aws-admin, Author at Pro Global

Catastrophic losses related to hurricane claims in Latin America often result in complex claims. Martin Smith, Pro’s Head of Latin America, offers five tips for re/insurers going into the 2020 hurricane season to help ensure proactive and efficient claims management.

The US National Oceanic and Atmospheric Administration has forecast another active 2020 Atlantic hurricane season, with more named storms than in an average season – a range of between 13 and 19 named storms, including upn to six major hurricanes.

Catastrophe claims resulting from hurricane losses can often be complex in nature, but the need to support policyholders as quickly as possible with their rebuilding post event is vital. Proactive claims management is critical, so here are five top tips for claims managers as the hurricane season gets underway.

If you would like any further information on how your claims teams can be better prepared and more proactive for this hurricane season, or if you’d like advice on automation and digitilisation of claims processes under remote working conditions, please don’t hesitate to get in touch – we are here to support you. Get in touch with Martin.smith@pro-global.com.

There is no one size fits all approach to Latin America’s re/insurance markets – each country has different regulations and cultural approaches to conducting insurance business, as well as their own macroeconomic challenges that make having local expertise critical to supporting clients on the ground.

Of course this has been made all the more challenging by the COVID-19 pandemic and ensuing lockdowns, which for many in the region have heralded the first widespread shift to and acceptance of remote working.

After initial skepticism and an adjustment period, we are now seeing some clients find real efficiency improvements with the new remote working normal and even reconsider their overheads in terms of real estate investments as a result. But it’s not been a smooth transition for everyone, and in particular legal proceedings have faced delays due to the lockdown conditions and understandable struggle to adapt to remote court proceedings.

At the same time that the industry is adapting to lockdown, wider economic challenges persist across the region. In Argentina, a debt crisis and Coronavirus have coincided in 2020, while Brazil has fared the worst of the region’s emerging economies, with the full impacts of the pandemic still playing out unfortunately.

And the impact of natural catastrophes is still being felt – smaller economies such as Puerto Rico are still in the process of recovering from the impacts of hurricanes Irma and Maria, and while proactive and orderly claims management is possible, the additional pandemic impacts on an already struggling economy will be wide-ranging.

June was a busy renewal season for reinsurance, made harder this year by Coronavirus lockdowns. Some initial trepidation about using video conferencing while working from home has given way to acceptance at new ways of working, however for some clients a reliance on paper and manual processes has meant the remote working normal has come at a cost to productivity.

However, this has not just been a tough renewal because of Covid-19, but also because reinsurance market pricing has hardened significantly compared to a year ago, leaving insurers frustrated at rising rates while facing unprofitability in their own business.

Nowhere is this more true than in motor business, which makes up the bulk of local insurers’ books, and for which combined ratios commonly stray above 100% and into unprofitability. However, motor insurers can look to one benefit from the pandemic: with few cars on the roads, the usual flow of claims have plummeted to offset their increased reinsurance costs.

For their part, reinsurers point to pricing inadequacy on their own side as the necessity for higher rates after more than a decade of soft pricing. Even in a catastrophe-exposed business, rate rises after 2010’s Chilean earthquake were temporary and pricing never recovered.

However, one crucial aspect to processing claims across the region from an insurance perspective is whether the courts have stayed open – as in the case of Puerto Rico, or are firmly closed – as in the case of Argentina.

Now, more than ever, mediation is proving to be a useful tool – and some clients are accepting settlements more readily as a result, particularly where negotiations had already started pre-lockdown.

Around forty percent of our staff in Argentina alone are dedicated to handling live claims for workers’ compensation and motor liability for insurance companies, and we are keenly anticipating the reopening of the courts in order to move these claims forwards.

We’ve been talking and listening to companies throughout the region and helping them manage this new way of working. Change is happening and business is moving, and if there is one positive that can come from the pandemic challenge it is an improvement to processes, workflows and productivity thanks to more electronic and digital processing.

We are here to help and support – if you need any advice please do not hesitate to contact us: Martin.smith@pro-global.com

When it comes to cyber risk, the first thought that comes to mind is ransomware: cyber criminals hacking into a computer system, then freezing and encrypting the user’s data; a ransom demand then follows. These scams vary in scale, but as technology advances, so too does the ransomware, and ultimately, the cost.

GPS and smart-watch manufacturer Garmin has felt the impact of this new wave of large-scale ransomware attack, after hackers reportedly accessed its services – including its aviation arm – bringing the company to a halt. The hackers demanded a $10 million ransom and, until that sum was paid, all Garmin services remained down.

Silent risks
Targeting well-known and established companies isn’t unheard of, and even government bodies have been faced with risk. The COVID pandemic saw an influx of scams related to the NHS and council systems. Texts appearing to be from the UK government regarding check and trace systems, and messages offering refund requests from councils, were sent to mobile devices throughout the country – all of which included links to malware.

These types of cyber-attacks are visible and loud, but what about the silent cyber risks that are emerging? From companies being discredited due to manipulated autocomplete functionalities in search engines, to the high-risk attacks subjected to residents in developing countries when financial transactions are conducted over unsecured mobile phone lines. These new models of cybercrime could even be the precedent for hackers disrupting or destroying voter-registration databases – a prospect which is a grave concern for governments.

Connected concerns
As highlighted in my previous blog, the widespread availability of connected technologies heightens the emergence of cyber risks, and if not effectively secured, connected devices can be accessed and controlled by hackers. Potential scenarios could include hackers manipulating voice-controlled devices to make purchases using hidden voice commands, or taking control of digital home or office assistants to override security systems.

From a security point of view, these risks could snowball. There are already growing fears about baby monitors and online CCTV systems being hacked and content viewed by persons other than the intended person, but what about connected vehicles and even military drones? Could these be subsequently hijacked if they are not correctly secured?

The increasing sophistication of these new cyber risks can make it challenging for insurers to understand their exposure to emerging cyber risks. For information on how we can better assist you with an independent, comprehensive cyber audit, contact our dedicated team: https://www.pro-global.com/uk/what-we-do/cyber.

How have you found the transition from office to home working under lockdown?

The global legacy re/insurance market is facing a number of impacts as a result of the pandemic crisis, ranging from a possible increase in run-off portfolio transfers, to industry-wide digitilisation of the day to day management of existing legacy portfolios, including legal processes and remote working.

It was quite interesting in that a couple of our clients got in touch in the early days and said they thought there could be hiccups in Service Level Agreements and offered extensions – but we haven’t needed this.

I think it’s a combination of the technology we had in place, the great team and the brilliant support of our HR function that have made the transition so seamless.

I think the key thing is making sure that everyone still feels connected to the business. And we’ve actually had a new senior team member join us during this time – all negotiated during the lockdown environment – which I think is such a testament to the drive and adaptability of everyone.

I think the biggest test has been how the technology we have in place would adapt to remote working conditions – conditions they weren’t designed for. And they’ve proven not only resilient but capable of processing high volumes of digital business.

Legacy insurtech systems like ours – which we affectionately dub Pelican because we occasionally feed it microfiche from particularly historic legacy files – have proven not only resilient but capable of processing high volumes complex liability and legacy claims, allowing us to cut costs, drive indemnity savings and ensure claims are managed promptly and paid in good time.

Of critical significance has been our ability to use Pelican to absorb historic data from legacy systems, paper based and green screen systems, intelligently link multiple policies from multiple insurers against individual claims, and automatically provide compliance and audit reports.

This allows in-depth portfolio and claims trend analysis, improved financial planning and cash flow management, while governance and oversight functions have facilitated enhanced security and disaster recovery processes.

Surprisingly, the larger books of business we work on have paradoxically been the simplest to process remotely, due to the fact that the legacy technology systems we have in place were a key part of us winning the contracts to manage those portfolios in the first place.

On the other side, we’ve worked hard to overcome challenges on some smaller paper based accounts but are working closely with clients to help them streamline and digitise their processes.

The crisis has demonstrated for everyone to appreciate the very real practical challenges of having paper files in offices when the workforce is remote. Particularly challenging is performing any kind of audit or review of a portfolio without technology in place, let alone ensuring continuous compliance with regulations such as GDPR etc.

With two teenage children at home, I would have to say their frequent loud music and quest for food, although generally not before midday!

What lessons would you like to see the legacy sector learn from this challenge?

The challenge of remote working is one that some in our corner of the industry have found themselves better prepared for and able to adapt to than others.

It’s not just about holding meetings via video call, of course – it comes to the very heart of efficiency and processes in the legacy market. Using innovative technology such as the Pelican claims management system has proven invaluable, allowing Pro to continue servicing clients on a business as usual basis.

If we didn’t use systems like Pelican then we simply would not have been able to process legacy business nearly as efficiently or completely as we have been under lockdown conditions.

We understand that some others have not found the process of adapting to remote working so seamless.

COVD-19 has graphically demonstrated the benefits of electronic file management and storage and I’d like to send a strong call to action for our industry to embrace digitalisation, have robust contingency plans in place, whilst developing resilient, adaptable and secure technology infrastructure.

By storing and processing legacy documents electronically you can allow security access to areas that are relevant for each user, and backup systems effectively to avoid the nightmare scenario of losing a critical paper document containing sensitive information.

Making sure that all the data is where you need it, and can be accessed securely by those who require it, and extracted and reported on accurately and in a timely manner is critical to the future productivity of our sector.

London, 3rd July, 2020: Global re/insurance outsourcing and consulting specialist Pro Global Holdings Limited (‘Pro’) is pleased to announce that its German office has successfully completed the operational transfer of Zurich Insurance plc (‘Zurich’)’s former German professional Architects’ and Engineers’ (A&E) professional indemnity insurance (PI) portfolio.

This previously announced transaction, structured initially as an LPT or retrospective reinsurance, has now received court approval from the Irish High Court, and regulatory approval from the CBI in Ireland and BaFin in Germany.

Legacy acquirer DARAG Group Limited (‘DARAG’) appointed Pro as claims administrator to manage the former Zurich A&E PI book, which it reached an agreement to acquire from Zurich in 2019.

This is the second time that Pro has been selected as claims administrator on a significant German legacy portfolio, following the 2017 transfer of Zurich’s former legacy medical malpractice book.

With almost EUR400 million allocated for reserves, the medical malpractice book was bought by legacy acquirer Catalina Insurance Ireland DAC, which appointed Pro to manage the orderly run-off.

The German A&E PI is reserved at approx EUR 200 million and its transfer represents one of the largest P&C run-off transactions in Germany. Completed on 1 April, 2020, the operational transfer paves the way for Pro to support DARAG with an orderly run-off of the portfolio and achieve pro-active settlement of claims.

Pro’s innovative Pelican technology for automating and consolidating manual processes was instrumental in ensuring a smooth transition, together with the dedicated team of highly specialist liability claims experts focused on seeking settlements.

“This is the second significant German legacy portfolio bid we have successfully won as claims administrator, and our use of technology to automate and consolidate manual claims processes together with a highly focused team of experts is the key to our success.

Using technology this way increases the valuable time our experienced claims handlers can spend supporting policyholders and improving the claimant experience, whilst reducing operational costs.

I’m particularly proud that we have completed the operational transfer during these challenging times. After a competitive bid to become the trusted claims administrator for this portfolio, we faced the prospect of assembling and training a team of 12 dedicated professionals at a time of ongoing upheaval and crisis.

All this stands us in good stead to further serve the German re/insurance claims market in the coming years both in run-off and live-portfolios.”

“I’m proud to be involved in this significant project, which is a testament to collaborative cross-border success. The operational transfer strategy saw a focused collaboration of legal entities – Zurich, DARAG and Pro – working together in a stretched environment, and still achieving the timelines promised with the best and most efficient solutions.

The transfer itself saw the integration of at least three major IT systems into Pelican, together with thousands of physical files and a vast volume of claims data, moving to a fully paperless claims handling.

The result is an improved operating model, reduced reliance upon ancillary systems to manage and settle claims – and faster claims settlements as well.”

“Having identified Pro as our preferred partner to handle the claims administration for the German A&E PI portfolio during the transaction process, it was crucial to DARAG that the operational migration was subsequently delivered in a timely and efficient manner.

The fact this has been achieved despite notable disruption to the working environment in recent months is testament to the resilience of the parties’ operating models and to the dedication and collaboration shown by team members from DARAG, Pro and Zurich.

We look forward to partnering with Pro on future opportunities as DARAG continues its growth as a global legacy carrier.”

Pro is a leading international consultancy and service provider that focuses on delivering flexible outsourcing solutions for live and run-off business, operational consultancy and audit services exclusively to the global insurance industry.

Founded in 1993, Pro has some 160 clients spanning the global insurance market, including insurers, reinsurers, brokers, lawyers and corporate investors.

The company has over 500 employees around the world, with recent geographic expansion in Germany and North America. Pro has offices in London, Cologne, Zurich, New York and Buenos Aires, all supported by regional delivery centres, enabling Pro to act for clients across multiple markets, cultures and territories.

Dicho Departamento – formado por abogados, médicos y consultores – brinda distintos tipos de servicios a las ART, entre los cuales destacamos:

Pro is successfully handling – on behalf an important UK Reinsurer – a portfolio run-off of hurricanes María and Irma, which isolated Puerto Rico in 2017.

As a first step, we started by performing a claims audit in Puerto Rico of 10% of the open claims to determine – between other issues – the reserves adequacy, claims handling efficiency, cedant´s and adjuster´s pro-activity to negotiate and close claims to reduce our client´s exposure.

After the audit was performed, a Report was presented to our client, detailing the most relevant findings. Pro team detected some large claims that – from our perspective – were not sufficiently reserved. Additionally, jointly with our report, we submitted our client an Action Plan to handle the claims portfolio, focused in a more pro-active claims handling in order to reduce exposure and duration of the run off.

Our client approved Pro’s Action Plan which was in line with their needs. Pro team in Buenos Aires – with a resource based in Puerto Rico – started handling this portfolio since July 2019.

Since project’s kick off, Pro team has been able to obtain a 40% reduction of the portfolio reserves and 50% reduction in the number of claims.

Projects like this, are – in principle – replicable throughout Latin America, where we also have Rep offices in Brazil, Peru and Colombia.

La enfermedad, denominada “enfermedad por coronavirus 2019” (abreviado COVID-19) se ha extendido rápidamente por todo el mundo, representando un grave riesgo para la salud y causando severos problemas económicos.

Entre el creciente número de casos a nivel mundial, el cierre de pequeñas empresas y el aumento del desempleo, el impacto en la industria de seguros podría ser significativo. Si a esta situación le sumamos que el resultado técnico del mercado asegurador argentino, tiene una tendencia decreciente en sus operaciones, la situación se vuelve aún más compleja.

He aquí que surgen interrogantes para distintos escenarios de incertidumbre, y donde más que nunca, se requieren de experimentados profesionales que puedan, por su habilidad y conocimiento, detectar oportunidades de negocios y mejoras necesarias para mantener “con vida” a las compañías de seguros.

La automatización y/o robotización, la optimización de procesos y la transformación digital serán los puntos claves para las aseguradoras, las cuales deberán adaptar sus sistemas, recursos y procesos a los nuevos requerimientos que esta nueva normalidad demanda.

Los mecanismos de suscripción on-line, demuestran un cambio significativo en la forma en que los clientes contratan y aseguran sus bienes. Asimismo, esta tendencia actual de los consumidores a comprar on-line se irá pronunciando a medida que avancemos en la digitalización de los servicios ofrecidos, y en la utilización más frecuente de aplicaciones móviles, que permitan con mayor sencillez y en una menor cantidad de tiempo contratar los productos y servicios que los clientes requieran según los gustos, costos y preferencias.

¿Cómo están respondiendo las aseguradoras hoy? ¿Y qué deberían tener en cuenta para el futuro cuando nadie sabe lo que éste nos depara?

Desde mi punto de vista, exceptuando las compañías líderes y aquellas que han sido pioneras en la implementación de nuevas tecnologías, no ha habido un acompañamiento en la digitalización y automatización en la mayoría de las aseguradoras del mercado argentino. Esto hace que las compañías más pequeñas, vayan perdiendo lentamente participación de mercado, por la falta de adaptación de sus servicios a las necesidades y hábitos de consumo de los clientes.

Es por ello, por lo que el aislamiento social preventivo obligatorio establecido a raíz del Covid-19, aparece para estas aseguradoras como una nueva oportunidad para retomar la senda de la automatización de sus procesos y la transformación digital tan necesaria para el desarrollo de sus negocios.

En este escenario de incertidumbre, será importante identificar qué aspectos se deberán tener en cuenta para el futuro de los negocios, determinar con qué recursos cuenta cada compañía, y que segmento quiere desarrollar o potenciar, para ello previamente se deberá realizar un análisis exhaustivo de las debilidades y fortalezas que cada aseguradora posee en sus procesos y sistemas, para posteriormente automatizar los procedimientos, implementar nuevas tecnologías y capacitar a sus recursos humanos.

Por otra parte, muchas compañías de seguros por lo general carecen de los recursos humanos especializados para llevar adelante la transformación digital, por lo que contratar los servicios de Consultoras especializadas en Seguros, les facilitará la tarea y les permitirá contar con servicios profesionales idóneos y con el conocimiento específico de las mejores prácticas y tendencias del mercado.

Asimismo, la consultoría especializada en seguros le permitirá a la aseguradora saber cuáles son sus riesgos reales, y establecer unas pautas legales y de actuación que impidan, que esos riesgos tengan un impacto directo sobre su operatoria o su economía.

Las consultoras de seguros también se encargan de ofrecer todo el apoyo y orientación necesaria en casos concretos en los que sea preciso desarrollar algún nuevo producto o segmento, buscando siempre la mejor opción económica para la aseguradora.

En conclusión, la transformación digital y la automatización de procesos serán cada vez mas necesarias para la sobrevivencia de las compañías, por lo que será imprescindible contar con la asistencia técnica de consultores especializados, atento a que los cambios en los hábitos de consumo de los clientes están impulsando la transformación de los negocios. Quien sepa transitar esos pasos seguramente lo llevará a la sendera del éxito.

Dave Woodfine from Cyber Security Associates Limited (CSA) on why comprehensive cyber audits and health checks are the key for the future of cyber risk and exposure management

Take it from an ‘outsider’ looking in, while there’s no doubt that cyber coverage will continue to grow and be one of the most promising areas of innovation in the insurance market, right now, it’s just not where it should be.

Consider this: the global cyber insurance market is projected to reach US$ 15 billion in value by 2022. And yet, thanks to the complex interconnections of supply chains and businesses, current modelled cyber insurance payouts in the event of a significant cloud service provider outage come in at US$ 14.3 billion alone.

Remember, these are losses stemming from just one cyber event. Anyone see an issue with that?

At the same time, with little established market practice in respect of insured risks and exclusions for cyber, there have been a number of recent high-profile denied cyber claims and reputation has been at stake.

Huge data breaches and far-reaching ransomware attacks in recent times have necessitated a rethink of cyber risk wordings, the overall exposure of the insurance industry, and the risk mitigation services encompassed within the products available.

Unique perspective

The risks that cyber criminals present are not exaggerated. My 28 years in the Royal Air Force as an engineering officer paved my way into cyber security, spending the last six to eight years of my service directly involved with military cyber security.

This experience has allowed me to view the front line of cyber security through a unique lens. And when I look into common practices in the corporate world, I’m concerned that businesses are not as prepared as they should be, and that insurers are more exposed to cyber risk than perhaps they think they are.

From what I’ve seen, despite the risk evolving and people talking about it evolving, businesses are still falling for basic attacks so there needs to be more action.

Yes, the implementation of GDPR did its best to focus people’s attention from a UK/Europe perspective but there is still a misconception out there that if the right technology has been put in place, then no more work needs to be done.

The next frontiers

This couldn’t be further from the truth. When I think about the next frontier of cyber risk, I think about how it will penetrate supply chains and cause disruption from all angles.

And with the exponential rise of the internet of things, biological printers, drones and other autonomous vehicles soon to become ubiquitous, you don’t have to stray far into the realms of science fiction to find a very real systemic threat from cyber risk.

External hackers continue to successfully demonstrate their ability to cause physical damage

through attacks, while regulators are demonstrating that they are serious about imposing public

fines for privacy breaches.

Indeed it is not just external threats – insider attacks are on the rise thanks to internal operational vulnerabilities. In fact, it’s estimated that 60% of cyber attacks are now carried out by insiders.

Proactive risk mitigation

Cyber insurers can’t be cyber security experts themselves, but they should be working with them not only to make sure their own house is in order, but also to help the corporates they insure to implement comprehensive gap analyses and be proactive about cyber risk.

To comprehensively understand what cyber risk a company might be carrying, the processes, the technology and people have to be carefully monitored. Too often, businesses think the risk of cyber just comes from the IT team, but this isn’t the case. There are almost always other factors outside of the IT team that play a part.

The reality is that anyone can be carrying cyber risk so to become more resilient as a company, the cyber risk management approach has to be integrated into the culture and it has to come from the top.

Pro Global Partnership

Our cyber audit services have been carefully considered to ensure our approach can help deliver an integrated cyber risk audit, with the end goal of companies being more resilient and viewed as a better risk in the eyes of insurers, subsequently leading to improved levels of cover.

By providing round the clock cyber security across a number of networks; direct cyber security audit and health checks with recommendations; awareness training; emerging threat discovery advice; preventative measures; and possible business interruption loss calculations, among other things, we are able to help businesses and insurers transform the way in which they look at and manage cyber risk.

In addition to providing the appropriate set of tools and expertise to do this, as a partnership, we are able to help collate valuable insights from the information gleaned from these audits to help improve insurer’s cyber risk decisions, including pricing decisions and exposure management.

Cyber – no golden egg

Cyber is identified as one of the biggest risks facing businesses, societies and indeed the financial system, and as such it is only natural that the demand for cyber insurance is increasing.

But this is no golden egg, and insurers must ensure they are assessing the risks they face as accurately as possible. Together, we can help develop a market-leading cyber audit that keeps pace with the rapidly changing world around us, helping insureds better understand and mitigate their risk, and helping insurers get a handle on the exposure they are underwriting.

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