Con temperaturas de la superficie de los océanos en niveles récord y un debilitamiento de El Niño que reduce la velocidad del viento, el escenario se estaría preparando para tormentas potencialmente devastadoras. En esos momentos, la eficiencia en el procesamiento de siniestros, se vuelven primordial para brindar un excelente servicio a los asegurados afectados.

Las pérdidas aseguradas mundiales por catástrofes naturales en 2023, superaron los US$ 100.000 millones por cuarto año consecutivo, según Swiss Re. El citado Reasegurador, también indicó que el principal factor de las pérdidas de US$ 108 mil millones del año pasado, fue la frecuencia de los eventos, mientras que las tormentas convectivas severas (SCS), representaron un récord de US$ 64 mil millones de pérdidas durante el año.

La temporada de huracanes del Atlántico Norte, comienza oficialmente el 1 de junio de 2024 y finaliza el 30 de noviembre de 2024.

A continuación, detallamos tres consejos claves para ayudar a las aseguradoras a prepararse ahora y evitar retrasos en la gestión de los siniestros:

1. Adecuación de sus Recursos Humanos

En primer lugar, las aseguradoras necesitarán delinear un plan de adecuación de recursos humanos y tecnológicos para poder afrontar el incremento estacional de los siniestros. Poner a los asegurados en primer plano, significa garantizar un pago rápido, eficiente y justo de las reclamaciones una vez ocurrida una catástrofe natural. Las preguntas que cada aseguradora debe hacerle a su equipo operativo incluyen:

• Cuentan con un panel de Ajustadores experimentados y listos para actuar?
• Cuentan con suficientes recursos humanos para dar una rápida respuesta a las innumerables denuncias / consultas de los asegurados durante los primeros días posteriores al evento catastrófico?
• Cuentan con un Equipo de Siniestros adecuado para cubrir la cantidad de reclamos derivados del evento catastrófico, que puedan además cubrir sus tareas habituales?

2. Agilizar el procesamiento de los Siniestros

El procesamiento eficiente de siniestros catastróficos, depende de flujos de trabajo optimizados y de una colaboración eficaz, especialmente con las Reaseguradoras. Es crucial contar con los protocolos de gestión de siniestros y aprobación de pagos correctos para garantizar el rápido pago de montos significantes. Además, es imperativo anticipar y prepararse para los reclamos de Business Interruption que también impactarán a corto y mediano plazo, posteriores al evento catastrófico.

3. Aprovechar los conocimientos y la experiencia

En Pro Global, nuestro equipo cuenta con una amplia experiencia en brindar soporte a las Aseguradoras y Reaseguradoras durante los aumentos repentinos de reclamaciones, tal como sucedió luego de los huracanes Irma y María en 2017. Entendemos la importancia crítica de la precisión y la eficiencia en el proceso de ajuste de pérdidas y manejo de siniestros. Al identificar los desafíos comunes que enfrentan nuestros clientes, desarrollamos las mejores soluciones alineadas con las demandas de huracanes y otros eventos catastróficos.

4. Actúe ahora

No espere a que llegue la tormenta; actúe ahora para organizar sus recursos humanos y tecnológicos. Ponerse en contacto con expertos en reclamaciones como los de Pro Global, puede ayudar a las Aseguradoras y Reaseguradoras a prepararse de forma pro-activa para los desafíos que se avecinan. Al aprovechar nuestra experiencia y soluciones personalizadas, las Aseguradoras y Reaseguradoras, pueden afrontar con confianza las complejidades de una potencial temporada de huracanes superior al promedio.

La prestación eficiente de servicios de siniestros durante un aumento de reclamaciones por eventos catastróficos, puede mejorar o empeorar la reputación de una Aseguradora. La planificación proactiva, los procesos optimizados y el apoyo de expertos son esenciales. Al priorizar las necesidades de los asegurados, optimizar los flujos de trabajo y aprovechar la experiencia de la industria, las aseguradoras y reaseguradoras podrán confiar en que están preparadas para cumplir su compromiso con los clientes en tiempos de crisis, cuando se demuestra el valor de estar asegurado.

Global insured natural-catastrophe losses in 2023 surpassed $100bn for the fourth year in a row, according to Swiss Re. The carrier said the main driver of last year’s $108bn in losses was the frequency of events, with severe convective storms (SCS) accounting for a record $64bn in losses during the year.

The North Atlantic Hurricane season officially begins on June 1, 2024, and ends on November 30, 2024.

Here are three key tips to help insurers prepare now, to prevent claims delays when it matters most for policyholders.

1. Plan for Surge Resources

First and foremost, insurers need robust surge resource plans tailored to handle the expected influx of claims. Putting policyholders front and center means ensuring fast, efficient, and fair payment of claims as soon as possible after a catastrophe strikes. Questions to ask your operational team include:

• Do you have a designated loss adjuster panel in place?
• Is there a fully staffed first review of loss mailbox ready to respond if inundated?
• Have you established a surge claims team specifically for hurricane claims while maintaining business as usual?

2. Streamline Claims Processing

Efficient claims processing hinges on streamlined workflows and effective collaboration, especially with reinsurers. It’s crucial to have the correct approval protocols in place to ensure smooth authorisation and payment of large catastrophe claims. Moreover, anticipating and preparing for business interruption and related liability claims in the medium-term aftermath of a storm is imperative.

3. Leverage Expertise and Experience

At Pro Global, our team boasts extensive experience in supporting insurance businesses during surges in claims, including the aftermath of Hurricanes Irma and Maria in 2017. We understand the criticality of accuracy and efficiency in the loss adjusting and claims handling process. By identifying common challenges faced by our clients, we develop best-in-class solutions aligned with the demands of catastrophic hurricanes.

4. Act Now

Don’t wait for the storm to hit—act now to put resources in place. Getting in touch with claims experts like those at Pro Global can help insurers proactively prepare for the challenges ahead. By leveraging our expertise and tailored solutions, insurers can navigate the complexities of an above-average hurricane season with confidence.

Efficient claims servicing during a surge in catastrophe claims can make or break an insurer’s reputation. Proactive planning, streamlined processes, and expert support are essential. By prioritising policyholder needs, optimising workflows, and leveraging industry experience, insurers can ensure they are ready to fulfill their commitment to customers in times of crisis, where the promise of insurance matters most.

Get in touch with the claims experts at Pro Global today to fortify your claims servicing capabilities and prepare for the challenges ahead.

Our U.S. Head of Audit & Advisory, Robert Sherman, recently attended the IRES Foundation 2024 National School on Market Regulation in San Diego, USA. Here are his three key takeaways from the event…

Insurers needs to be clear on their MGA relationships

To ensure market conduct is being met, it’s vital the relationship between the insurer and MGA is clear. When an insurance company gears up for review, it must be clear who does what, to understand the MGAs involvement in market conduct and responding to requests. The MGA must therefore be on notice when an exam is called.

It’s also important to ensure there is thorough and complete documentation, too. Too many companies don’t know who has access to what information or data. Getting ducks in a row will make a big difference when an MGA is then made aware there is a formal enquiry. There should be a contractual agreement between the two parties to gain access to carrier information. The carrier may be ‘outsourcing duties’ to the MGA, but the carrier remains responsible for the data and sharing with regulatory authorities when requested.

Third parties (MGAs, TPAs) are an extension of a carrier, who are responsible for their vendor

It’s important for carriers to take full responsibility when auditing, including adopting proactive auditing and reporting of issues.

Carriers may outsource or vend aspects of their business but, ultimately, the carrier is responsible for compliance. They must have a clear sight of what their vendors are doing, how data is maintained, and how such things as artificial intelligence (AI) may be utilized in diverse processes..

For example, if a carrier is vending out its claims, they must have the ability to access claims files, and must make sure they get information from administrators. Ultimately the carrier is the one that is licensed.

Carriers must also be proactive. When something is found, report it as soon as possible along with justification and explanation. It’s important to also consider controls that can be put in place to prevent this from happening in the future.
An uptick in self reporting will lead to an improved relationship with companies and regulators.

Insurers must be flexible as AI and its regulation develops

AI is evolving fast, as is the regulation around it. A degree of flexibility will need to be in place from insurers to ensure they can adapt when needed.

Regulators will want to know what AI processes are in place in the context of market conduct, and will want to understand what companies are doing – for example, understanding potential gaps. It is recommended that insurers sit with regulators and explain the processes they have in place, showcasing how the data is being used.

Insurers need to begin sooner than later to implement governance frameworks and be flexible as AI and its regulation develops. If there’s one word I would repeat to insurers, it would be Document; Document; Document!

Finally, insurers need to be able to explain their use in understandable terms. Cumbersome explanations or jargon just won’t cut it!

These insights from the IRES Foundation 2024 National School on Market Regulation event underscore the critical importance of clarity and responsibility within insurer-MGA relationships, as well as the necessity for thorough oversight of third-party vendors, and the imperative for insurers to adapt and remain flexible in the face of evolving AI technologies and regulations.

There are proactive steps that insurers can take to keep pace with these rapidly evolving dynamics, and ensure they are maintaining compliance best practice at all times. These include comprehensive documentation, proactive auditing, and transparent communication with regulators: a powerful trio that combined will market conduct and compliance practices. As the industry continues to navigate the complexities of market regulation, I hope these key takeaways from the evolving conversations in our market serve as helpful guidance for insurers striving to maintain integrity and effectiveness in their operations.

Get in touch to find out more about Pro Global’s Audit capabilities or talk to our team.

How is the MGA market developing in Europe today?

With reputations, brands, and quality standards under scrutiny, there’s a pressing need for robust internal audit functions to provide steadfast support and reassurance to insurers that they are maintaining their standards across business functions, and focused on continuous improvements.

Assuring Confidence

Internal Audit Services are strategically imperative for insurers. Regulators and market bodies demand assurance that carriers are upholding their promises, safeguarding their reputation, and adhering to stringent quality standards. This necessitates a thorough evaluation of internal processes, controls, and compliance measures.

Strengthened internal audit functions serve as the frontline defense, instilling confidence by providing independent assurance that risk management, governance, and internal control processes are operating effectively.

Internal audits play a pivotal role in objectively enhancing an organization’s business practices. By scrutinizing culture, policies, and procedures, internal auditors contribute to the oversight of the board and management. They verify the effectiveness of internal controls, assess operational efficiency, mitigate risks, and ensure compliance with laws and regulations. This kind of objective insight can be critical to shaping the future tactics and strategies for an insurer.

The Pro Advantage

However, to reap the full benefits of internal audit services, credibility and expertise are paramount. Pro Global’s team of proven experts stands ready to augment existing staff or provide invaluable third-party insight. Our experienced insurance auditors can provide an independent and unbiased view, adding value to the organization by identifying areas for improvement without operational bias. Whether it’s enhancing current processes or offering a fresh perspective through due diligence and quality assurance, Pro’s Internal Audit Services are tailored to elevate your organization’s performance and compliance standards.

Call to Action

Augment your internal audit team with Pro’s experts or allow Pro to perform a Due Diligence review of your current internal audit program. Get in touch to learn more about how our Internal Audit Services can fortify your business and ensure its sustained success.

At the same time, the traditional methods of evaluating agency performance are evolving. Beyond mere adherence to contractual and underwriting provisions, there is a growing demand for deeper insight into how individual agencies impact overall performance and loss ratios. This necessitates a shift towards tailored audit solutions that address the unique needs of each client.

Tailoring a new service

Recognizing this emerging trend, Pro Global has developed a cutting-edge Agency Management Review service tailored specifically for the US market. This innovative offering leverages our partnerships with actuarial staff to provide unparalleled insights into the performance of agency partners.

One of the key pillars of our Agency Management Review service is ensuring compliance with underwriting standards. By meticulously evaluating adherence to contractual obligations and underwriting guidelines, we help safeguard the reputation, brand, and quality standards of our clients. This not only instills confidence in stakeholders but also mitigates potential risks associated with non-compliance.

Moreover, our approach goes beyond compliance by identifying specific areas that may be affecting agency performance. Whether it’s poor loss ratios or operational inefficiencies, our team of experts conducts a thorough analysis to pinpoint areas for improvement. Armed with this actionable intelligence, our clients can make informed decisions to optimize agency performance and enhance overall profitability.

No one-size fits all approach

At the heart of this new service is our commitment to delivering accurate and actionable audit result reports. We understand that generic, one-size-fits-all solutions fall short in today’s complex insurance landscape. That’s why our Agency Management Review service is tailored to meet the specific needs and objectives of each client. Whether it’s a comprehensive assessment of agency operations or a targeted review of underwriting practices, our reports provide invaluable insights that drive tangible results.

By partnering with Pro Global for Agency Management Review, insurers and MGAs can enjoy a myriad of benefits. Firstly, they gain the confidence that their reputation, brand, and quality standards are being protected by a team of seasoned professionals. Secondly, our accurate audit result reports serve as a roadmap for enhancing agency performance and driving sustainable growth.

Matching growth with quality underwriting

As the US P&C insurance market looks set for substantial growth in the coming years, the importance of effective agency portfolio management cannot be overstated. Insurers and MGAs must proactively monitor and optimize the performance of their agency partners to capitalize on emerging opportunities and mitigate potential risks.

Pro Global has responded quickly to market demand by developing an expert new Management Review service, designed to support clients in knowing that their agency partners are meeting underwriting standards and driving sustainable growth in-line with the robust growth forecast expected for the market as a whole in the coming years.

Get in touch to find out more.

Insurance regulatory bodies face mounting challenges to keep pace and maintain robust, reliable reviews of carriers that take into account the shifting landscape around them. 

In the US, the National Association of Insurance Commissioners (NAIC) has outlined its 2024 strategic priorities, which underscore the critical need for coordination and innovation in addressing these challenges. 

NAIC’s strategic priorities for 2024 encompass a wide array of issues crucial to the insurance sector’s stability and resilience. From tackling climate risks and enhancing insurer financial oversight to addressing deceptive insurance marketing and promoting financial inclusion, these priorities reflect a proactive stance in safeguarding consumer interests and fostering industry integrity.

Meanwhile, in Canada the P&C sector is grappling with similar risk horizons and regulatory shifts, as well as internal policy issues such as adherence to Quebec’s French language law, Bill 96, which mandates that all policy contracts conducted with clients in the province must be in French initially. 

Working with Insurance Regulators

These are just a handful of examples, but the overall message is clear. As state-based insurance regulation continues to evolve, collaboration between regulators and industry experts becomes paramount. There is growing demand for sector specialists to support regulators in auditing carriers’ performance. 

Our team stands ready to assist insurance regulators in evaluating carrier behavior, performance, and customer outcomes, ensuring compliance with market requirements. With expertise spanning regulatory audits, underwriting, claims, and run-off assistance, we bolster market conduct functions and provide invaluable support to regulatory bodies.

Benefits of Collaboration

By partnering with our team, regulators gain confidence in protecting consumers while strengthening market conduct functions. Our experts augment regulatory staff, offering tailored solutions to meet evolving regulatory standards. Through collaborative efforts, we ensure industry participants uphold regulatory requirements, fostering trust and integrity within the insurance ecosystem.

Extensive experience is required to work closely and effectively with insurance regulators, conducting detailed reviews of carriers to uphold regulatory standards. By leveraging our expertise, regulators can effectively fulfill their mandate of safeguarding consumers and maintaining market integrity in an ever-changing regulatory landscape. Together, we pave the way for a more resilient and consumer-centric insurance industry.

Get in touch to find out more.

This article is shared with the kind permission of Canadian Underwriter. Original article here

Insurance providers “should have an overlaying company policy saying, ‘Here is how we, as an MGA or insurer, etc., are handling production of all of our insurance policies with respect to Bill 96,’” said Elaine Collier, senior auditor at Pro Global, which conducts Lloyd’s audits of Canadian and U.S. coverholders. “They should have something they ensure all staff are aware of as part of their training: ‘This is what you need to do.’”

Under Bill 96, passed in 2022, businesses offering goods or services in Quebec must inform and serve their Quebec clientele in French first. “This principle is now an express obligation which, if contravened, is an offence punishable by fines,” as Stikeman Elliott notes on its website.

Application anticipation

It’s unclear how Quebec’s government and courts will interpret the scope of the law’s application. For example, ambiguity exists around whether the law’s reach will extend to insurance providers with offices both inside and outside Quebec.

“If, for example, the insured and the main risk is located and domiciled in Ontario but there may be secondary locations in Quebec, I think a case could be made that you could issue everything in English,” Collier says. “But if there is some variation on that, it might be better to default to issuing a separate policy in French for Quebec locations.

“I think [the company policy is] something each entity has to decide for themselves.”

Whatever the corporate policy, insurance providers must make sure front-line staff who serve the clients know how to issue documents in proper accordance with the provisions of Bill 96.

“It’s not just a discussion for the higher-ups — the lawyers and presidents,” Collier told Canadian Underwriter in an interview. “It filters right down to the front-line…It’s a training issue as much as anything else.”

Insurance providers serving customers and clients in Quebec should be prepared to prove they issued a French version of the policy documents to the consumer first, before the customer provides express consent to receive English copies of policy documents.

“Section 55 [of Bill 96] clarifies that the French version of the agreement must have “been given to the other party” and that [the consumer] must have ‘explicitly expressed willingness’ to conclude an English version of the agreement,” as the law firm Gowling WLG notes on its website.

Documentation equations

Keeping track of this may be complicated, as Collier observes.

“If our English [clients] want [their policies] in English, they have to make a formal request to have it in English,” Collier says. “And [insurance providers] need to adequately document their files, which is often poorly done. In some of my audits prior to Bill 96, there’s nothing clearly retained in an underwriting file that tells me the client said, ‘Yes, I would like my policy in English.”

Issuing renewal policies will also be complicated, Collier adds. For example, if the policy was first issued in French, and the consumer at that point confirms a preference to receive further documents in English, can the renewal policies be issued in English? Or must they be delivered in French first?

Insurance providers “need to have a renewal strategy so that any policies outside of the envelope [of the law] are [translated into French] in a certain amount of time,” Collier says. “All renewals have to be done in a different light…

“This is an area where probably not enough attention is being paid, but more attention should be paid. Do [insurance providers] just issue renewable [French] declarations and they don’t provide [French] copies of the wordings? That’s a risk factor there.”

Translation situation

Translating English insurance policies to French is not as easy as it sounds, for several reasons. For example, Collier’s seen examples of French and English sections contained in a single insurance policy document.

“How do we deal with all of these policies we have that are…what I call ‘moitié-moitié,’ which is half and half?” she asks. “You might get a dec page that’s French and a Lloyd’s endorsement in English, and then another endorsement that’s in French. Some of them can be messy.

“How are they going to deal with that legally? Because there’s still some discussion about the legislation and there’s also been no testing of this new legislation in the courts.”

Plus, translating documents is a nuanced art that includes technical industry jargon. Ambiguity exists around specialty or manuscript wordings that have no Quebec equivalent, and/or have not been tested in the Quebec courts under the Civil Code.

2023 saw a record number of 20+ MGAs incubated in Europe through Pro MGA, and for 2024 we are already working on a double digit number of opportunities and we are expecting forecasted premiums of EUR 100m+ across our supported MGAs by year end. It’s clear that Pro MGA’s commitment to innovation and industry expertise is empowering MGAs to drive meaningful change within the insurance industry.

For decades, MGAs have been a stalwart presence in the insurance industry. However, unlike previous cycles where MGAs struggled amidst market instability, they are now not just surviving but thriving as valuable extensions of insurer underwriting capability, connecting innovative and relevant new products with local markets.

We feel 2024 has the hallmarks of a milestone year of expansion for MGAs in Europe. So, what’s turbo-charging this growth drive?

Three Key Trends Driving MGA Popularity in Europe:

Partnership Approach:

• Collaboration Over Competition: Insurers and MGAs are shifting towards a collaborative approach, viewing each other as partners rather than adversaries.

• Iterative Relationship Building: The evolution of insurer-MGA relationships is ongoing, agile, and iterative, characterised by continuous communication and adaptation.

• Mutual Growth Strategies: Partnerships between insurers and MGAs are driven by mutual growth objectives, fostering innovation and market expansion.

Insurer Diversification:

• Exploring New Markets: Insurers partner with MGAs to tap into unexplored market segments and innovative solutions, diversifying their portfolios and revenue streams.

• Risk Mitigation Strategies: Insurers utilise MGAs as a strategic tool to manage risk and explore new business opportunities while maintaining profitability.

• Learning Opportunities: Collaboration with MGAs provides insurers with insights into non-legacy dominated environments, facilitating learning and adaptation to modern market dynamics.

Innovation:

• Agility and Speed: MGAs leverage their agility and speed to innovate rapidly, outpacing traditional insurers in developing and implementing new solutions. They harness advanced data sources and powerful analytics to quickly adapt to market trends and consumer demands.

• Technology and Data Advancements: MGAs are exploring new technologies to enhance underwriting processes, risk modeling, and data analytics, driving innovation within the industry. By tapping into new data sources and deploying cutting-edge analytics, MGAs are revolutionising the way risks are assessed and managed.

• Culture of Experimentation: MGAs foster a culture of experimentation, encouraging novel approaches to addressing market challenges and moving quickly to capitalise on opportunities. This culture allows them to experiment with emerging technologies and data-driven strategies, and affords their insurer backers an opportunity to test and learn new tactics.

These three factors are fueling a shift towards longer-term relationships between insurers and MGAs.

Traditional year-by-year arrangements are being replaced by multi-year contracts, fostering greater alignment and stability. This move towards long-term partnerships incentivises both parties to focus on sustained profitability and mutual growth, rather than short-term gains.

MGAs are also increasingly aligning with panels of insurers to explore capacity options. These alliances allow MGAs to access a diverse range of underwriting capacities, enabling them to offer comprehensive coverage across various lines of business while mitigating risk. By collaborating with multiple insurers, MGAs can maintain their independence while ensuring a secure and well-backed operation. Some MGAs have successfully secured non-classical risk capital by securing alternative risk capital from for example pension funds/trusts, looking to diversify their investment portfolios.

This model is not only enhancing the resilience of MGAs but also fostering competition among insurers, driving greater efficiency and innovation in the market.

Moreover, the increase in profit commissions, coupled with delayed earnings accrual, strengthens the financial performance of MGAs over time. By prioritising long-term relationships, insurers and MGAs are cultivating partnerships of trust that foster entrepreneurialism, and support the sustainable navigation of market fluctuations, laying the groundwork for enduring success.

Backing MGAs – The Investment Environment

Meanwhile, the investment landscape surrounding MGAs reflects both challenges and opportunities. While securing investment remains a hurdle in the current volatile investment environment, the attractiveness of proven MGAs as investment targets persists despite market uncertainties.

2023 saw a cooling-off period in the broader M&A market, but this is expected to turn around in 2024, and the MGA sector in particular remains active. MGAs with a track record of successful growth are fetching attractive multiples, drawing interest from investors and traditional insurers alike. Limited targets and heightened competition underscore the lucrative nature of MGA investments.

This competitive environment highlights the strategic importance of M&A activity within the MGA space and as part of an MGA’s strategic objective, as players vie to capitalise on the industry’s growth potential and secure their position in an evolving market landscape.

MGAs: Crucibles for Talent

The most critical element to the value proposition of an MGA is of course the team behind it. MGAs are often formed by ambitious entrepreneurs who have grown frustrated with slow-moving systems at large insurers, and the space is also fostering and securing talent as start-ups grow. Talent is attracted to fast-growing, agile start-up environments, and there are many more in the market who want to be part of the MGA success stories that we are seeing. In fact, anecdotally we are seeing talent gravitate towards MGAs at a pace outperforming the general insurance space.

In particular, specialised niche underwriters are realising that their expert underwriting knowledge is highly valuable, and by joining an MGA structure that aligns with their area of expertise, they become more than a small cog in a large machine, and can drive a business forward and be rewarded for it.

The barriers to entry to start an MGA are now lower than ever before – the path is well-trodden. Enabling platforms like Pro MGA Global Solutions are keen to support high quality ideas backed by expert underwriting talent, and can take on the heavy lifting when it comes to the sometimes daunting regulatory and operational hurdles that can be overwhelming, particularly when resources are limited with start-ups.

MGAs: Driving Growth to Thrive

The turbo-charged rise of European MGAs is not merely a short-lived trend but an upwards gear shift in the dynamics of the insurance industry. MGAs are poised to grow in influence in the European insurance sector, through collaborative partnerships, a strategic focus on insurer diversification and relentless pursuit of innovation.

The transition towards longer-term relationships between insurers and MGAs signifies an important maturation of the partnership model, emphasising stability, alignment, and sustained profitability over short-term gains.