October 2016
Dear members and business partners,
2016 has been a very eventful year with partly surpris-
ing developments that both directly and indirectly
affected the insurance markets.
Besides changes and castling in the top manage-
ment positions of the international insurance compa-
nies (Zurich, Generali, AXA), often combined with sig-
nificant strategic changes, also mergers and acquisi-
tions shaped the insurance landscape. Whole waves
of company mergers, which we already know from
other industries, have reached Continental Europe
and mega-brokers have started fighting their position
by trying to expand in the SME sector. Furthermore,
new players have entered the market, e.g. Hyperion
Group.
Further challenges arise from supervisory changes,
which directly influence clients’ interests (UK and Rus-
sia), but also fundamental changes in the political
landscape (e.g. BREXIT) with unforeseeable eco-
nomic consequences, also for cross-border insurance
solutions.
Table of Contents
Members
Market and Product
Information
Conferences & Events
Editorial Team
As an international SME insurance broking network with a market value of USD 2.1 bn in
premiums and 16,000 employees worldwide, we are increasingly considered as a re-
spectable partner by the major international insurance companies with whom we al-
ready have in-depth conversations on the top management level. To ensure that the ef-
forts are also target-oriented, the development of the unisonBrokers network towards a
strong union is vital.
The first step in this direction is the analysis of common premium volumes with the respec-
tive insurers, which we have taken within the scope of our global survey conducted
among our members, with the aim of gaining better conditions and commissions. Cur-
rently, we are evaluating the results of this survey. In case we have not received your
feedback yet, we would kindly ask you to send the respective information at your earli-
est convenience.
Nowadays, everyone is talking about cyber insurance. Nearly every member of our net-
work added this kind of coverage to their product portfolio. However, while the gross
written premium in the USA rose to USD 3 bn, the market outside the USA is still in an early
stage.
To deepen our members' understanding of this issue, unisonBrokers is giving a workshop
for its German members in cooperation with TÜV SÜD – Sec-IT, BELFOR Deutschland
GmbH and Erichsen GmbH. The “Cyber Risks” workshop, which will take place in
Stuttgart on October 26, aims at providing a deeper insight into this subject as well as at
showing solutions for comprehensive customer service in this business sector.
In the last few months, numerous new members joined the unisonBrokers network.
With a record number of 170 participants including the most renowned international in-
surance carriers, our last unisonBrokers Independence Day Conference in Porto was a
tremendous success.
Last but not least, after a long and complex development process, we advanced our
internet platform uniNet, which proved to be successful in the past, to the next level, al-
lowing more potential for the development of the interactive processes, reporting, co-
ordination of projects as well as for the general exchange between our members.
A famous Chinese proverb says: “May you live in interesting times”. Well, as this is what
we all do at the moment, we could add the following words: “and may you make the
best of it”.
We very much hope you will find our choice of articles in this unisonTimes edition interest-
ing and informative. Enjoy reading!
Yours,
Rolf H. Diekhoff
Members
New members
Australia
Ceneta Insurance Services: www.ceneta.com.au
Contact: Mr. Darryl Morris, [email protected]
The companies owned by Darryl Morris being LTM Risk Partners, the former unisonBrokers
member, National Franchise Insurance Brokers, Worldwide Franchise Insurance Brokers,
ABI Platform, have now gone through a major change effective the 6th April 2016. Dar-
ryl Morris has sold 100 % of his interests in LTM Risk Partners to a Joint Venture with the
Steadfast Network, at the same time selling 50 % interests in NFIB, WFIB & ABI to private
equity. This significant change is enabling the expansion of the product range and of-
fering of these companies both locally in the Australian market and internationally. To
assist with the unisonBrokers membership requirements, a new broking business called
Ceneta Insurance Services (100 % owned by Darryl) was established to meet the needs
of our network clients, ensuring the same level of service and commitment previously
enjoyed under LTM Risk Partners. Ceneta and NFIB are the new joint members within
unisonBrokers.
Belgium
Induver Insurance: www.induver.be
Contact: Mr. Jean-Luc Verbaet,
Induver is a leading insurance broker and advisor in Belgium, founded in 1990.
Since then Induver has grown into being one of the10 largest independent brokerage
companies of the country and an important partner of every insurer in the Belgian mar-
ket.
Induver is a family-owned business and has 3 offices, namely in Antwerp, Ghent and
Hasselt. The more than 100+ motivated staff members are highly focused on corporate
insurance with specific complexity. Induver is one of the market leaders in road trans-
portation and coach & bus insurances. Other specialties include tailor-made solutions
for the construction sector, professional liability insurance for the consulting sector and a
specialized marine insurance team.
Induver has a dedicated international desk in Antwerp with more than 20 years of expe-
rience in international insurance solutions. All incoming international clients are per-
sonally followed up by Jean-Luc Verbaet and his international team, backed by the en-
tire Induver organization.
Denmark
RTM Insurance Brokers A/S: www.rtm.dk
Contact: Mr. Henning Toftager, [email protected]
RTM Insurance Brokers A/S is the largest independent Danish-owned insurance broker
in Denmark
RTM consists of mainly 4 units being
industrial and commercial insurance broker division
Engineering and Risk management division
Health and benefit department
Insurance underwriting agency with several pool solutions.
RTM has more than 60 employees and was founded in 1992.
RTM’s success and ongoing growth is based on being in close contact with our cus-
tomers delivering state of the art insurance and risk management solutions.
India
SecureNow Insurance Broker Pvt. Ltd. : www.securenow.in
Contact: Mr. Abhishek Bondia, abhishekbond-
SecureNow is an award winning insurance broking firm focused on commercial insu-
rance in India. We have been recognized as a top three Asian Broker by an indepen-
dent peer-group two years in a row. We have been awarded the claims innovation of
2016 by the Claims Awards Asia Pacific 2016.
Our distinctiveness lies in the use of technology to deliver insurance services and our
deep product knowledge. Our work is spread across all lines – employee benefit being
the largest followed closely by marine, property and liability. We have over 1600 clients
in India, many of these multinationals, spread across industry and cities.
We play a constructive role in increasing insurance awareness by writing frequently in
popular local media, publishing health insurance ratings that are now considered a
market standard and contributing to various insurance and financial planning journals.
Many of our clients are expanding rapidly and looking for support outside of India. We
value international collaboration not just on clients but also on technology, underwrit-
ing and servicing.
Italy
CARE Broker: www.brokercare.com
Contact: Mr. Cristian Novelli, [email protected]
Established in 2001 by Sergio De Regibus following a 40-year long career in insurance,
Care is a leading specialist international insurance broker based in Milan, Italy and in
Lugano, Switzerland. As a well-established professional and accurate intermediary be-
tween firms and the most important insurance companies, Care has a strong expertise
in Marine risks (including project cargo): in this field, the company can offer a second-
to-none service to international freight forwarders, carriers and worldwide logistics op-
erators, thanks to a sound industry knowledge. In addition to this, Care can provide
wide-ranging property and liability covers, pollution and environmental liability poli-
cies, travel, life & health and legal protection for companies and individual customers.
A strong expertise in technologies (including renewable energies and, in the coming
months, cyber policies) completes their varied skills. Thanks to its own network of corre-
spondents and to its status of Lloyd’s correspondent Care has a truly global presence,
now further strengthened with unisonBrokers. Its years-long, cherished relationships with
the most important insurance companies of these two countries will also be an ad-
vantage for anyone interested in placing risks there. The valued additional first-class
service usually provided by Care to its clients, which includes effective risk analysis,
professional claims management and its specialists’ continued availability, will be the
same offered to other unisonBrokers members: a guarantee of quality that will ensure
that Care will take…care of them.
Switzerland
GlobalBroker: www.globalbroker.ch
Contact: Mr. Christian Scharer,
GlobalBroker was established due to a spinoff from an existing broker company. The
former independent company location Zurich and competence center for Interna-
tional Program Business was rebranded to GlobalBroker Group AG at the beginning of
2016. GlobalBroker runs its brokerage operational business mainly for domestic and in-
ternational corporate clients. On September 1st, GlobalBroker opened a second office
with ten employees in Basel. Other G|B locations will follow in major Swiss cities such as
Bern, Geneva, Lausanne. Once more, we had the chance to experience a successful
business year with our broker partners from the unisonBrokers network. We very much
appreciate the numerous longstanding relationship and we take herewith the oppor-
tunity to express our special thanks to all of you. We look forward to a continued fruitful
cooperation also in the future under the new “G|B flag”. Always being well advised –
therein lies our strength.
Member information
Australia/New Zealand
Ceneta Insurance Solutions Pty Ltd.
USA
Cottingham & Butler: www.cottinghambutler.com
Contact: Mr. Robert Heath,
C&B is a full-service broker that acts as a risk manager & benefits consultant for local,
regional, national, and multi-national clients. C&B has grown from 2 employees in 1957
to over 800 today, with clients in every state in the United States and an historical, or-
ganic growth rate in excess of 15 % year. In recent years, our growth has ranged from
18 % to 22 %. The growth is largely due to the focus on the alternative market place
which is comprised of risk management alternatives and services as opposed to con-
ventional insurance (off the shelf insurance solutions). The alternative market place utiliz-
es self-insurance, large retentions or captives (C&B has structured 9 policyholder owned
captives) which works well for the larger lines of a firm such as workers compensation,
general liability or fleet. C&B also performs feasibility analysis and knows the market well
for excess coverages. C&B provides superior in-house services for claim administration
for both casualty and employee benefits, safety services as well as medical services
with a full-time Medical Director and 30 nurses on board. All of this has produced signifi-
cant cost savings for clients throughout the USA who keep sending referrals to C&B
which made the company rank amongst the top 35 brokers in the US.
The Australian broker Worldwide
Franchise Insurance Brokers just
opened a subsidiary in New Zealand
and has further partner opportunities
under contract discussion in six other
countries.
(Source: Ceneta Insurance Solutions Pty Ltd.; photo: private)
Contact: Mr. Darryl Morris, [email protected]
With the merger of Fraumünster Insurance Experts and swissbroke Group under one
umbrella, the foundation for a sustainable business development has been laid. We
are well-prepared to realize our vision to jointly act as a leading insurance broker and
expert with a focus on SMEs in Europe.
The new holding company is the best type of enterprise for the successful handling of
future challenges in the market.
ASSEPRO pursues a clear multi-brand strategy, i.e. both of the brands, Fraumünster In-
surance Experts and swissbroke will continue operating independently. This will also ap-
ply if other local brokers join the group.
We are convinced that a common holding company enables a better reaction to the
market needs, also in the future. Therefore, we are looking forward to jointly develop-
ing new and innovative products, processes and services with your assistance so that
our clients will benefit from a wider range of services and more attractive conditions.
If you have any questions, please contact Beat Blaser at [email protected]
Switzerland
swissbroke AG/ASSEPRO
The corporate name for the
new holding structure is ASSE-
PRO. This name will hence-
forth be the new quality
brand, supported by the logos
of both its subsidiaries. Thus,
ASSEPRO takes over the lead-
ing position regarding co-
ordination, management as
well as account maintenance
and as a holding company
ensures a solid group struc-
ture.
ASSEPRO – Introduction of the new umbrella brand
Contact: Mr. Beat Blaser, [email protected]
USA
Alper Services
Contact: Mr. Gary Kirshenbaum,
Most business owners hear the words,
„trade credit insurance“ and immediately
assume „this isn’t for me, it’s on only for
companies that sell overseas or have a ter-
rible history of losses“. In reality, many com-
panies only trading domestically and with a
spotless loss history insure either a portion or
all of their receivables. What’s more, credit
insurance assures these companies will con-
tinue to have a spotless loss history as a part
of its legacy.
Given the strength Alper Services has in re-
presenting middle-market businesses across
the country, it came as no surprise that it
started its Alper Global Trade Risk Manage-
ment division earlier this year. Since its
inception, it has helped companies to reali-
ze their receivables – which on a balance
sheet are among a company’s largest as-
set class – are among te most vulnerable to
a loss. When it comes to risk protection, re-
ceivables are all too often exposed.
Alper Services closes the gaps associated
with a company’s receivables. When ex-
plained by Gary Kirshenbaum – who spear-
heads the division for Alper Services – credit
insurance can help a company grow its top
-line revenues while proactively safeguar-
ding against bottom-line losses.
„To be sure, credit insurance was instituted
to help protect companies doing business
overseas. One never knows all oft he risks
involved when doing business on the other
side of the pond. Yet, most CEOs don’t
recognize that credit insurance can make
receivables more attractive to your ban
and other lenders,“ he noted. „It’s amazing
the look on their faces when they can see
they can obtain more favorable terms by
including more receivables in a borrowing
base, with credit for export receivables
and/or overcoming concentration caps or
extended terms that age out. It opens new
doors and new opportunities. We look at
credit insurance as a means of opening up
cash-flow when business owners need it
most.“
Kirshenbaum addressed some ways that
credit insurance can protect companies:
A customer is insolvent or has an inabi-
lity to pay timely
Export payments are inconvertible or
„stuck“
Political unrest and violence, govern-
ment expatriation, business interruption
Early warning that a good customer
has suffered a degradation of credit
For an honest assessment for whether your
business is a candidate for credit insurance,
reach out to Gary Kirshenbaum at gkirshen-
(Source: Alper Services LLC, Alper Global Trade Management)
ALPER GLOBAL TRADE RISK MANAGEMENT
brings credit insurance to middle-market manufacturers
Germany
Württembergische Versicherung AG
As of June 13, 2016, Württembergische
Lebensversicherung [life insurance] has en-
larged its old-age pension scheme portfolio
by adding the new index pension scheme
„IndexClever“ to its range of insurance
products.
Since index pension schemes combine the
return potential of the money markets with
the securities of a standard pension
scheme, they are a popular form of old-
age pension. Many providers count on in-
dex pension schemes on stock indices in
conjunction with limits on return. Stock indi-
ces are often subject to fluctuations. There-
fore, positive monthly returns are often
capped while negative returns are debited
fully to the accounts of the investors. Thus,
the success has failed to materialize up to
now.
According to the Württembergische
Lebensversicherung, multi-asset indices are
a much better alternative. In contrast to Eu-
roStoxx and DAX, they display different clas-
ses of investment and thereby reduce the
fluctuation margin without minimizing the
opportunities in the same way. Hence, the
company has developed the “multi-asset
strategy index” for its index pension
scheme. The multi-asset strategy index is
widely spread and invests in nine bonds
worldwide. In the stock class of investment,
there are Europe, USA, Japan and China
being the most important economic re-
gions.
Furthermore, state bonds are designed for
investment in the USA, Germany and Ja-
pan. Commodity trading is globally cov-
ered by raw materials in general, except for
agriculture commodities, as well as gold. As
one could both bet on falling or rising share
prices, there are up to 18 different bonds to
choose from. This enables a wide spread of
risk and creates the basis for a broadly di-
versified portfolio. The index is adjusted dai-
ly, according to the current market situa-
tion.
Norbert Heinen, Chairman of the Württem-
bergische Lebensversicherung AG com-
ments on the product as follows:
“Our new product is perfectly suitable for
old-age pension investments. By means of
the index share, it enables yearly growth
opportunities and 100 % capital guarantee
for the saved assets.
This means: If the yearly return on invest-
ment of the index is positive, the clients will
proportionally profit from the price deve-
lopment and will receive a respective re-
turn. If the development is negative, the re-
turn will be set to zero and the clients will
not have any losses. The pension capital will
100 % survive the decline.
The German institute for provision and fi-
nancial planning has recently reviewed the
eligibility of the multi-asset strategy index for
pension schemes – with a positive result:
The multi-asset strategy is an excellent in-
dex model for private pension schemes.
Market and Product information
Contact: Mr. Rainer Gelsdorf,
Old-age provision—Württembergische launches index pension scheme
Combined Cargo Policy
“As of July 1, 2016 the box has to be put on the scales” - Sea freight containers have to
be weighed
The popular Olympic saying “higher, faster, further” no longer only applies to sports events
but is increasingly used in the context of global trade. The flow of goods and commodities
will significantly grow in the following years. By 2050, the international cargo traffic will
quadruple – SME businesses will also profit from this development.
For better safety: As of July 1 sea freight containers have to be weighed
Today, there are already container vessels with a transport capacity of 19,000 containers
navigating the seven seas. With an increasing transport volume the risk of losses and dam-
age to the goods and commodities during transport will also dramatically soar – not only
at sea. In order to promote safety in shipping, the
regulations for sea cargo were tightened as of
July 1, 2016. The sender (shipping agent) of the
container is now obliged to communicate to the
freight forwarder or the ship owner the exact
weight of the container. This shall serve as a
means of preventing damage resulting from false
weight indications, e.g. in case containers are
wrongly loaded/stored and vessels get into a
skew position.
Carriers are only liable for very small damages in transit.
During marine transportation, but also during road haulage, rail and air transport, the
goods are exposed to enormous risks like damage or loss through breaking, bending,
denting, theft, robbery or fire. The carriers only bear very limited liability: about € 10 per kg
at a maximum, for marine transportation even less (about € 4 per kg).
As a result, there is an enormous claim potential: For one euro-pallet with household appli-
ances worth € 25,000 and a weight of 500 kg, the carrier would only bear liability of up to
€ 5,000. The difference amount of € 20,000 remains with the sender or owner of the goods
– unless they have taken precautionary measures.
Comprehensive coverage for damage in transit: The cargo policy
Via its cargo policy, Württembergische insures these and many further losses with their full
amount.
These features are among the highlights of this cargo policy:
comprehensive coverage, incl. an all-risk coverage
global scope of coverage
high insurance sums on a first risk basis (no underinsurance)
all means of transportation are insured (own and foreign vehicles, post and parcel
services, freight forwarders, shipping agents, trucks, railroads, vessels, aircrafts etc.)
(Source: Württembergische Versicherung AG)
Russia
Malakut Insurance Brokers
In accordance with the Federal Law No.363-FZ from July 3, 2016 “About the implemen-
tation of the changes to Federal law of the Russian Federation “About the organization
of insurance activities in the Russia Federation” the new insurance market player is orga-
nized – National Reinsurance Company.
As per the Law effective from January 1, 2017 all outgoing reinsurance contracts must
be declared to the National Reinsurance Company. This means that each and every
insurer must approach National Reinsurance Company for each reinsurance placement
on mandatory basis. National Reinsurance Company has the right to underwrite from
0 % up to 10 % of the 100 % of reinsurance order. National Reinsurance Company pos-
sesses the right to write bigger shares (above 10 %) but only in case the reinsured wishes
to retrocede more. Only after approach of the National Reinsurance Company, the in-
surer can continue further placement.
At the moment, there is a huge discussion of this new approach between insurers/ bro-
kers and other involved parties as National Reinsurance Company is only organizing and
a lot of issues remain open still (for example technical capacity to review huge amount
of reinsurance requests from all market players simultaneously etc.)
The above will considerably affect the structure of the multinational programs as effec-
tive from January 1, 2017.
(Source: Malakut Insurance Brokers)
Contact: Ms. Tatiana Razuvaeva, [email protected]
Spain
Segurcruanyes
Consorcio de Compensación de Seguros
According to Law 50/80, the Spanish Consorcio coverage stipulates a cash before cov-
er solution, i.e. the premium generally has to be paid before the insurance cover be-
comes effective. This applies to new policies having a premium payment deadline of 7
days following the contract conclusion. For renewal policies, this period extends to 30
days.
If the insured fails to pay the premium on time, the Consorcio cover lapses, so that there
will be no indemnification in case of claim.
The Consorcio de Compensación de Seguros is a compulsory Government cata-
strophic risk insurance in Spain.
Contact: Mr. David Cruanyes, [email protected]
Since the amendment of this regulation in 2015, the situation has slightly defused. With
regard to the criteria for delayed premium payment in the event of a claim, there are
normally two possible situations:
New policy (initial premium)
a) The issuance of the policy prior to the claim is essential.
b) Preliminary invoices for the policy and the Consorcio coverage showing 50 % of
the policy premium as well as 50 % of the Consorcio premium have to be issued
and paid within one month after the effective date of the policy.
c) The CCS will only settle the claim after the total premium and the Consorcio Fee
have been paid.
Renewal
a) The insured or rather the intermediary may provide proof to the CCS that the in-
sured has already envisaged a prolongation of his policy and the actions taken by
the insurer and the broker should have resulted in the renewal of the policy. The
CCS will then evaluate the willingness of the insured to renew his policy as well as
the dates when the respective actions were initiated. In case there was a change
regarding the insurance carrier for the prolongation of the policy, the willingness to
renew the policy shall be clearly recognizable. If there is a tacit renewal, the miss-
ing cancellation notice will be taken into consideration. However, it is also seen in
relation to the duration of the default of premium payment and the problems that
occurred during the prolongation process.
b) The renewal of the policy has to be initiated at least 1 month prior to the actual
due date.
c) The continuity of coverage can be proven especially for the 2 previous insurance
periods.
d) Preliminary invoices for the policy and the Consorcio coverage showing 50 % of
the policy premium as well as 50 % of the Consorcio premium have to be issued
and paid within one month after the effective date of the policy.
e) The CCS will only settle the claim after the total premium and the Consorcio Fee
have been paid.
f) Provided that the insured can exactly provide proof of all possible actions taken to
enable a punctual premium payment and that 2a), b), c) and e) are still in effect,
the CCS may agree to compensation even without having received partial pay-
ment of the premium.
However, Consorcio is not a compulsory insurance for the following insurance lines:
Transport (freight and marine transport), CAR, EAR, Liability, Health, Legal Expenses,
Travel Assistance as well as agricultural insurance via Agroseguro.
(Author: Rolf Diekhoff; Source: Segurcruanyes)
Zurich launches Commercial Insurance unit headed by James Shea;
Claudia Dill, Jack Howell and James Shea join Executive Committee,
effective October 1, 2016
Zurich Insurance Group (Zurich) today announced that it will combine its Corporate
and Commercial businesses into a single global busi-
ness as part of its process to simplify and strengthen its
organization. The new unit, to be called Commercial
Insurance, brings together corporate and commercial
insurance expertise worldwide under a single umbrella
and will be headed by James Shea (50, Canadian citi-
zen), who joins Zurich as CEO Commercial Insurance.
Commercial Insurance will help businesses around the
world understand and protect themselves from risks.
Zurich is also creating a new Global Specialty Lines
function within Commercial Insurance that will include
Credit Lines (i.e. Political Risk, Surety and Trade Credit), Marine, Aviation and Energy.
The Insurance Act 2015
The Insurance Act 2015 introduces the first major changes to Insurance Law in the UK
since the Marine Insurance Act 1906 and came into force on 12 August 2016. The aim of
the Act is to create a fairer balance between the insured and insurer as well as bring
the position for Business Insureds in line with Consumer insurance under the Consumer
Insurance (Disclosure & Representations) Act 2012 (CIDR). It has an impact on the fol-
lowing areas:
The existing duty of disclosure which is replaced by a duty of “fair presentation”
Remedies available to insurers
The abolition of “basis of contract” clauses
Warranties
Terms not relevant to an actual loss
Fraudulent claims
The Act applies to all insurance and reinsurance/retrocession contracts (and variations
to existing contracts) concluded after 12 August which are governed by UK law, re-
gardless of where the (re-)insured is based. Parts of the Act only apply to Business In-
sureds (e. g. changes to disclosure rules), while the rest of the changes under the Act
apply to all Insureds.
Switzerland
Zurich Insurance Group
United Kingdom
Tyser & Co. Ltd
Contact: Mr. David Randle, [email protected]
(Source: Zurich Insurance Group)
Changes for Business Insureds
Duty of “fair presentation”
Insureds are now required to:
Disclose all material circumstances of which an insured is, or ought to be aware of;
or
Failing that, providing the insurer with sufficient information to put a prudent insurer
on notice that they should make further enquiries.
Disclosures must be reasonably clear and accessible to a prudent insurer.
Representations regarding material facts will need to be substantially correct and
representations of expectations or beliefs are made in good faith.
Business Insureds will now have to make a fair presentation of their risks.
This replaces the previous duty of disclosure.
What should Business Insureds do?
1) Avoid data dumping – work with your broker to ensure that material circum-
stances are clearly sign-posted within the information you provide.
2) Ensure your complete and reasonable search of information available to
you. Have you searched all information held by all of the people and organ-
izations likely to know about the risk and those who will be covered by the
policy (e.g. Chairpersons, partners and associates, branch managers , Seni-
or Management, external risk managers and brokers, internal risk managers
and other people that might have relevant knowledge about the risk (e.g.
members of the Legal/Compliance department etc.))?
3) Keep a note of who was asked for information, how information was ob-
tained (enquiries or paper/electronic files) and when the information was
obtained.
Remedies available to insurers
Insurers will still be entitled to avoid the policy where there has been a deliberate or reckless
presentation by the Insured (or its agent) and there will be no requirement to return the pre-
mium. However, under the Act proportionate remedies will apply based on what the insurer
would have done had the insured made a full and fair presentation of the risk.
Where the insurer can show it would not have entered into the contract on any terms, the
contract can be avoided and insurers can refuse to pay claims but the premium must be
returned. If the insurer would have agreed to enter into a contract but on different terms,
the contract will be treated as if those different terms apply. For example, the insurer may
be able to show that a higher deductible or lower limit would have been applied.
Where a higher premium would have been charged for entering into the contract (with the
existing or different terms applying) the insurer is entitled to proportionately reduce the
amount paid on any claim.
“Basis of contract” clauses
Since the new Act is in line with consumer insurance, it is no longer possible for insurers to
convert information contained in a proposal form, application or similar document, into a
warranty by stating that it forms “the basis” of the contract.
Changes for ALL Insureds – Business and Consumers
Warranties
The suspension of a warranty means that an insurer will be liable to pay claims that arise af-
ter the breach of warranty has been remedied (if it can be) and will still be liable for losses
before the breach, as is currently the case. However, if a loss occurs when the policy is sus-
pended then the loss will not be covered, even if the warranty is later remedied. This is sub-
ject to the “terms not relevant to the loss” provisions of the Act.
Proportionate remedies are introduced where there is a non-disclosure
or misrepresentation.
“Basis of contract” clauses will be abolished for Business Insureds.
Breach of warranty will suspend rather than discharge the insurer’s liability.
The onus is on the insured to show that, in the circumstances in which it occurred, the
breach could not have increased the risk of the loss that actually occurred. However,
the provision will not apply where the warranty or other onerous term defines the risk as a
whole. For example:
The use to which an insured property can be put (e. g. commercial/personal).
The geographical limits of the policy.
The class of a ship being insured.
The minimum age/qualifications/characteristics of a person insured.
Fraudulent claims
Terminating the contract does not affect claims made before the fraud – the insurer will
still be liable for losses occurring before the fraudulent act. Fraudulent claims regarding
group insurance made by one beneficiary under the policy will not affect the cover pro-
vided under the contract to other parties.
Contracting out
If insurers wish to contract out, they will need to draw every proposed departure from
the Act (a. k. a “disadvantageous term”) to a Business Insured’s attention before the
contract is entered into and cannot simply rely on a standard opting-out clause. The
business insured must agree to their inclusion.
The insurer is not liable to pay a fraudulent claim and can recover any amounts al-
ready paid in relation to that claim. On giving notice they can also treat the contract
as terminated from the date of the fraudulent act and do not need to return premium
paid under the policy.
With the exception of the abolition of “basis of contract” clauses (which is mandato-
ry), insurers of Business/Commercial policies will be able to contract out of the Act only
if a term which would put the insured in a worse position than under the Act meets
certain transparency requirements. Insurers cannot contract out of the Act with Con-
sumers.
(Source: Tyser & Co. Ltd. Client Briefing—The Insurance Act 2015 [Excerpt])
USA
Quantum Insurance Advisors
Are you sure you understand Extra Expense coverage?
Expense to Reduce vs. Extra Expense
The term “Extra Expense” is often mis-
used in the context of a commercial
property claim and, more importantly,
often improperly estimated and ac-
counted for when placing coverage.
A thorough understanding of Extra Ex-
pense may eliminate unnecessary pre-
miums and allow coverage gaps to be
filled that you didn’t realize existed.
Extra Expense is synonymously mistaken for “expense to reduce” coverage. These terms
are NOT the same. In fact, “expense to reduce” is not really a separate coverage. Extra
Expense, however, is an additional coverage that is added to enhance Business Inter-
ruption (BI), just like some of the other additional coverages commonly available (e.g.
CBI, Service Interruption, EPI, etc.). ALL basic BI coverage inherently includes “expense
to reduce.” It is rare to find a policy that spells out “expense to reduce” or has a sepa-
rate “expense to reduce” clause.
Contact: Ms. Rebecca Blohm,
Helping policyholders navigate the complex world of property and business interrup-
tion claims, values, and exposures since 1945.
For more than 60 years, Quantum Global Advisors (QGA) has been an essential part-
ner with businesses around the world, providing assistance and management with
every type of property insurance claim. A tradition of excellence has helped us devel-
op an unparalleled reputation as an industry leader - not only for results achieved, but
for our competent, thorough and professional approach in securing results.
To date, the QGA team has participated in the measurement and resolution of over
$ 5 billion of property and time element claims.
Since July 2016, unisonBrokers and Quantum Global Advisors maintain a co-
operation with regard to professional property insurance as well as claims preparati-
on and management.
The key difference between Extra Expense and “expense to reduce” is that “expense
to reduce” must equate to an amount lower than BI losses that would have been in-
curred absent the mitigation efforts. Therefore, the “expense to reduce” value is lower
than the potential BI exposure.
Before we continue, let’s first refresh our understanding of BI coverage:
Example: Say a policyholder has a potential $ 100 BI loss. For $ 20 they can perform an
action that will make the $ 100 BI loss go away. The $ 20 expense is considered an
“expense to reduce.”
Extra Expense and “expense to reduce”
enter the loss recovery picture after an in-
sured suffers a covered loss and then has
an opportunity to minimize its potential BI
losses. As previously mentioned, all BI cov-
erage inherently includes “expense to re-
duce” coverage. “Expenses to reduce”
are simply costs incurred by a policyholder
after a loss incident that reduces the po-
tential BI losses.
BI provides coverage for a company’s change in revenue and expenses after suffe-
ring a covered loss, i.e. BI coverage will step in and replace the revenue lost during
the period of interruption (note that changes in expenses, higher or lower, are also
part of BI).
Important note: All property policies require an insured to mitigate its loss. Thus, if there is
an opportunity to minimize BI losses, even partially, the policy requires the insured to
take action.
Extra Expense coverage is always separated in a policy; usually as an additional cover-
age. Unlike the “expense to reduce”, the Extra Expense does not have to reduce BI losses
otherwise payable under the policy. Almost every policy’s language requires the Extra Ex-
pense to be reasonable, necessary, and spent to continue operations.
While most businesses seem to find a way to mitigate BI losses after suffering from a cov-
ered peril, the reality is that Extra Expenses are rare. Most mitigation efforts taken by a
business fit the “expense to reduce” definition.
Why is this all important? During the placement process, the confusion over how mitiga-
tion efforts impact an insured’s financials can cause the efforts to be incorrectly consi-
dered Extra Expenses. Therefore, unnecessary Extra Expense coverage is purchased when
the policy already provides recovery for mitigation efforts under existing BI coverage.
My intention is not to minimize the value of Extra Expense, but rather to clarify the purpose
and practical application of the coverage. It is impossible to prepare for every loss sce-
nario, so you never know when Extra Expense may prove valuable. The best case scena-
rio for a policyholder after suffering a loss is to maintain revenue and customers, even if it
means incurring additional expenses. A careful review of a policyholder’s disaster recov-
ery plan and/or mitigation opportunities can help quantify the actual Extra Expense expo-
sure.
(Author: Kevin Grudzien, Quantum Global Advisors [Excerpt from original text])
Australia
NSW Fire Services Levy
The New South Wales (NSW) Fire Services Levy is being abolished from the 1st July 2016
and will be run down over the coming twelve months to nil.
India
Krishi Kalyan Cess
The Indian Government has imposed a new tax, the Krishi Kalyan Cess, which became
effective from 1st June 2016. This new cess increases the service tax rate to 15 % from
14.5 % from 1June 2016.
A GST (Goods & Services Tax) is expected to be passed in Parliament’s Monsoon ses-
sion. GST is expected to have a rate of 17 %-18 %, to replace all forms of tax, and to
be uniformly levied across the country.
United Kingdom
IPT rate increases to 10 %
With effect from 1 October 2016 the standard rate of UK IPT will increase from 9.5 % to
10 %.
The new standard rate (10 %) will apply to new insurance policies and renewals
(business), incepting on or after the 1 October 2016, however, there are transitional ar-
rangements that allow certain business to continue to be processed at the old rate
(9.5 %). Business processed in relation to cover that incepted prior to 1 October 2016
may be taxed at the 9.5 % rate if it is processed before 1 February 2017.
All businesses processed on or after the 1 February 2017, apart from return premiums,
will attract the new rate of IPT irrespective of the inception date.
(Source: Lloyd's Market Bulletin, Ref: Y4999 [Excerpt], May 20, 2016)
Tax changes
(Source: Prudent Insurance Brokers Pvt Ltd)
Contact: Mr. Shamsher S. Dhupia, [email protected]
(Source: Ceneta Insurance Solutions Pty Ltd. )
Contact: Mr. Darryl Morris, [email protected]
Independence Day 2017
Conferences & Events
SAVE THE DATE !
12th unisonBrokers INDEPENDENCE DAY CONFERENCE 2017
7 – 9 June 2017
BERLIN, GERMANY
Hotel Adlon Kempinski
Unter den Linden 77, 10117 Berlin
Formal invitation and event details to follow!
Melinda Keller, Jenny-Annett Kubina, Olga Hoffmann
Any news, ideas, suggestions, etc. will be welcome so please send your thoughts to:
Website: www.unisonbrokers.com
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Disclaimer: Information appearing in unisonTimes™ is checked for technical accuracy but is not intend-
ed to provide a basis of knowledge upon which advice can be given. unisonBrokers accepts no responsi-
bility for any loss occasioned to any person acting or refraining from action as a result of the material in-
cluded in this newsletter.
unisonBrokers AG
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D - 20457 Hamburg
GERMANY
Tel: +49 (0)40 80 90 729 0
Fax: +49 (0)40 80 90 729 99
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USA
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Editorial Team