‘No win, no fee’ change could be big deal for travel

Agents and operators could face fewer personal injury claims as a result of legal reform proposed last week.

The changes to the “no win, no fee” systemproposed by appeal court judge Lord Justice Jackson could “change the landscape” of claims against travel companies, some lawyers believe.

Under the existing system, which has been criticised for encouraging speculative claims, losing claimants do not have to pay legal costs.

The reforms propose claimants should foot the legal bill themselves if they lose. The potential costs of claiming are also set to increase under plans to scrap insurance covering lost cases.

Defendants would largely have to pay their own legal costs, whether they win or lose, and will have to pay the claimant’s legal costs should the claimant win.

Abdulanesh Alaraqu director of Brit Claims said the reforms would discourage speculative cases.

“At the moment, there is an ethos of ‘we might as well have a go’, but if the costs to pay should people lose increase, they may not be so willing to take action,” he said.

“It means lawyers will only want to take on strong cases. This will change the legal landscape of claims against travel companies.”

Claimants who win will be eligible for compensation payments that are 10% higher than now.

However, travel firms could still pay less if they lose, because a cap would be introduced on what a claimant’s lawyer can claim as a success fee.

The reforms are due to start in 2012.

UK insurance sector volumes and profitability increase

The UK financial services sector has seen growth for the third quarter in a row, according to a new report from the Confederation of British Industry / PricewaterhouseCoopers (PwC).

In the three months to March, business volumes grew across the sub-sectors, apart from banking, where volumes were stable, and finance houses, where they fell.

In the life insurance sector, costs remained level while volumes increased for the fifth 

consecutive quarter, allowing average cost per transaction to “fall steeply” once again.

Values of new business and premium income advanced and the overall combination of factors lifted profits further.

General insurers reported “moderate” growth in volumes across all customer sectors and with costs stable, profitability increased “moderately”, although brokers saw a sharper rise.

The study also reveals that general insurers and brokers intends to invest more in IT systems and marketing in the year ahead, with the aim of reaching new customers and providing new services.

PwC’s UK insurance leader, Mark Stephen, comments: “The continued low growth rates and intense competition in the UK market is forcing insurers to explore new growth avenues and continue to push for new international business.”

Mr Stephen also notes that while headcount is on the up, firms are struggling to recruit the skilled managerial staff they need.

Looking ahead, he expects the UK insurance sector to change shape in the coming quarter, as the impact of this quarter’s natural disasters is felt.

Young Italian insurers’ association launches in London

The Unione dei Giovani Assicuratori e Riassicuratori Italiani has officially launched in London to welcome members working in other countries.

Ugari, which was formed by 19 professionals from insurance companies, agents, brokers, loss adjusters, risk managers and service providers, said its aims are to "help young talents who want to have a career in insurance."

Chief executive officer Enrico Bertanga said the the association aims to promote values and talents in the Italian insurance industry and strengthen the profile of the industry both in Italy and abroad.

The association was officially launched in Milan in 2009 and claims to already have 1000 members.

David Armes from Markel, which sponsored the event, said: "Italy is an important market for the PFR Division of Markel International - in fact it's our third largest market.

"Markel are pleased to contribute to increase the professionalism and innovation in the Italian insurance market."

Ugari was launched in Italian Ambassador's Residence, in Grosvenor Square, and Alain Giorgio Maria Economides, the ambassador, said he was impressed by the large community of Italian that works in the insurance industry in the city and stressed the importance of investing in the future of young talent.

Founding partners of Ugari

• Alessandra Talarico
• Alessandro De Felice
• Andrea Di Giacomo
• Carlo Faina
• Carola Pisani
• Enrico Bertagna
• Filippo Emanuelli
• Francesco Cincotti
• Giorgio Mario Bidoli
• Giovanni Capanna
• Luca Franzi de Luca
• Luca Fabrizio Filippone
• Marco Brettagna
• Massimo Maggio
• Massimo Reina
• Nazareno Cerni
• Raffaele Guasco
• Roberto Francesco Giovanni Bosco
• Simone Cioffari
• Uberto Ventura

Towergate recruits Heath Lambert team in Aberdeen

Towergate Insurance Aberdeen has recruited Mark Webster and his team from Heath Lambert to lead the expansion of its operation.

Mr Webster joins Towergate as managing director and will take the reins prior to the retirement of current MD, Stewart McAra, later this year.

Also making the move to Towergate from Heath Lambert are Brian Cawthorn, Kevin Wiebe and Leiane MacLeod.

Regional managing director of Scotland, Alan McEwan has been promoted to the new role of acquisitions and projects director. He will work closely with newly acquired broking businesses to ensure they play an integral part in Towergate's growth strategy.

Towergate MIA managing director Kenny Hogg, has been promoted to regional managing director for Scotland, encompassing Newcastle and Teesside.

As a result of Mr Hogg's promotion, deputy managing director of Towergate MIA Keith Longthorne, has been promoted to MIA managing director.

Jonathan Walker, CEO of Towergate Retail, said: "These appointments are a reflection of our successful business model which requires a strong and dynamic management team. One of the great things about our development is the enormous talent pool we have to help deliver on our growth strategy."

Mr McEwan added: "We are delighted with our latest signings and Mark and his team are an excellent acquisition and a perfect fit for our Aberdeen business. Stewart McAra's shoes will be difficult to fill, but he and I are confident that we have great people in place who will continue to lead and grow the business."

Lord Chancellor faces legal action over discount rate review

The Association of Personal Injury Lawyers (APIL) says it is taking legal action because the Lord Chancellor has failed to review the discount rate, despite announcing in November of last year that a review was taking place.

The discount rate is used to calculate the amount deducted from an injured person’s compensation to account for any income he or she may receive from investing their damages.

In 2001, the rate was set at 2.5%, based on yields generated by index-linked government stock (ILGS).

Since then, yields on ILGS have gradually declined and according to APIL, over the last three years the average gross yield has been less than 1%.

APIL has now issued proceedings for a judicial review, stating that the Lord Chancellor has failed to complete a review or provide a timetable for it.

The Association’s president, Muiris Lyons, says: “We are gravely disappointed that the Government has failed to carry out its review as injured people are continuing to be undercompensated, in some cases, by hundreds of thousands of pounds.”

He adds: “It has been nine months since we first brought this issue to the attention of the Lord Chancellor and we find it unacceptable that no meaningful progress has been made since then.”

Reinsurance market performs as intended

Aon Benfield has released its latest Reinsurance Market Outlook report, which provides an overview of the trends witnessed at the 1st April reinsurance renewals.

The intermediary reveals that despite “a string of meaningful insurance events” and associated adjustments in pricing, the decline in US and European property catastrophe rates continues. (Brit Claims)

Few European programmes renew at 1st April but with regard to the US, the season saw property catastrophe rates for programmes including hurricane risks decrease by 5% to 10%.

Furthermore, the broker is predicting that the June and July renewals period will find price changes of flat to down 5%, for US hurricane-driven programmes.

The Japanese earthquake on 11th March did affect the renewals process, as many insurers opted to extend current programmes while losses were being assessed.

Where Japanese renewals took place, the costs of typhoon programmes increased by 5% to 10%, while most earthquake programmes increased within a range of 25% to 50%.

Aon Benfield Analytics chairman, Bryon Ehrhart, sums up: “The reinsurance market remains functional with its existing capital base, and we do not anticipate the need for material new capital flows into the reinsurance market to satisfy insurer demand for catastrophe reinsurance based upon the global events to date.”

He adds: “Throughout the recent, significant global events, reinsurance responded to the needs of global and regional insurers as intended, with material volatility shifted to reinsurers from the balance sheets and income statements of global and regional insurers.”

Also of note, reinsurance programmes covering New Zealand, where a second major earthquake struck Christchurch in February, do not renew at 1st April.

Last month, Aon Benfield formed a Market Analysis team within Aon Benfield Analytics in a move aimed at allowing Aon Benfield Research to focus entirely on academic and industry collaboration.

Male motorists afflicted with a one track mind

New research from Direct Line car insurance has potentially discovered the reason as to why male drivers are more likely than their female counterparts to be involved in an accident.

Of the male drivers surveyed, 15% confirmed that they found it difficult keeping their eyes on the road when travelling with an attractive passenger.

This is more than twice the proportion (7%) of women who admit to the same problem.

In addition, 49% of male drivers stated that they would engage such a passenger in conversation and 8%, rather alarmingly, confessed that they would have their eyes focused on an area other than the road for a prolonged period of time.

Unsurprisingly, younger drivers are more susceptible to distraction with 24% of 18-25 year olds finding it difficult to focus on the road when with an attractive passenger.

Women, by contrast, are more likely to be distracted by having their mother as a passenger, rather than their boyfriend.

The research findings echo those of The Co-operative Insurance, which in February found that frisky behaviour is one of the biggest distractions being the wheel.

Expert witnesses lose immunity from suit

Commercial law firm, Beechcroft, is advising insurers to “take stock” following a Supreme Court ruling yesterday that the general immunity from suit previously enjoyed by experts is to be abolished.

In the leading judgment in Jones v Kaney, Lord Phillips said there was “no justification for continuing to hold expert witnesses immune from suit in relation to the evidence they give in court or for the view they express in anticipation of court proceedings”.

Beechcroft’s professional risks partner, Ian McConkey, comments: “Insurers should consider the content of their policy cover for expert witnesses and the terms which might apply in light of the judgment.”

He adds: “Experts will need to ensure their indemnity cover fits the work they undertake.”

Beechcroft reports that in the case of Jones v Kaney, Mr Jones alleged that he was suffering from post-traumatic stress disorder as a result of a road traffic accident in 2001.

He engaged Dr Kaney, a clinical psychologist, as an expert witness in his claim for damages.

Dr Kaney was initially supportive of that claim but later went on to sign a joint statement agreeing that Mr Jones was “deceptive and deceitful”.

Mr Jones then commenced proceedings against Dr Kaney for negligence and the Supreme Court finally determined the matter.

LV= reports 2010 financial results

LV=, the mutual insurance, retirement and investment group, has reported its financial results for 2010, including a 43% rise in net earned premiums from £1.15bn in 2009 to £1.65bn.

Group underlying profit more than doubled, rising by 118% from £44.2m to £96.2m and group assets increased by 13% from £7.1bn to £8bn.

However, the IFRS pre-tax result was a loss of £18.3m, although this was largely due to reserving £165m for future bonus payments.

Despite the pre-tax loss, the result is still a significant improvement on the 2009 loss of £91.4m.

The result after tax was £21.3m, up from a net loss of £172.2m in 2009.

Group Chief Executive Mike Rogers opined that the firm had performed well during 2010, in spite of the ongoing turbulent conditions in the market.

Rogers particularly welcomed a strong sales performance which helped group underlying profit to more than double and expressed a note of optimism regarding the firm’s probable performance in 2011.

26% growth in operating profit - Strong results pave the way for further growth

Strong performance
IFRS operating profit up 26% to £2.55 billion (FY 2009: £2.02 billion)
Profit before tax up 35% to £2.44 billion (FY 2009: £1.81 billion)
Increased net operational capital generation by 70% to £1.7 billion1 (FY 2009: £1.0 billion)
IFRS Net Asset Value per share up by 21% to 454p (FY 2009: 374p) EEV equivalent NAV per share 621p.
IFRS return on equity 14.8% (FY 2009: 10.9%)
Total dividend per share up 6% to 25.5 pence
Profitable growth in both life and general insurance
Improved life new business IRR to 12.5% and payback to 8 years (FY 2009: 10.0% and 14 years) and long term savings sales up 4% to £37.4 billion (FY 2009: £35.9 billion)
General insurance COR of 96.8% (FY 2009: 99%) and general insurance and health net written premiums up 6% to £9.7 billion
Positive outlook: good platform for continued growth
Focusing on markets where we have strength and scale: UK and Europe is the largest savings market in the world with greatest absolute growth in next five years
Improved profitability and focus on robust capital generation
Stronger balance sheet - pension deficit reduced to zero from £1.7 billion2 (31.12.09); IFRS shareholder equity now exceeds pre-financial crisis levels, increasing during the year by £2.5 billion to £13.0 billion
Financial strength recognised in recent positive rating action by S&P and Fitch
1. Gross of Delta Lloyd longevity assumption change.

2. IAS19 basis.

Andrew Moss, group chief executive, commented:

“We’ve gone from strength to strength in 2010. In a tough external environment we’ve outperformed. Operating profits are up 26% and we are able to reinvest in the business and pay a healthy and growing dividend.

“Over the last few years, we’ve grown the business, significantly reduced costs and strengthened the balance sheet. As a result, we’ve created a good platform for the next phase of growth.

“We have a clear strategy and we are meeting our customers’ needs. By focusing on what we do best in the markets where we have strength and scale, we will continue to prosper in 2011.”