is open an insurance company because economic activity only works if people can protect their intellectual property and take risk and I don’t think enough people in governments understand how pivotal insurance is". We hope you enjoy the podcast! Please subscribe to stay up to date with the latest episodes. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered! The podcast that looks at the inner workings of the insurance industry with the help of expert guests. This episode we are joined by James Daley, founder of Fairer Finance, and we will be discussing the concept of treating customers fairly. We start by discussing James time as a journalist and how he became involved in the insurance world. The concept of holding up standards and ensuring customers are treated fairly is something that has been at the heart of James work from the beginning. When looking at the financial services and insurance market James saw there was this real information asymmetry between what customers knew and understood and the reality of these complex product offerings. He identifiedthe that there was a role for the press to play in helping to keep the industry honest and ensure customers are treated fairly.James goes on to explain why he set up Fairer Finance in 2014.  "I set up Fairer Finance with the idea of having a company that was first and foremost something that we would try and support consumers to make better decisions but also very much recognising that a successful market for consumers had to be one that was fair to businesses as well". They developed a I created a rating system called 'customer experience ratings' that are a clear indicator to consumers which companies are the most customer focused. The ratings are developed partially through polling of customers but also takes into account the 'uphold rate' at the financial ombudsmen. The idea of these ratings are not to attack companies but something they can take to them with recommendations on how they can make their business more client friendly. "We ended up creating a consultancy business that specialises in re-writing policy documents. Helping companies create clearer customer journey, even helping them with regulatory response or product development with the focus on treating customers fairly". James goes on to explain while they do this for businesses across financial services, from an insurance perspective they focus on personal lines. We then discuss what James thinks are the biggest concerns in the insurance world from an insured's perspective. James mentions trust, the struggle of finding the right product (customer experience) and the customer expectation gap as his three biggest concerns from an insureds perspective. He goes on to explain that they are linked in many ways. "Trust has been lost as a result of the customer expectation gap, the difference between what the customer expects to get vs what they actually get can sometimes differ, it goes back to the lack of knowledge and understanding of complex products". We then get to the main question of the podcast, what does treating customers fairly really mean. "So, I think it really does mean acting in customers' best interests and the phrase that we say specifically to companies when we work with them is it is your responsibility to do everything you possibly could to give the customer the best chance of getting a good outcome".We hope you enjoy the podcast! If you did, please subscribe. Hosted on Acast. See acast.com/privacy for more information.

Welcome to Insurance Covered! The podcast that looks at the inner workings of the insurance industry with the help of expert guests. Our guest this week is Trevor Burnard and we will be discussing the most notorious insurance coverage case in history, Gregson v Gilbert also known as 'The Zong Massacre'. Trevor is the Wilberforce Professor of Slavery and Emancipation at the University of Hull and the Director of the Wilberforce Institute. The Zong massacre is a notorious event in insurance history and involved the despicable murder of enslaved people in an attempt to claim back losses in insurance. We start by setting the political scene in the 1780s. The first murder of enslaved people, or captives, on the Zong happened on 29th November 1781. It was only a month after Britain had lost the American Revolution with the battle of Yorktown. French ships were at that stage just moving in towards the Caribbean. It looked like Jamaica was going to get taken over and conquered by the French fleet. At that point, Jamaica which was Britain's most valuable and important colony was in a terrible state. The great majority of Britons were invested in the slave trade and Britain was the greatest slave trading nation in the world.We then move specifically on to the story of the Zong. The Zong was a ship captured in Ghana and by a British family, the Gregson's who wanted to make a bit of profit from the slave trade, these Liverpool slave traders, used this captured ship to put on a very large number of captives with a very small crew and send them across ideally to Kingston. The ship encountered trouble and found itself off course and running low of supplies. The crew had three choices that they could have made. The first and the most obvious one was to wait for water to arrive, in other words, rain, and to sail for Montego Bay as quickly as possible or wait for another ship to come by. The second one, which is one you would expect them to do, would be to batten down the hatches so slaves could not escape, accept that slaves would die from dehydration and disease and then when they got to Montego Bay to try and sell as many slaves as they could for whatever price they could get and that's what normally happened on slave ships in this sort of situation. The third one was what they did do which was to decide to throw overboard 54 women and children in order, they claimed later on, to stop an insurrection, a rebellion. They did this on 29th November, they threw over another 42, all men on the 1st December and sometime after 6th December they threw over another 26 captives while 10 Africans threw themselves overboard. This equates to the abhorrent murder of 122 captives. The Gregson's then put in an insurance claim, citing the action taken to be lawful to prevent insurrection and rebellion, which at the time was a common claim to make. The underwriter however refused to pay out the claim on this matter, its thought that the actions of the Gregson's made him doubt this was a legitimate claim and more of a scheme to maximise profits and make up for their poor voyage. The decision was then taken to the courts to decide, initially the decision went in favour of the slave traders, but on appeal, Lord Mansfield reversed the decision. Two key reasons for this; the manner in which a number of captives which threw themselves off the ship and also the claim that lack of water was the reason for insurrection when in fact there had been heavy rain before, during and after the massacre.   Despite the case going against the slave traders the story unfortunately has an unsavoury ending, they did not win their claim but the ultimately got away with murder. The Zong was one of the first cases that signaled the changing of attitudes and the kickstart of the abolitionist movement. We hope you enjoy the podcast! If you did, please subscribe to be notified of future episodes Hosted on Acast. See acast.com/privacy for more information.