European Insurance Industry: Merger creates European digital insurance group - by Terry Gangcuangco

Two insurtech pioneers have completed a merger to form The Digital Insurance Group.

Digital insurance broker Knip and comparison-software provider Komparu will complement each other in hopes of further innovation in the industry. The combination consists of 70 insurance, technology, and business development experts.

“This merger is an exciting step that will bring together two transformative insurtech brands to create a major force in Europe’s insurance sector. It represents a significant milestone for this rapidly growing sector, which is using disruptive technologies to deliver innovation to a multi-trillion dollar insurance industry,” said Ingo Weber, Group CEO of The Digital Insurance Group.

Knip launched in 2014 as Europe’s first truly-digital insurance broker, while Komparu became known for its proprietary comparison platform after launching in 2013. A large share of the mobile-first insurance brokerage market in both Germany and Switzerland has been captured by Knip.

With the merger, Knip’s platform will be serving a third of the nearly €1.1trn European insurance market. Meanwhile, Komparu – which provides SaaS technology services for insurance companies, brokers, and publishers – will be able to deliver an end-to-end solution for partners while broadening the group’s reach.

Komparu chief executive Ruben Troostwijk said Knip and Komparu will be able to share expertise and geographic footprints to create bigger and better innovations. On the other hand, Knip CEO Dennis Just is stepping down as Weber heads the new parent company.

Roeland Werring, who becomes Group CTO of The Digital Insurance Group, commented: “The consumer-facing apps and CRM of Knip on the one side, and Komparu’s transactional frameworks and B2B white-labelling tools on the other, complement one another perfectly.” He said the partnership not only promises immense possibilities for innovation but supports industry transformation as well.
 
Read more: Merger creates European digital insurance group | Insurance Business

European Insurance Industry: Financial Assessment of the European Insurance Industry

The European insurance industry is struggling with the volatile macroeconomic environment and regulatory changes while also incorporating changes in technology and business model to be at par with its global peers.

While premium growth is accelerating, pressure on profitability continues due to low investment income and the uncertain economic environment. Growth in premiums is different for different countries in Europe, but is led by emerging economies in Eastern Europe.

 The European insurance industry has remained somewhat resilient to the 2008 financial crisis, which did not have much impact on its returns statistics.

Threats of deflation are rising in Europe and can have a negative impact on this industry. Changes in the preferences and demands of the consumer; corporate and technology developments creating new areas of risk to be insured; and industry consolidation in search for better distribution network (online or physical) are some factors that are likely to drive industry growth.

Life and health (L&H), and property and casualty (P&C) insurance revenues are growing at a steady pace despite the challenging macroeconomic situation. However, as situations are expected to worsen in the near future, decreased premium growth and lower investment income are expected unless insurers use diversification as a strategy to enhance returns.

Operational costs have decreased due to investment in upgraded technology, and the cost-effective online distribution structure has led to increased profitability in the industry. Underwriting ratios have witnessed improvement but the industry is not well placed in terms of policy holders surplus to cover future claims.

Overall, the insurance industry is well positioned financially and ready to face the challenges that lie ahead.

Insure-Digest.

Insurance Industry: "SURE" takes close look at readjustments and consolidations taking place in the European insurance industry

The Summer issue of SURE published by Koster Insurances takes a special look at the readjustments and consolidations taking place in the European insurance industry .

Also in this issue additional information on the upheaval in the European Insurance industry which comes not only as a result of new EU regulations affecting the Insurance market, but also as a direct consequence of changing economic times, circumstances and influences. Among these outside influences, probably one of the most important being the low interest rates.

SURE notes that For multinational companies, including those in the insurance industry, another dark cloud on the horizon seems to be that there is a general consensus among governments around the world, including the EU, that something has to be done about the tax evasion practices by many multinational corporations. To combat this problem the EU is presently developing a common EU tax base.

This issue of SURE also reviews the EU's sustainable energy strategy and how it can positively influence the job market, and looks specifically at market developments in Britain, Poland, Sweden, and the Netherlands concerning the insurance industry.

Koster Insurances, the publisher of the publication also announced in this issue that this would be the last issue of SURE in its present format. The publication was first published in 2006. 

EU-Digest

European Insurance Industry: Low Interest Rates Pressuring European Insurers - by Juliet Samuel

Low interest rates are taking their toll on some European insurers as they prepare to implement more stringent capital regulations being introduced by the European Union.

Results from three of the continent’s largest insurance companies Wednesday showed how low or negative yields are having an uneven effect, forcing some companies to change their strategies.

Tidjane Thiam, the outgoing chief executive of Prudential PLC, who is leaving to run Credit Suisse Group AG, warned about the “headwinds” of low long-term rates and said that his priority since 2008 has been to reduce the company’s reliance on rates for its earnings.

“It was my deeply held belief that if we wanted to control our destiny we needed to reduce the [interest rate] income in our earnings,” the chief executive said. “We’ve done that successfully.”

Prudential on Wednesday said total new business profits fell 6% from a year earlier in the first quarter, to £496 million. Total annual premium equivalent, a common measure of sales for U.K. insurers—reached £1.25 billion, up 7% compared with the first quarter of last year.

Prudential’s shares fell 1% on Wednesday in London.

Insurers are particularly sensitive to low rates. One of the main ways they make money is by collecting payments made by policyholders and investing them in the market for higher returns, mostly in bonds because they are seen as lower risk than equities. When interest rates fall, insurers’ margins get squeezed.

Low market yields also force insurers to put aside more cash because they can’t rely on high market returns to generate enough cash to fulfill their obligations to policyholders.

“There is a lot of jiggery-pokery they can do to manage these numbers to at least show a good number,” said James Shuck, an analyst at UBS AG.

Read more: Low Interest Rates Pressuring European Insurers - WSJ

UK gets key EU portfolio for insurance and pension regulation - by UK politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker - by Judith Ugwumadu

UK politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker.

- See more at: http://www.theactuary.com/news/2014/09/uk-gets-key-eu-portfolio-for-insurance-and-pension-regulation/#sthash.6QsqAncI.dpuf

UK politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker.

- See more at: http://www.theactuary.com/news/2014/09/uk-gets-key-eu-portfolio-for-insurance-and-pension-regulation/#sthash.0PXJ6O6s.dpuf

British politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker.

Lord Hill will take up the newly created post of commissioner for financial stability, financial services and capital markets union once the make-up of Juncker’s commission is approved by the European Parliament.

The portfolio has been created after the decision to break up the existing internal market department of the commission, headed by French commissioner Michel Barnier, and move responsibility for financial regulation.

Lord Hill will therefore be responsible for the European supervisory authorises, including EIOPA (European System of Financial Supervision), the regulator for insurance and pensions.

The appointment was welcomed by senior UK politicians.

UK politician Lord Hill is set to be handed a senior economic post in Brussels, which will include responsibility for the new Solvency II regulations for the insurance industry, by European Commission President-elect Jean-Claude Juncker.

- See more at: http://www.theactuary.com/news/2014/09/uk-gets-key-eu-portfolio-for-insurance-and-pension-regulation/#sthash.6QsqAncI.dpuf

Read more: UK gets key EU portfolio for insurance and pension regulation | The Actuary, official magazine of SIAS and The Actuarial Profession

European Insurance Industry: Solvency II technical draft too harsh, firms claim - by Hugo Coelho

Insurance industry representatives have called on the European Insurance and Occupational Pensions Authority (Eiopa) to soften draft Solvency II technical specifications, arguing that some of the specifications are not aligned with parts of the Solvency II legislation and impose harsher requirements than politicians intended.

An updated draft of the technical specifications, circulated in March for consultation, is inconsistent with the Solvency II delegated acts in relation to ring-fencing requirements and the calculation of the volatility adjustment, insurers say.

The technical specifications provide the details that insurers will use both to calculate their regulatory capital for forthcoming Eiopa stress tests and to complete reporting exercises during the preparatory period for Solvency II, which comes into force in 2016. They are subordinate to the delegated acts – the second layer of Solvency II legislation now being finalised by the European Commission.

Read more: Solvency II technical draft too harsh, firms claim - Risk.net

Europe's insurers seen escaping brunt of flood damage - by Chris Vellacott and Jonathan Gould

As insurers start counting the cost of devastating floods across central Europe, many of the region's businesses and households are not covered and will have to foot the bill themselves.

Nicolaus von Bomhard, chief executive of the world's largest reinsurer Munich Re, attributed under-insurance for flood risk in the worst affected areas to a legacy of insurers' past reluctance to offer services in the region.
While this has changed and insurers are now prepared to insure almost all the risk, under-insurance remains a problem in the region, he said.

"On the losses, I can't give any numbers, it's way too early, but the macroeconomic loss will be much bigger than the insured loss," he said at an insurance industry news conference on how insurers and governments could work to reduce the impact of natural disasters.

But while waters were still rising and thousands of Germans, Hungarians and Czechs were evacuating their homes, some industry specialists said they expect the insurance loss to fall short of the last big floods to hit the region in 2002

Read more: Europe's insurers seen escaping brunt of flood damage | Reuters

European Insurance Industry: ACE advises European insurance industry not to overlook 'emerging insurance markets close to home'

Joseph Clabby, Regional President of Continental Europe for ACE Group, today highlighted Turkey, Poland and Russia as Europe's top three emerging insurance market opportunities.

The ACE Group registered in Switzerland is one of the world's leading global commercial property and casualty insurance organizations. ACE operates in 53 countries and territories and in the Lloyds insurance market in London. Clients of the ACE Group consist of multinational corporations and local businesses, individuals, and insurers seeking reinsurance coverage. In 2012, the group had $92.5 billion in assets, nearly $21.6 billion of gross written premiums and more than 17,000 employees.

Speaking to insurance industry executives at the Insurance Day Summit in London, he highlighted four 'megatrends' which would help drive future insurance market development in these countries:

-- Economic advantage -- as the centre of gravity of the global economy shifts east and south
-- Trade revolution -- as emerging market growth radically changes the shape of future trade flows
-- Investor attractiveness -- as investor confidence in emerging Europe continues to increase
-- Increasing wealth -- as greater individual wealth drives successful business growth

Read more: ACE advises European insurance industry not to overlook 'emerging insurance markets close to home' - WSJ.com

Insurance Industry: New EU Rule Means Unpredictable Future for Insurance & Annuity Rates -

On Friday 21st December, new gender equality rules came into force regarding the calculation of insurance premiums and pension annuity rates. The new rules mean that gender can no longer be taken into account when insurance premiums and annuities are calculated.

Previously, women have paid - on average - lower insurance premiums as statistics show they have fewer car accidents and make fewer insurance claims than men. Women also live longer - on average - so while they have paid less on health and life insurance, they have also received a lower annuity rate as payments will generally need to be made for more years than for men. Annuities are determined by the rate set at retirement, and are paid out every year from retirement age.

However, a ruling by the European Court of Justice found that gender discrimination in the calculation of rates fell foul of EU gender equality rules, and that men and women should receive the same rates.
Last week, the Telegraph reported that: "Annuity rates [fell] by 9% in the past three months."

Alan Higham, the chairman of Annuity Direct, said: "we have seen insurers change their rates very often in the past few weeks. ... My impression is that those changes are to get the most business at the lowest rate."

Billy Burrows of Better Retirement Group agreed, adding: "Annuity companies knew they were going to get a rush of business from people looking to beat the deadline, so they cut rates to avoid being swamped."

Gregor Watt reported in Money Marketing this week that: "The European Court of Justice ban on using gender in underwriting could have far-reaching effects on annuities and other products," including an increase of up to 20% on life insurance for women, a 10% fall in life cover for men and an 8% decrease in annuity rate for men that could represent a "substantial" fall in retirement income, which would disproportionately affect those on lower incomes.

It remains to be seen what the long term effects of the new ruling will be on annuity rates and insurance premiums, but experts are predicting both rises and falls as companies alter rates according to what their competitors are doing or to gain an advantage in the market.

New EU Rule Means Unpredictable Future for Insurance & Annuity Rates - World News Report

Polls: Results EU-Digest November Poll - respondents prefer Health Insurance Premiums be tied to income

The results of the November EU-Digest poll on the question "Should Health Insurance Premiums Be Linked To Income" resulted in 67% of the respondents saying yes and 33% saying no.

Our December poll which will be featured on EU-Digest asks your input  to the question:
"Will the US go off the financial cliff?"

EU-Digest

European Insurance Industry: E.U. weighs two-year delay for insurer capital rules

European Union officials have entertained the idea of a two-year delay in the implementation of strict new capital rules for the bloc's insurers, an internal document shows.

The Solvency II rules, proposed by the European Commission and aimed at making insurers hold capital in strict proportion to their liabilities, have already been delayed by persistent disagreements over their final shape, angering the industry and undermining their intended status as a benchmark for regulators worldwide.

The E.U. document, seen by Reuters, looks at the option of holding tests to gauge the impact of Solvency II after governments agree the new rules in principle, and concludes that this would push the new regime's start date out to 2016.

However, the document, which was prepared by the Commission for discussion by E.U. lawmakers and member states, expresses a preference for holding the tests first because this would allow the rules to take effect in 2015, just one year beyond the official 2014 deadline.

Read more: E.U. weighs two-year delay for insurer capital rules | Business Insurance

European Commission hits back at Prudential Insurance over threat to leave - by David Sandham

The European Commission said it had issued the statement in response to news stories that said the Prudential insurance company was considering leaving London because of the future Solvency II rules.

'The Commission fundamentally disagrees with statements made by some insurance companies that Solvency II leaves them with no choice but to leave the EU,' the statement said.

The Prudential's chief executive Tidjane Thiam had attacked the Solvency II rules earlier this week, saying: "We love London, we're a British company and we've been here for 160 years. It's not a debate about London but about the things that are happening in Brussels. Without Solvency II we wouldn't be having this debate.'

The European Commission vigorously defended its position. 'Solvency II – which the industry campaigned for in the first place – will improve the international competitiveness of insurers, not undermine it,' it claimed. 'The financial crisis demonstrated only too clearly how important good risk management and sound governance are. This is true for all financial actors, and not just banks. And this is not time for complacency in the financial sector.'

Note EU-Digest: maybe Prudential should get out of the EU and give up a market of close to half a billion people. This is the EU and Prudential will have to follow the rules of the land. It's as simple as that.

For more: European Commission hits back at the Pru over threat to leave - New Model Adviser®

Insurance Industry Groups Hail Joint US-EU Working Group

Industry trade organizations on either side of the Atlantic are applauding the formation of a joint working group designed to promote increased regulatory understanding and to reduce barriers to trade between the United States and European Union insurance markets.

The working group, dubbed the High Level Working Group on Jobs and Growth, was formed by the Transatlantic Economic Council. The TEC is an EU political body to oversee and accelerate government-to-government cooperation with the aim of advancing economic integration between the European Union and the United States.

The American Council of Life Insurers and CEA, the European insurance and reinsurance federation, said the joint working group could help in the push to expand the economic relationships between the U.S. and European insurance markets.

EU-Digest

European Insurers Face Ongoing Capital Challenges Amid Struggle to Deliver Top-line Growth in 2012

European life and non-life insurers face significant strategic decisions and difficult choices in 2012 with the recent European sovereign downgrades adding to capital pressures, according to Ernst & Young’s new European Insurance Industry Outlook.

Volatility and deterioration in macroeconomic and political factors are disrupting balance sheets, consumers and investors. Consumer needs and expectations are rapidly changing, and a mature insurance market in the region continues to make growth difficult to achieve. As a result, considerable challenges are hitting insurers who are seeking to improve both top-line and bottom-line performance.

"Economic developments in Europe create significant risks to insurer balance sheets and may result in a prolonged and stagnant organic growth environment,” says Andreas Freiling, Ernst & Young’s Europe, Middle East, India and Africa (EMEIA) Insurance Leader. “Fiscal imbalances that guided the downgrade of sovereign debt in weaker European countries have adversely affected the balance sheets of numerous European insurers and reinsurers.”

For more: European Insurers Face Ongoing Capital Challenges Amid Struggle to Deliver Top-line Growth in 2012 | Audit Profession News & Events

Insurance Industry: Worsening outlook could mean higher rates

A new survey of insurance providers by global consulting firm KPMG LLP indicates a “dramatic reversal” of this sector’s economic outlook is underway – a reversal that may result in higher insurance rates.

According to the 350 insurance executives polled by KPMG, more than a third (36%) said that business conditions for the insurance sector have worsened compared to a year ago – a significant turnaround in executive perception compared to last year’s survey, the firm noted, when more than half (51%) said conditions had improved from 2009 to 2010.

In addition, many do not anticipate much brighter prospects in the next 18 to 24 months, as 28% predict another downturn/double dip before the economy begins to significantly recover, and 58% believe the recovery will not occur until 2013 or later.

Facing this economic environment, only 31% of insurance execs surveyed expect their company to perform above expectations next year – a decline of 10% compared last year’s poll – while 24% expect to perform below expectations; up from 19% in 2010.

EU-Digest

European Insurance Watchdog Backs Bermuda

European insurance watchdog EIOPA has said Bermuda’s regulatory regime for big insurers mostly complies with the European Union’s own strict Solvency II rules, Reuter is reporting, easing fears of a mismatch that could have hindered Bermudian players’ access to the European market.

“EIOPA’s advice is that Bermuda meets the criteria set out in EIOPA’s methodology for equivalent assessments under Solvency II,” EIOPA said on Wednesday [Oct. 26] in a submission to the European Commission.

The European Insurance and Occupational Pensions Authority is a European Union financial regulatory institution that replaced the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). It is established under European Union regulations.

Bermuda, a major centre for the global reinsurance industry thanks to its favourable tax regime, is home to reinsurers who account for 40 percent of the European property catastrophe reinsurance market, EIOPA said. Bermuda-based insurers include Montpelier Re , Hiscox , Catlin , Validus and Endurance .

EIOPA also said Switzerland — a non-EU member — and Japan’s regulatory regimes mostly complied with Solvency II, a set of rules aimed at bolstering European insurers’ capital expected to come into force in 2014.

For more: European Insurance Watchdog Backs Bermuda : Bernews.com