New energy insurance products and market developments

01 April 2019

Stephen Catlin and Paul Brand have registered a new start-up insurance company, Convex Group UK Limited, in London with Companies House this week. Convex Group UK Limited has four founding directors; Catlin, Brand, former Catlin CFO Benjamin Meuli and former Catlin’s Chief Administration officer Adrian Spieler.

We understand that Convex is a placeholder name and will not be the trading name for the business when it launches later this year.

The business is apparently awaiting a license from the UK Prudential Regulation Authority (PRA), but it is believed the parent company will be headquartered and registered in Bermuda. It has been reported that Catlin and Brand have been fundraising for this new vehicle in conjunction with Evercore as lead bank and were targeting investment capital of USD 3bn.

The latest Nordic Marine Insurance Plan (NMIP) amendments have clarified its war risk cover parameters. It was agreed to restrict war risk cover to politically motivated interventions, with state interventions falling outside any war risk cover and to be included in its marine insurance cover.

The NMIP is an all-risk insurance contract where the perils covered by the war-risk insurance are specified, while the range of perils covered by the insurance against marine perils is negatively defined, covering any other form of perils to which the interest is exposed. Insurers in recent years had also noted a rising trend of vessels being captured or detained in ports without it being obvious whether the motivation was law enforcement or whether there were other political motives and a number of disputed cases around these topics had been reported.

A full overview can be found on the official webpage of the NMIP .

Pool Re (the UK Government backed Terrorism Reinsurance pool) can now offer businesses nondamage business interruption following a bill being passed in parliament.

The Counter-Terrorism and Border Security Bill 2018 received Royal Assent after clearing all parliamentary stages in the House of Commons and House of Lords.

The act includes an amendment that makes Pool Re the first scheme in the world to extend cover to include non-damage BI losses

The number of Lloyd’s syndicates has dropped from 100 in 2018 to 92 in 2019, as syndicates closing outstripped new syndicates for the first time in many years. There were nine closures and only one new syndicate launched as the Corporation took a tough attitude to start-ups to mirror its stance to existing businesses.

The Standard Club’s Syndicate closed as Lloyd’s refused to sign off its 2019 business plan, whilst Advent Syndicate 780 was also discontinued, with much of its business transferred to other Fairfax Financial entities.

Other syndicate closures included Securis (after Axis acquired Securis’ sponsor Novae, and gave notice to the ILS manager), two life syndicates (AmTrust and TMK), Barbican’s Names Quota Share syndicate of their main Syndicate, XL Catlin’s Argenta Names Syndicate Quota Share syndicated of their main syndicate, Axa’s Africa focused SPA with Chaucer, and main the Novae syndicate (now merged into Axis Syndicate).

The one new syndicate was Apollo’s so-called Ibott Rover syndicate, which has capacity from Swiss Re, focused on the so called ‘sharing economy’.

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The offshore engineering capability of Marsh JLT Specialty has been enhanced by Daniel Sim joining our team.

Daniel is an offshore construction engineering specialist who has worked in industry as well as in loss adjusting and marine warranty surveying.

A diverse 18 year career in the maritime industry covers consultancy to the offshore industry, policy development and implementation for the UK Maritime & Coastguard Agency and Military service.

A Chartered Naval Architect and Fellow of IMarEst; Daniel’s specialties include offshore transportation and installation, heavy lift operations and in particular deep water subsea construction.

Latterly focusing on the offshore sector, his previous roles have considered the industry from many angles: Marine Warranty Surveyor, Energy Loss Adjuster, Technical Consultant, Casualty Investigator and most recently as an expert witness on a major offshore pipeline construction dispute valued at circa €750mm.

The benefits for our clients of collaboration with Dan are his experience in the following areas of activity:

  • Support operating programmes & CAR project risk presentation for placement
  • Risk Review – proposal narrative, EMLs & loss scenarios
  • Risk quality review / presentation for placement:
  • Technical design & construction method evaluation: e.g. Statement and description of novel vs typical technology
  • Enhanced client insurance reps offshore construction technical knowledge
  • Large Loss / Complex loss / disputed claim – specialist advisor
  • Support clients with causation / quantum negotiation
  • Advocate for client claim preparation / submission
  • Outsourced advisor to clients for claim management, preparation, submission & adjuster liaison
  • LNG Sector support as specialist advisor
  • Value added insight for risk in the LNG value chain
  • Client team technical training and shadowing.

Briefly

According to the latest World Economic Forum Annual Global Risks Report, natural disasters, extreme weather events, and failure to address climate change ranked among the most damaging risks facing the economy in terms of both impact and likelihood, The full report (in conjunction with Marsh and Zurich) can be downloaded from here.

Allianz Global Corporate & Specialty’s (AGCS) has released its “Risk Barometer for 2019”. Of 100 responders who selected up to three “top risks” each, 34% mentioned natural catastrophes, while 32% were concerned at “cyber incidents”, which included cybercrime, IT failure/outage, data breaches, fines and penalties.

A “new entry” at number 3, mentioned by 28% of respondents was “market developments” (e.g. volatility, intensified competition/new entrants, M&A, market stagnation, market fluctuation).

Down from equal second last year to fourth in the 2019 barometer was business interruption (including supply chain disruption), mentioned by 26% of respondents (down from 31% in 2018).

A new entry in fifth position, mentioned by 24% of respondents, was “Changes in Legislation and Regulation” (including trade wars and tariffs, economic sanctions, protectionism, Brexit, Euro-zone disintegration). The full report can be downloaded here.

Lloyd’s have launched a new report modelling a global ransomware attack, produced by the Cyber Risk Management (CyRiM) project of which Lloyd’s is a founding member.

The report titled ‘Bashe attack: Global infection by contagious malware’ finds a global ransomware attack could cost USD 193bn and affect more than 600,000 businesses - with 86% of the total economic costs uninsured.

The report also offers insight into economic losses by region and sector, breakdown of global insurance losses and highlights the impacts and opportunities for insurers and risk managers. The report can be downloaded here.

Global non-life insurance-linked securities (ILS) markets have reportedly grown to USD 93bn at the end of 2018, up from USD 88bn year-on-year, despite a substantial slowdown in the fourth quarter.

Non-life cat bond issuance remained strong in the face of multiple smaller catastrophic events in 2018 and a meaningful series of catastrophes in 2017. Around USD 9.2bn of new capital was delivered, making it the second most active calendar year on record.

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If you would like to talk about any of the issues raised in this article, please contact John Cooper, Managing Director -Technical on +44 (0)203 394 0464.