02 September 2021

New Dawn Risk Group Limited, the international specialty insurance broker, announced today the appointment of Angus Simpson as a non-executive director.

Max Carter, CEO of New Dawn Risk, said: “We are delighted to welcome Angus Simpson to our board.  He brings with him a rare depth of board-level experience in the independent London market broking sector, and we have no doubt that he will provide valuable insights and support to our management team.  New Dawn Risk is strongly positioned to become an increasingly influential participant in the specialty liability market, and Angus will be a major asset in helping us to achieve this.”

Commenting on his appointment, Angus Simpson, said: “I am hugely excited to be joining the Board of New Dawn Risk at what is, unquestionably, a time of immense opportunity for specialty, privately held, independent brokers in the London market. New Dawn Risk is committed to broadening the range of products and services that it can offer to its clients and is now very well positioned to grow its business over the next few years.”

Angus has a wealth of experience with a career spanning 35 years in the insurance industry. He has set up two businesses, an insurance broker and a Managing General Agency underwriting specialist personal lines business. Earlier in his career, he was a director of a Lloyd’s Broker and ran the Central Broking team at Aon Risk Solutions. Angus has also served as a non-executive director for Kite Warren and Wilson Limited, a Lloyd’s insurance and reinsurance broker.

Notes to Editors

Established in 2008, New Dawn Risk is a specialist insurance broker providing dynamic advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims.

The article below was originally published in Cannabis Law Report in July 2021. You can access the original article here.

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Sean Hocking of Cannabis Law Report recently spoke with Max Carter, the founder and principal at New Dawn Risk, about insurance and risk in the current US cannabis market. The following interview was conducted on 8th July 2021.

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Now that we have a Democratic administration with a majority in both houses, what are your feelings about the growth of the insurance market for cannabis as the federal legislation conversation edges forward?

There is a great deal of excitement in the insurance industry at the opportunities the cannabis market will present. We are pretty certain we will see a large number of players being willing to get involved as soon as they have the certainty that they won’t be breaching any federal regulations.

At CLR we have noticed that in some states there has been a marked increase in cannabis insurance services for the sector over the last 12 months. Are you able to give us any insights about what is happening in states like CA, IL, FL and whether comprehensive services are being offered to industry players, or are companies having to string together a patchwork of coverage from different insurance suppliers?

California, Illinois and Florida are in the top five states when it comes to general property and casualty insurance, so we would certainly expect them to be where there is more activity taking place.

As for suppliers being willing to provide a comprehensive suite of cover to cannabis businesses, it does very much depend on the size of the entity being insured and their activities.

Some classes of insurance, in particular, remain very challenging for larger companies, such as directors’ and officers’ liability for listed companies.

Do you think that NY’s recent move towards legalisation and developing a regulated sector will help with providing both greater opportunity for insurance providers as well as better options for companies and organisations looking for coverage?

We don’t think we are going to see any particular difference in approach for New York compared to other large states at this point.

The key to really unlocking the market for insurance will be the passing of the Claim Act.

As mentioned above, providers in the main areas appear to be US state-based organisations providing limited coverage on a state by state basis. Do you concur with this analysis?

Yes, absolutely at the smaller end of the spectrum coverage is being provided by local state-based carriers.

Where we see international interest is more on the larger risks, although at this point there is very little capacity in the market for US risks with very few exceptions (such as Relm in Bermuda).

There really is no international appetite to write US cannabis risks. This is for the same reasons as domestic carriers, namely that they don’t want to fall foul of federal regulators and risk their ability to trade in the US for all of their business.

If you were to highlight where coverage is most needed in the industry are there certain sectors that you feel need solutions now rather than later?

For most businesses, product liability is an essential coverage and it would be nice to see a stronger supply of this coverage being available immediately.

Outside the US and especially in the EU & UK – where there still isn’t really any hard and fast regulation with regard to cannabis but an ever-increasing amount of CBD, medical cannabis & hemp businesses launching in the sector – what options are there for these companies to get coverage?

The market is still very limited in the UK and EU because of the lack of clarity around the regulation of CBD, medical cannabis and hemp.

However, solutions are available.

We think that there needs to be more clarity around regulation in order for insurers to enter the market with enthusiasm.

In 2021 New Dawn Risk Group set up New Dawn Risk (Europe) Limited as a specialist insurance intermediary responsible for servicing European and Maltese brokers. We focus on placing complex liability and other speciality insurance and reinsurance risks with insurers in all major markets including Lloyd’s of London. Please follow the embedded hyperlinks above for more information.

We are currently looking for a permanent full-time Junior Account Executive to join our rapidly growing business. This role reports directly to the Senior Executive Manager.

Key activities and responsibilities:

• Developing strategic sales / business development plans to grow our UK professional and financial lines and other target business.
• Identifying classes of business in which opportunities exist for New Dawn Risk to play a relevant role and developing a strategy to take advantage of such opportunities.

• Producer broker relationship management.
• Managing the flow of new submissions, chasing quotes, etc.
• Quote preparation.
• Cover note and debit note preparation.
• Broking business when appropriate.
• Servicing renewals – sending out reminders, renewal proposal forms, etc.
• Identifying prospects and building a sales pipeline.

Desirable skills and qualifications for an Account Executive:

• A proven and experienced retail producer, who can hit the ground running.
• Established product knowledge, particularly in Professional Indemnity and Directors & Officers Liability.
• An individual who wants to drive their own business responsibilities and to accelerate their career.
• At least a year’s experience in insurance in Professional Indemnity or Management Liability broking or Account Management or a graduate with a desire to work in insurance
• Strong insurance product knowledge.
• Undergraduate degree-level education.
• And/or on the way to ACII qualification.

Key attributes and experience:

The successful candidate will most likely have a degree and will have some business experience. Whilst previous insurance experience would be of help, particular with a Professional Indemnity focus, this may be substituted by experience in other areas of insurance where the candidate is able to demonstrate that they have the requisite aptitude to learn quickly and understand key financial as well as business mechanics.

The candidate should be able to demonstrate real examples of independent thought and action and should exhibit an aptitude to understand complex instructions and willingness to ask for guidance where necessary.

We would not rule out a bright, astute and ambitious graduate with some experience who has a mature mindset, an appetite to learn the ropes to start a career in insurance broking.

This position represents an exciting opportunity for a bright individual to take a position of responsibility early in their career, to learn a great deal about the business of insurance very quickly, and to become a key member of a fast-growing team with a real opportunity to take an accelerated career path.

Personal qualities:

• Excellent communication skills, they will be able to demonstrate a very high standard of written English
• Strong numeracy skills
• Outstanding attention to detail
• A high level of competency with IT
• An enthusiastic self-starter and a fast learner who is self-motivated
• Ability to meet deadlines and to take responsibility
• The role requires interaction with our clients around the world, thus, strong verbal communications skills are also important.

Compensation package:

The compensation package for this role will include a competitive salary and private health insurance.

The article below, by Nicky Stokes, Head of Management Liability and Financial Institutions at New Dawn Risk, was originally published in Insurance Day in July 2021.

It is a tough time to be a di­rector or officer. Few can remember an operating en­vironment characterised by quite such a level of uncertainty and array of emerging risks. At the same time, for those looking to transfer some of that risk, the directors’ and officers’ (D&O) lia­bility insurance market has been going through a long overdue pe­riod of price corrections, coupled with restrictions on coverage.

The full impact of Covid-19 has yet to be felt and is unlikely to be until governments begin to wind back the unprecedented levels of financial support they have put in place. With the near-term eco­nomic and political outlook still uncertain, D&O liabilities linked to company insolvencies are like­ly to increase.

Of course, the pandemic has by no means been all doom and gloom. Pent-up capital has been seeking an outlet, which has re­sulted in a wave of transaction activity, driven in no small part by the rise of special-purpose ac­quisition companies (SPACs). This has brought its own set of risks. A SPAC has just two years to deploy investor capital, which puts the onus on swift action. Rushing to market brings with it the risk of bad deals being negotiated and we should expect claims to be brought against directors and of­ficers as a consequence.

Company executives must also contend with the rising cyber threat, which has been exacerbat­ed by the shift to remote working. Additionally, environmental, so­cial and governance (ESG) issues are climbing up the agenda. With more personal accountability, changing attitudes and the rise of social media, directors and of­ficers are increasingly exposed to claims related to employment­related risks, ethics and culture.

Looking ahead, though, the big­gest threat over the coming years will be claims that result from cli­mate change and other environ­mental issues. These are already behind a number of D&O claims, a trend that is only going to accel­erate, driven by a combination of three groups of actors: activists, regulators and investors.

Activist efforts

The recent case brought by Greenpeace, five other environ­mental organisations and more than 17,000 individual claimants against Royal Dutch Shell in the Netherlands has brought this issue sharply into focus. Dutch judges ordered the oil and gas major to implement stringent carbon dioxide emissions cuts within the next few years.

On the same day, a tiny hedge fund – Engine No.1 – mobilised by a dissident shareholder group dealt a major blow to Exxon Mo­bil, unseating a number of board members in a bid to force the company’s leadership to reckon with the risk of failing to adjust its business strategy to match global efforts to combat climate change.

Given mounting public concern about the environment, activism is only going to increase and it will not just be oil and gas companies that are targeted. They may be first in the firing line as some of the world’s biggest polluters but firms across agriculture, industry, manufacturing, transportation, the list goes on … should expect to come under scrutiny as well.

Climate change is also being tak­en increasingly seriously by regu­lators. In 2019 the UK’s Prudential Regulation Authority applied new rules that require certain finan­cial services firms to nominate a senior manager responsible for identifying and managing finan­cial risks from climate change.

In the US, the Securities and Exchange Commission (SEC) is expected to require public com­panies to publish data on a whole range of new areas, including greenhouse gas emissions, work­force turnover and diversity, as its new chairman looks to enhance the SEC’s disclosure regime.
Gary Gensler, SEC chair, has already said it plans to introduce new climate-related and human capital rules as it steps up ESG disclosures and earlier this month closed a public consultation on a potential new rule, which is likely to be proposed in October.

Investor behaviour

But it is investors that probably hold the strongest hand when it comes to forcing companies to change their behaviour concern­ing climate change and, by exten­sion, raising the level of risk facing directors and officers should they fail to do so.

Last year, BlackRock – the world’s largest investor – an­nounced it was making climate change central to its strategy for 2021, putting environmental and social priorities at the forefront of its investment approach. With as­sets under management of more than $7trn, BlackRock has signifi­cant influence on most of the com­panies in the S&P 500.

Interestingly, BlackRock and fel­low investors Vanguard and State Street gave powerful support to Engine No.1 in its case against Exx­on’s leadership. These huge invest­ment companies rarely side with activists on such issues, so this marks something of a sea change.

Investor pressure is building elsewhere. Launched last year, the Net Zero Asset Managers initiative saw 30 of the world’s largest asset managers commit to supporting investing aligned with net zero emissions by 2050 or sooner. Just last week Amundi, Franklin Templeton, Sumitomo Mitsui Trust Asset Management and HSBC Asset Management an­nounced they were among the latest big investors joining the ini­tiative, bringing the total on board to 128, which means $43trn in assets are now committed to a net zero emissions target.

This is a now a one-way street. Companies across the board need to understand that failing to un­derstand and take seriously their exposures to climate change will have significant ramifications for them and, ultimately, their direc­tors and officers too.

The original article can be viewed here

The article below, by Tom Malcolm, Head of UK Broking at New Dawn Risk, was originally published in Insurance Day in June 2021.

Even though four years have passed, issues in cladding have still not been resolved since the Grenfell Tower tragedy. Individuals and families across the UK are stuck living in dangerously clad properties that are more vulnerable to fire and have plummeted in value, nearing the point of being unsellable unless expensive remediation work is carried out.

In February, the Housing Secretary announced that the government would finally be intervening and will pay to remove unsafe cladding for all leaseholders in high-rise buildings, providing reassurance and protecting them from costs. It will also introduce measures to boost the housing market and free up homeowners to once again buy and sell their properties. This is a very welcome development for affected homeowners but does little to address the issues still faced by architects, another key group impacted by Grenfell.

Architects are unable to practice without a professional indemnity insurance policy in place that protects them against a broad range of potential risks, including professional negligence that might result in property damage, personal injury or financial loss, which might stetch back over many years. The problem is the cost of this insurance has risen astronomically to the point where it poses an existential threat to some architects.

Underpriced cover

Why exactly has this happened? To find the answer you need to look back some time. Architects’ PI insurance had been under-priced for many years prior to the 2017 Grenfell Tower fire. The tragedy (and subsequent Hackitt Report) called into question the safety of accepted design and building practices for high-rise buildings, including the use of many types of common cladding, fire-safety management and the principles and responsibility for the sign-off of any building as being ‘safe’. What this brought to the fore was a number of systemic issues with the UK’s Building Regulations regime. 

Previously, any architect’s insurer could rely on the standards and efficacy of all architects’ work being guaranteed by adherence to building regulations, but the confidence of insurers in this as a protection against large-scale claims was undermined by the failings that Grenfell Tower uncovered, including a lack of any clarity over who was ultimately responsible for a building’s safety.

Since 2017, that uncertainty, combined with multiple claims post-Grenfell, has generated fear in the insurance market, with large concerns that the liability may be passed back to the architects and thus the insurers. We have seen many insurers withdrawing from the professional indemnity market altogether. This has caused demand to far outstrip supply, driving up prices to an unprecedented level.

In addition, insurers have also put strict restrictions on the limits they will cover for any one claim, as well as excluding any buildings with ACM cladding from their cover – a significant restriction for commercial architects.

Restrictions in cover also severely limit the types of work architects can carry out, (for example basements, swimming pools, anything fire related) meaning some bread-and-butter architecture project types are becoming close to uninsurable.

The virtually universal restriction on protection for fire safety and strategy in professional indemnity insurance policies issued to architects has led to mistrust of insurers, while insurers have been obliged to take defensive action in response to brokers seeking quickly to “block notify” all projects which may in the future face a challenge to their fire strategy. The ultimate outcome in some cases, and, depending on the breadth of the fire safety exclusion, has been that some firms have had to cease practising.

A way forward

A solution to all this lies with the government. Its announcement in February included a proposal to provide a state-backed indemnity scheme for qualified professionals unable to obtain professional indemnity insurance for the completion of EWS1 forms. Our view at New Dawn Risk is that this proposal should be expanded to include a provision to provide PI insurance covering architects and engineers who specified cladding materials that were within building regulations at the time.

This fund can either be delivered in the form of indemnities directed to the architect, or, we believe more practically, via a reinsurance scheme for insurers of architects, engineers, and other professionals to carve out exposures relating to the specification, inspection and installation of cladding materials that are now deemed to be unsafe. The scheme could be administered through a commercial third-party administrator and claims would be continued to be handled by the insurance industry. Participating insurers would contribute a levy of a percentage of the premium (maybe 5%) to obtain access to the reinsurance fund and would not be permitted to exclude cover for cladding or fire safety claims. We think this will allow the PII insurers to remove the exclusions that are crippling the industry – such as those involving tall buildings, specifications of cladding, etc. – and to moderate the premiums being charged to professionals that are exposed to such historical projects.

Ultimately, this issue has underlined the importance of all parties working together. Insurance brokers and underwriters, lawyers and professional bodies should continue to engage closely to lobby local and national government to broker an effective, long-term solution that supports architects and the wider construction industry.

The original article can be viewed here

Latin American insurance markets are becoming more international and seeing regulatory improvements in some areas.  However, the challenges are growing for financial lines, as the global rate increases currently seen in D&O and aligned capacity / rate crunches in cyber cover begin to bite.

New Dawn Risk’s latest white paper Connecting across continents: International reinsurance solutions for Latin America is launched today, and highlights the interactions between Latin American markets and London, as well as the tensions that capacity and rate issues can bring.

Download the white paper in English or in Spanish here.

Max Carter, CEO of New Dawn Risk, said: “Latin America is seeing growing demand for increasingly complex insurance products.  One notable development has seen local brokers putting together in-country consortia to cover some larger risks, reducing their reliance on London. But the need for international cyber and financial lines cover is growing on a steady trajectory. Claims continue to spike in cyber, with ransomware being the most noted ‘problem child’, causing prices to be steeper than the broader class. These lines are seeing decreased local capacity, creating a growing need to look to London for its expertise and appetite in these areas.”

Manuel Sicard, Senior Broker for Latin America, commented “The link between London and Latin America is strengthening, and it is now more relevant than ever to examine what each market needs to know about the other to help trade flow more smoothly. We have brought together views from Latin American experts both in-country and in London, along with our own insights as a specialist broker dealing with both regions, to publish our first Latin American market report.”

Notes to Editors

Established in 2008, New Dawn Risk is a dynamic, specialist insurance intermediary providing bespoke advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims.

New Dawn Risk has today launched its latest white paper on insurance for the US legal cannabis, CBD and hemp markets. The 2021 report is called “Opportunity knocks at last in the US cannabis insurance market”.

Download the white paper here.

Since the publication of the previous report in 2020, US sales of medical and recreational cannabis have grown exponentially, reaching $17.5 billion in 2020, a 46 percent increase from 2019. In addition, the legislative landscape in the USA has been transformed by the arrival of the pro-cannabis Biden presidency, supported by a Democratic majority in both Houses.

A new CLAIM (Clarifying Law Around Insurance of Marijuana) Act has been introduced to the Senate, alongside the parallel SAFE Banking Act, and both are expected to pass into law by the end of 2021.  This will at last permit insurers to work with the cannabis industry legally; and will also reduce some of the insurance risks that previously dogged the industry.  For example, D&O cover will become a legally available option, and marijuana businesses will be able to regularise their banking and cash operations.

The updated white paper examines the key drivers of growth whilst exposing both the potential premiums and the size of the insurance gap for the cannabis industry in the US. Headlines include:

• 36 US states, and Washington D.C., have now legalised cannabis for medical or recreational use.
• Americans now spend almost as much on legal marijuana products as they do on Coca Cola.
• Cannabis dispensaries were deemed “essential businesses” by many states and therefore remained open during lockdown.

Max Carter, CEO of New Dawn Risk, commented: “The legal and regulatory environment of the cannabis industry has transformed over the past year.

“The changing attitude towards the cannabis industry, and new State and Federal legislation present an exciting opportunity for insurers to work with growers and sellers. With legalisation of banking and insurance, the door seems likely to open to what could be a $1bn premium market.

“On the consumer side, cannabis was deemed an “essential business” during the Covid-19 pandemic, and the growth of the sector seems inexorable. New Dawn Risk is committed to working with carriers and clients to share knowledge and insights to help identify and deliver cover for this untapped market.”

Notes to Editors

Established in 2008, New Dawn Risk is a dynamic, specialist insurance intermediary providing bespoke advisory solutions. We focus on complex, international liability and other specialty insurance and reinsurance. Clients large and small profit from our expertise, creativity and responsiveness – from risk assessment through to claims. 95% of our business emanates from outside the United Kingdom.

The article below, by Rachel Cohen, Senior Treaty Broker at New Dawn Risk, was originally published in Insurance Day in March 2021.

The market is hoping that as Covid-induced losses start to come through, and reinsurance rates harden, it will drive further increases in underlying liability rates in the region.

Before the onset of the global pandemic and the subsequent lockdown at the end of March 2020, the reinsurance sector had certain­ly seen some hardening of rates in the January 1, 2020 renewals, com­pared to the recent past.

In the international casual­ty treaty sector, this hardening was more prevalent on loss­-affected programmes. Reinsureds were achieving more and more increases in underlying rates, in particular on directors’ and offi­cers’ (D&O) and the professional lines business, where increases were anything between 25% and 200%, even where accounts were claims-free. However, it could still be argued that rates were still not quite where they should be, mainly because of the abun­dance of reinsurance capacity in the market.

Modest rate rises

Fast forward to the recent Janu­ary 1, 2021 renewals and it can be said that for the most part, casual­ty treaty reinsurers remain fairly subdued about the overall rein­surance rate changes that were achieved. There was certainly a hardening of rates, particularly on distressed accounts, but not the emergence of the hard market that many had speculated would finally occur post-pandemic.

In the Middle East, many ced­ants during the July 2020 and Jan­uary 2021 renewal meetings told their reinsurers they were achiev­ing underlying rate increases on bankers’ blanket bond and D&O business for the first time in a long time. These rate increases range from +5% to +30%, which is considered significant for the Middle East.

This certainly brings a glimmer of hope that the United Arab Emir­ates (UAE) market is turning, even if that turn is in its very early stag­es. Even on general liability pol­icies where rate decreases have traditionally been recorded year on year, cedants were reporting that rates were finally holding flat, which can certainly be de­scribed as an achievement.

These rate increases bring wel­come news to those reinsurers who participate on proportional placements and therefore directly benefit from these increases. In addition to this, the treaties that New Dawn Risk places in the UAE continue to remain even more profitable because of the absence of significant casualty losses, cer­tainly compared to London mar­ket placements.

It was also apparent, particu­larly during the recent renew­al season, that reinsurers were holding firm on the ceding com­mission and profit commission levels on their casualty propor­tional treaty renewals; certainly no decreases were being granted to the reinsureds, and reinsur­ance rate decreases on non-pro­portional contracts were also rarely seen.

One key trend in the Middle East market at the moment is the growth in single-project profes­sional indemnity (PI) business risks because of the increase in construction projects in the re­gion. ·while rate increases are being achieved on this line of business, many reinsurers remain cautious about the extensive long­tail nature of this line of business, and some are reducing capacity, since 10 years of extended report­ing period coverage tends to be standard in the territory.

Covid claims expected

In terms of Covid-19-related claims, liability claims are typical­ly long tail with a lag in reporting, so general liability and workers’ compensation claims have not yet materialised. However, the prediction is there will be a sig­nificant rise in these loss notifica­tions all over the world over the next few years.

Several outbreaks of corona­virus have already been linked to high-risk environments, such as gyms, hotels and cruise ships. There is a significant likelihood that all these environments will be sued for not taking proper care of their clients by either al­lowing them to enter against the government rules or failing to provide a Covid-19-safe environ­ment, resulting in clients catch­ing the virus.

The more of these liability losses that come to fruition, the greater the likelihood that under­lying rate increases in the liability sector in the UAE will finally turn positive along with more harden­ing of reinsurance rates.

As a result of the fallout from the pandemic, closer attention is now being given to wording cov­erages and more questions are being asked in relation to any existing clauses in contracts that could be construed as ambigu­ous. Certainly, in the UAE, the majority of cedants are imposing the Covid-19 specific or commu­nicable disease exclusions on all their new and renewal business. Most of our clients have informed us that they have not received pushback from their brokers on applying these clauses to the con­tracts, which is a great comfort for the reinsurers.

Finally, changes in the Middle East market continue, with insur­ers and reinsurers moving in and out of the Dubai International Fi­nancial Centre and some reinsur­ers making the decision to write the business out of their Europe­an offices instead going forward. In addition, new reinsurance ca­pacity continues to be set up, with the capabilities to write Middle Eastern business.

As 2021 continues, time will tell if there will be an increase in casualty losses, particularly in relation to Covid-19, to continue hardening reinsurance rates or if new reinsurance capacities will continue to suppress this.

The article below, by Max Carter, CEO of New Dawn Risk, was originally published in Insurance Day in March 2021.

Underwriters and brokers alike must be more responsive and innovative when it comes to addressing client needs to repair London’s reputation with regional and international clients.

Over the last year, the COVID pandemic has changed almost every part of the global economy, and insurance is no exception. Working online, with data held in the cloud, has proved robust and practical.  Like other industries we have experienced a revolution in working practices, creating a new normal.

The signs now are that many firms will soon begin adopting a hybrid office/home model that should end up being just as effective and more efficient, adding back in that missing element of human interaction.

Beyond the purely practical, though, there are other areas where the past year has not gone as smoothly as we may at first have imagined. In some cases, we have, I believe, made the mistake of thinking that continuing to function in any way at all was a success, and we have failed to acknowledge that our clients require more than just the basics. In my view there has been resulting collateral damage done, and it will require effort on our parts to help our economic bounce-back.

Service standards

Firstly, it seems that to many the London market has appeared expensive and gained an unwelcome word-of-mouth reputation for delivering poor service to regional and international buyers over the past twelve months.  Lloyd’s Decile 10 remediation was already well underway when COVID hit and, as a consequence, London pricing was out of kilter with the wider market.  It was a tricky time for clients to be suddenly unable to talk to their brokers/insurers face-to-face; and some important conversations were undoubtedly mishandled or avoided, simply because it is easier to ignore the hard yards when you are not physically present within a market.

Perhaps it would be more charitable to consider some teams were simply swamped and were finding everything was taking longer to work through (I wonder if this is subtle support for the old argument that face-to-face broking is more efficient for the underwriters, if not for the brokers).  Response times to brokers certainly suffered through the second half of 2020.

To my mind, the consequences of this could ultimately be serious, because this sort of criticism soon ripples around the world.  We cannot take our pre-eminence for granted.  Clients who have been loyal to London for many decades now have alternative options available to them and could head for the exits if they continue to be faced with an expensive market that is hard to communicate with.  We have an opportunity now to step up and demonstrate that our reticence over the last year was a covid-related blip, not a permanent step down or backwards, and we must take it.

What are the remedies for all this reputational damage? First (and urgently) both underwriters and brokers in the London market need to focus on being more responsive. It is bad enough having to give out bad news, but if the news comes late, the person giving the news is reluctant to engage, and overall service is also poor, we must ask ourselves why anyone would bother to come back to London next time, particularly as the market starts easing again.

Innovation

Innovation is also important to help create a step change in per­ception. All of us in the market need to work to rebuild our lost reputation by creating new and innovative products that seek to cover the business interruption risks caused by future epidemics (including Covid).

Organisations like the London Market Group (LMG) have a role to play too. We are in great need of a strong promotional campaign that reaches far into the international markets that feed into London and I applaud the LMG for its work in this field. Its “London makes it pos­sible” campaign must now, more than ever, be our mantra around the globe: not just a slogan, but an approach to live and work by for our international market.

Underwriters also need more help in delivering upon this en­deavour. Busy teams are cut too thin at present; this makes it hard to come up with smart, bespoke solutions. Insurers perhaps need to consider how to deliver digital underwriting better by staffing up on the underwriting support side. Moving to a more radical option, would it be so wrong for insurers to start publicly agreeing service standards for underwriting en­gagement and setting out to ad­here to them?

Finally, insurers and brokers need to recover their teamwork, rather than trying to eat each other’s lunch. Let us stop quib­bling about commission, espe­cially in a hard market, and look outwards to our clients. We all re­alise the market needs to squeeze costs out of distribution, but let us not do this until we have worked through these more pressing is­sues together.

We must work as one to rebuild London’s reputation as a great in­surance centre as the pandemic comes to an end.

What can we expect in 2021?

Silent cyber, also called non-affirmative cyber, is the unknown vulnerability in an insurer’s portfolio caused by any cyber risks that have not been explicitly excluded from policies where coverage was not intended to be provided. Whereas standalone cyber policies define clear boundaries for cyber cover, many traditional policies do not anticipate cyber risks; this does not preclude claimants filing claims, and courts agreeing with them, which could result in insurers paying certain cyber loss claims.

In July 2019, Lloyd’s mandated that all policies across all classes of business must explicitly clarify whether they provide cover for cyber risks by either excluding or affirmatively covering such exposures. They released a timetable for enforcing these measures, issuing four phases and pushing rollout every 6 months. The first phase, applied from 1 January 2020, addressed first party property damage policies. The second phase, from 1 July 2020, covered bankers blanket bond (BBB) and crime policies. The third phase, effective 1 January 2021, addressed professional indemnity (PI), D&O and other liability policies. The final phase will take effect on 1 July 2021, and includes lines such as marine XL, casualty treaty and employers liability/WCA.

With such a short timeline for insurers to become compliant, the industry has seen a trend amongst insurers of opting for umbrella-like cyber exclusions rather than offering affirmative cover when scrambling to meet these deadlines.  This pattern has been clearly seen throughout phases one and two, and even the newly-implemented phase three. It is unlikely that we will see much of a difference in phase four come July.

The lack of clarity provided by Lloyd’s when implementing overarching policy mandates has unintentionally created an echo effect, and the gaps in coverage once attributed to silent cyber are now still very evident, but just no longer “silent”. As carriers continue to exclude coverage, the only solution is for policyholders to pursue standalone cyber, which can cover gaps and may offer coverage clients had not previously considered. In 2021 it will be more important than ever to determine whether a separate cyber insurance policy is required and to meticulously ensure appropriate coverage is put in place.

James Bullock-Webster