Insurance Jottings

Cayman Islands clean energy captive receives ‘Excellent’ rating

Ratings agency AM Best has affirmed the financial strength rating of A (Excellent) of Palms Insurance Company, the Cayman Islands-based single parent captive of NextEra Energy Capital Holdings (NEECH).

NEECH is owned by NextEra Energy, a renewable energies company based in Florida.

The ratings reflect Palms’ balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

They also reflect Palms’ solid risk-adjusted capitalisation, history of consistently positive operating performance and conservative balance sheet strategies, as well as its significant role within the risk management structure of its parent, NEECH.

These positive rating factors are partially offset by Palms’ limited market scope and high net loss potential stemming from a single, severe occurrence relative to surplus. However, AM Best said this is somewhat mitigated by the company’s excellent loss history, favourable geographic spread of risk and Palms’ history of strong surplus position.

Palms accepts insurance risks only from NextEra Energy and its affiliates, providing specialised direct and assumed property and casualty coverages, workers’ compensation, automobile liability, employers’ liability and property risk.

Asian captive insurance industry nascent but unknown to many

While the captive insurance concept is young and showing signs of future potential in Asia, it is still unknown to many in the region.

This is according to Farah Jaafar-Crossby, CEO of Lauban IBFC, speaking ahead of the Asian Captive Conference.

The conference this year is jointly organised by Labuan IBFC and Labuan International Insurance Association (LIIA) and will be held on the 1^st and 2^nd August in Kuala Lumpur.

Both parties are hoping to encourage more participation from the risk-related and risk management industries across the Asian region.

“We are excited to organise the Asian Captive Conference 2018 (ACC 2018) again and we hope to see more delegates from the Asian region especially when the conference is a platform dedicated to the development of the self-insurance industry in the region,” Ms Jaafar-Crossby said.

“The self-insurance sector is a niche market and we believe that there is a huge potential for structures such as captives and protected cell companies as a self-insurance tool, to grow in this region, especially with the ever-evolving risk landscape in the region.”

She added that self-insurance is not just for big corporations but is a suitable solution for medium-sized businesses, along with groups with shared interests, for example lawyers and medical practitioners, where there are advantages and cost-efficiency to be had in the pooling of risk.

“Captive insurance is a unique concept and it can be structured according to the needs of the business or indeed the idiosyncratic demands of the risk being mitigated. Indeed, Labuan IBFC offers a wide range of self-insurance solutions include group or association captives, which much like the protected cell companies, is unique to Labuan IBFC,” she added.

“For instance, tech start-ups which often have unique business models and risk profiles – with very much of their competitive edge stemming from concepts and technologies which are new to the market – their unique risks can be tailored underwritten by setting up a group or association captive and this could be used alongside with the traditional insurance approach,” Ms Jaafar-Crossby explained.

The Labuan International Insurance Association chairman Raymond Wong Shu Yoon said: “We are pleased and honoured to have Labuan IBFC as a partner for this event again and we are definitely excited to see the turn out for this year and we hope to receive a positive response from the industry players in the Asian region.”

“We are optimistic and passionate about the growth of the captive insurance market in Asia and we hope that through initiatives such as hosting the ACC 2018, risk managers and practitioners alike will have a better understanding of the benefits of using captive insurance as an alternative risk management and mitigation tool,” Mr Wong added.

Swiss Re to Create Standalone E&S Unit for US

Swiss Re Corporate Solutions has announced the creation of a standalone excess and surplus (E&S) business unit in North America.

This unit will include Swiss Re’s traditional E&S property and E&S casualty groups, which will be fortified with the addition of multiple lines of business in the near future.

Ella Broks has been appointed head of E&S Sales North America. In her new role, Ms Broks will lead E&S sales efforts and business partner relationships.

She has been with Swiss Re Corporate Solutions for the past six years, most recently leading the Broker Relationship Management team.

Swiss Re said these changes should have little to no impact on the day-to-day interaction between underwriting units and its brokers, but the hope is that having a dedicated unit for the US E&S market will allow it to respond better to specific needs.

Hiscox launches cyber training centre

Bermuda-based specialist insurer Hiscox has launched a cyber training centre to help its cyber insurance customers worldwide mitigate and manage their cyber risks.

The Hiscox CyberClear Academy is an online interactive suite of cyber training content. The platform features diagnostic assessments to test existing knowledge and ensure that training is tailored to specific knowledge gaps.

Regulatory change is a key consideration when it comes to understanding the cyber risk, Hiscox noted. Under New York Cybersecurity, and the new General Data Protection Regulation (GDPR) which comes into force across Europe in May 2018, organisations now have a greater obligation to protect the data they hold and process.

For many businesses, this will include customer information such as addresses, contact numbers, bank account or credit card details. The Hiscox CyberClear Academy is another way in which businesses can help to manage their regulatory obligations, the company noted.

Like many other risks, cyber is indiscriminate – it affects businesses of all shapes and sizes,” said Hiscox cyber CEO Gareth Wharton. “If a business experiences a cyber-attack or breach, there will be many implications – lost revenue as a result of business interruption, the cost of remedial action, as well as the reputational impact – and a big business will have the firepower to recover far quicker than a small business.

“Awareness of the cyber threat is therefore one of the most important parts of cyber risk management. This is where cyber security training can really help.  Educating your employees and building your human firewall should not be overlooked – a significant proportion of the cyber insurance claims we see are people related; somebody who inadvertently clicks on a suspicious link, or loses a device containing sensitive business information.  Our recent Cyber Readiness Report highlighted that there are still too many cyber ‘novices’, so we want to do our bit to create more cyber ‘experts’.”

Hiscox began writing cyber insurance in the late 1990’s and now sells cyber-specific products direct to consumers through its retail businesses in the UK, and via brokers and carriers through its UK, European, US, London Market and reinsurance operations to organisations of all sizes – from entrepreneurs to multi-nationals.

Hiscox’s move follows a similar undertaking by AXIS Capital Holdings which recently launched a cyber centre of excellence to provide products and solutions for mitigating cyber threats associated with companies’ tangible and intangible assets.

AIG splits Europe business between UK, Luxembourg ahead of Brexit

American International Group is creating two new insurance companies, one in the UK and one in Luxembourg and is splitting the European business among them ahead of the UK leaving the EU.

Sompo secures Luxembourg approval; targets European growth

Bermuda re/insurer Sompo International has secured regulatory approvals from the Ministry of Finance of Luxembourg to establish a new subsidiary in the country – a move it made to deal with the UK leaving the European Union.

SI Insurance Europe, which will become operational later in 2018, provides the company with an underwriting platform to service its clients across the European Economic Area (EEA) after Brexit and a foundation for strategic expansion across Continental Europe.

Sompo International said it plans to extend SI Insurance Europe this year beyond its headquarters in Luxembourg to include operations in Italy, France, Spain, Germany and Belgium as the company integrates Sompo Japan Nipponkoa Insurance Company of Europe and further expands its European operations.

SI will maintain its presence in the Lloyd’s market and its current offices in London and continental Europe.

EY and insuretech Concirrus add AI to Marine Underwriting

A new partnership between insurtech firm Concirrus and consultancy EY is aiming to transform the way risks are written in the marine insurance market.

The two firms are seeking to use artificial intelligence-powered software to help marine insurers move from “demographic-based underwriting models to live, behavioural-based underwriting”.

Until now, marine insurers have managed their risk portfolio based on data such as the age, size and flag of a vessel. The Concirrus software provides behavioural analysis which considers a ship’s location, speed and other factors to offer more accurate underwriting models.

New AI-powered cyber underwriting firm launched

Envelop Risk, a new global specialty cyber insurance analytics and underwriting firm, has been launched in London.

The firm also operates offices in Boston, Washington DC, and Bermuda.

Envelop Risk provides cyber underwriting to re/insurers, partnering with cyber security firms to deliver custom cyber insurance products for their customers.

Using its proprietary artificial intelligence-based simulation model the company claims to provide “more-accurate policy and portfolio pricing with increased access to capital markets, while reducing overall risk exposure”.

Envelop applies an augmented intelligence approach, combining quantitative methods with human expertise in underwriting and cyber security.

“Our innovative, proprietary technology allows us to better determine risk and therefore price accurately,” said Envelop CEO Jonathan Spry. “With the close of an initial seed funding round, we are in a position to expand and build upon our extraordinary team.”

“We are excited to launch new insurance offerings that address gaps in the rapidly-growing and increasingly complex world of cyber insurance.”

The company has also appointed Ray Johnson (QxBranch), former senior vice president and chief technology officer of the Lockheed Martin Corporation, to its board of directors alongside existing members Jinesh Patel (QxBranch, Dymon Asia Ventures) and Nicolai Hansen (New Nordic Advisors).

Johnson commented: “Coming from Lockheed Martin, I recognise that cybersecurity represents one of the greatest threats facing our global economy, private corporations, and national sovereignty. Envelop’s augmented intelligence approach not only changes the game in risk factor analysis, it provides a more complete solution for pricing and providing insurance policy protection through our partners.”