Leo Tootell, Management Liability and Financial Institutions Broker
Can you describe what your current role involves?
I am a Management Liability and Financial Institutions Broker at New Dawn Risk. My team specialises in the placement and negotiation of Directors’ & Officers’ Liability and Financial Institutions Insurance, primarily from the Middle East and the US.
What is your favourite insurance fact?
There is a type of insurance called Spooksafe Insurance which provides coverage in the event that you are attacked by a spirit, werewolf or vampire. One woman with this insurance died after she was allegedly thrown over the banister of her home by a poltergeist. The insurer concluded this was a valid claim and paid out $100,000.
What did you do before joining New Dawn Risk?
I joined New Dawn Risk just after graduating from Bristol University with a BSc Geography degree.
Tell us one thing about your career we didn’t know:
I have co-hosted two New Dawn Risk virtual internships with my colleague Amelia Acreman. Both were aimed at educating school and university students about insurance basics and helping them to access the industry.
What are your hobbies outside of work?
Over lockdown, I took up guitar and spent the vast majority of this period learning the opening to “Do I Wanna Know” by Arctic Monkeys. Expecting a band to snap me up in the coming weeks.
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 Nicky Stokes, Head of Management Liability and Financial Institutions at New Dawn Risk, was originally published in Middle East Insurance Review in May 2021.
There are signs that significant changes are afoot in the litigation environment in the Middle East – and this could have an impact on the directors and officers insurance market.
The market for directors and officers (D&O) insurance in the Middle East is in something of a state of flux. Historically, regional demand for the product has been relatively limited due in part to the proliferation of large, affluent, family-owned private companies in the area who have simply not seen the need for this type of risk transfer solution. With demand for D&O insurance low, pricing of the product has been relatively cheap, and it has been viewed as something that is a nice-to-have rather than a necessity.
Furthermore, the litigation environment – a potential key driver for claims to be brought against directors and officers – has been comparatively benign in the Middle East. However, there are signs that significant changes are afoot.
Regulatory developments
Up until recently, there had been a patchwork of litigation regulation across this region. But as Middle East states look to align with global standards and reporting requirements, the regulatory burden is increasing. In Saudi Arabia there is a massive drive to regulate the financial services industry as part of the government’s National Transformation Plan 2020 and Saudi Vision 2030, designed to reduce the kingdom’s dependence on oil, diversify its economy, and develop public service sectors. One key development – among a string of reforms under Vision 2030 – was the introduction of a Bankruptcy Law in 2018, to further encourage the participation of foreign and domestic investors by structuring the business legal framework and putting new regulations around businesses operating in the kingdom. This is having a direct effect on directors and officers as it makes it much easier to identify where obligations have not been met. Where duties are codified into law, it is much more straightforward to bring a claim.
In October 2020, the UAE government made various changes to its Bankruptcy Law to similar effect. In another development in December 2017, one which marked a first for the region, the Capital Market Authority in Saudi Arabia introduced a new class action regime for claims by shareholders of listed companies in the country. Last year, the first lawsuit filed under the regime was brought against the former board of directors of Al-Mojil Group, its senior management and its auditor for alleged violations committed during the subscription in the company’s shares as part of its 2008 IPO. We should expect more to follow.
Claims drivers
In fact, the last few years have seen an increase in regulatory investigations across the region, which has changed the claims landscape for the directors and officers of Middle Eastern companies. Criminal or regulatory actions increasingly relate to allegations of financial irregularities or accounting misstatements. There has also been an increase in investigations into alleged fraud, money laundering and embezzlement by directors and officers.
Indeed, the wide range of D&O claims drivers that is apparent the world over is increasingly present in the Middle East. These include investor claims of mismanagement against executives of companies in distress to those that stem from criminal or regulatory action against the directors and officers. We have also seen claims stemming from third parties such as private equity investors alleging financial irregularities prior to their investment. And civil claims have arisen against board management individuals for alleged financial wrongdoing where the company has been unable to repay debt to a lender.
An international market
Meanwhile, recent events have underlined the global nature of the insurance market. A combination of increasing litigation and regulatory risks, more notifications, and profit pressures following years of premium reductions are prompting underwriters to carefully manage the capital they deploy for D&O risks. TI1is has diminished insurer competition fo1· buyers and resulted in higher rates and less favourable coverage terms for most buyers.
Rates for D&O insurance have been hardening significantly in the UK, and latterly in the US, for some time. But prices in the Middle East have followed suit. Increases at renewals are now starting at a minimum of 20% and can rise into triple-digits. Because the D&O market comprises a large number of international insurers, price changes in the region are being driven from a top-down perspective. Those international insurers that have been hit hard in terms of losses, in the UK and US for example, are looking to remediate their books elsewhere.
As insurers’ appetite for D&O has diminished, this has led to a reduction in capacity. For example, an insurer that used to underwrite around $60m of Middle East D&O may now do no more than $10m. Last year we saw placements of $10m on the primary layer and $1Sm on the excess for D&O insurance. This year, placements dropped to around just $2m on the primary and $Sm on the excess.
These factors have led to some difficult conversations and pushback from buyers at renewals this year. For example, an insured who bought $75m worth of cover last year might have got a third of that for the same price. This has always been a price-sensitive market and, as a result, people are buying less cover than they have done in the past. We are starting to see a number of businesses that are clearly underinsured for the exposures that their directors and officers are facing, a trend which may store up trouble for the future.
Interesting times ahead
Looking ahead, the risks facing directors and officers in the Middle East are broadly in line with those that their counterparts are exposed to elsewhere in the world. Cyber is high on the agenda and there are a number of recent cyber events in Saudi Arabia that have hit both government ministries and petrochemical firms, generating significant losses with the potential to impact the D&O market. Saudi Aramco has seen an increase in attempted cyber attacks since the final quarter of 2019, which the company has so far successfully countered. However, the increasing magnitude and frequency of these incidents is a trend that is only expected to worsen over time.
It is unclear at this early stage, but it is likely that we will also see a string of claims against directors and officers as a result of the coronavirus pandemic. The situation is still evolving, but businesses in the Middle East and elsewhere should brace themselves for a likely flood of shareholder lawsuits. We have seen some massive share price drops, and if investors feel they were not fully informed about supply chain vulnerabilities or distribution problems they may choose to litigate. While there is no guarantee that these claims will be upheld, there is a potentially significant exposure to directors and officers in terms of defence costs.
Emerging risks
Potentially an even bigger pandemic-related threat to directors and officers in the Middle East and elsewhere is the ongoing recession. With the near-term economic and political outlook remaining uncertain, D&O claims resulting from company insolvency are likely to increase. Insolvency rates had already been increasing in certain regions prior to the pandemic due to slowing global trade and political threats.
Meanwhile, with COVID-19 vaccines finally being rolled out, dealmakers are hoping for an economic rebound and are targeting vulnerable or attractive assets. There has been a dramatic increase in the number of special purpose access companies – listed vehicles that are pre-funded by backers and set up ready to acquire a portfolio of businesses that look ripe for investment – and blank cheque companies. Anyone and everyone are looking to raise funds, which could lead to bad deals being negotiated and agreed in a rush to market. With rushed deals comes a very high chance of failure – leading to an uptick in D&O claims.
This would, without doubt, prolong the hard market cycle already being experienced, which could continue for another 24 months. Underwriters, brokers and insurance buyers are trackirig D&O developments in the Middle East closely. There could be tough times ahead.
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.
New Dawn Risk Group Limited, the international specialist insurance intermediary, announced today the appointment of Manuel Sicard to lead the company’s expansion into Latin America.
Max Carter, CEO of New Dawn Risk, said: “Latin America is a dynamic and developing region that is experiencing growing demand for increasingly complex insurance products, translating into a broad range of opportunities for international reinsurers. Given that this is relatively uncharted territory for some, cedants and reinsurers alike need to know their broker can provide local specialist knowledge of the markets they are operating in. Manuel’s depth of experience in the region – spanning underwriting, broking and risk management – combined with the strength of the relationships he has built up over more than two decades working in the industry, means we are now able to offer clients a more engaging and valuable proposition in Latin America.”
Prior to joining New Dawn, Manuel was vice-president, financial lines at Guy Carpenter. He previously held a similar role at Willis Towers Watson in London. Earlier in his career he worked in Colombia as a reinsurance analyst for Allianz and a risk consultant at RE Ingenieria. He has an MBA from the University of Cardiff.
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.
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
The article below, by Tom Malcolm, Head of UK Broking at New Dawn Risk, was originally published in Insurance Day in January 2021.
The confidence of insurers in building regulations as a protection against large-scale claims was undermined by the failings the Grenfell Tower fire investigation uncovered.
While all professional indemnity insurance has faced a hardening market during 2020, last year the sub-category of architect’s professional indemnity saw the culmination of four years of tumult, resulting in immense challenges for architects, their brokers and insurers.
The difficulties of renewing and maintaining adequate professional indemnity insurance for architects has caused industry uproar and a swathe of negative publicity within that professional community. The Royal institution of British Architects (Riba) has called on the Ministry of Justice to review the situation but, as yet, no solution has been found.
The problem began with 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 were a number of systemic issues with the UK’s building regulations regime.
Tearing up the rulebook
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 the Grenfell Tower tragedy uncovered, including a lack of any clarity as to who was ultimately responsible for a building’s safety.
Since 2017, that uncertainty, coupled with the impact of many years of underpriced policies and combined with multiple claims post-Grenfell, has seen many insurers withdrawing from the professional indemnity market altogether. This has caused demand to far outstrip supply, especially following the Lloyd’s review of underperforming syndicates in 2018, which further increased insurer exits from the segment as they looked to focus on more profitable lines of business.
In early 2020, there were government moves afoot to rewrite the UK’s buildings regulations regime to help improve the situation, but Covid-19 has compounded the market’s issues by drawing governmental attention elsewhere, leaving unresolved issues and resulting in continued uncertainty.
Catastrophic pricing
Much of the impact of all of this has been price-related, with subsequent negative publicity for insurers attached. In May 2020, Architects’ Journal highlighted professional indemnity renewal prices rises of up to 800% and campaigned for government support on this issue for the industry.
By October Riba had issued a further statement, detailing its concerns about the significant restrictions of cover that had begun to be common. During the autumn 2020 renewals, it was reported fire protection was excluded from almost all available architect’s professional indemnity policies.
Insurers have also put strict restrictions on “any one claim” limits; as well as excluding any buildings with aluminium composite material cladding from their cover – a significant restriction for commercial architects.
Restrictions in cover also limit the types of work architects can carry out (for example basements, swimming pools, anything firerelated), meaning some bread-and-butter project types are becoming close to uninsurable.
The Architects Registration Board (ARB) head of professional standards, Simon Howard, recently spoke to Architects’ Journal about the difficulties architects were experiencing in acquiring adequate insurance at an affordable price. He suggested these could prevent some firms operating, saying: “No architect should purchase a professional indemnity policy that fails to provide them with adequate cover for the work they do – and that includes fire safety cover. It is clear that if a firm is employed as a fire safety consultant and the policy excludes these activities, then the policy isn’t fit for purpose.”
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 that may in the future face a challenge to their fire strategy. The ultimate outcome in some cases, depending on the breadth of the fire safety exclusion, has been some firms have had to cease practising.
No quick resolution
Looking ahead to 2021, it seems unlikely any of these problems will be quickly resolved. Architects are heavily exposed to the vagaries of the economy. If GDP falls just 1 %, it .is normal to see a contraction in the architectural market of up to 12%, as large projects are taken off-stream by developers until the economic environment improves. With Covid-19 looking likely to bring a much larger contraction in GDP than 1 %, insurers will, therefore, be extra cautious in the risks they are willing to underwrite this year. The insurer supply is not going to increase and, as a consequence, it is unlikely prices will stabilise in the near term, at least.
Perhaps the only solution is for all parties to work together. Riba is seriously concerned about the rising costs of professional indemnity insurance and prevalence of fire safety exclusions, which pose significant risks to architects’ practices, clients and the public.
The institute has suggested all sides, convened by Riba, should continue to engage closely, including the insurance industry, construction lawyers and other professional bodies, and put pressure on the Ministry of Housing, Communities and Local Government and the ARB to broker a solution that supports architects.
We remain sceptical such an outcome is likely and, in the meantime, look ahead to navigating another challenging year in a sector that makes the rocketfuelled directors’ and officers’ liability market seem stable and positively dull by comparison.
The original article can be viewed here
Can you describe what your current role involves?
I lead the Technology, Media and Cyber team at New Dawn Risk. Our team is responsible for structuring and placing liability programmes for a variety of US and International clients.
What is your favourite insurance fact?
Wow, hmm I’m not sure I have any favourite insurance facts. But I recently re-watched Woody Allen’s Love and Death and chuckled when he said “There are worse things in life than death. Have you ever spent an evening with an insurance salesman?”
What did you do before joining New Dawn Risk?
I served 11 years in the British Army, completing several operations tours (Iraq & Afghanistan) before having a career change. I started my broking career at Paragon in 2015 and joined New Dawn Risk in 2019.
Tell us one thing about your career we didn’t know:
I am an ambassador for a wonderful military charity called The Not Forgotten Association https://thenotforgotten.org/. They do a huge amount of good work supporting our veterans and I’m proud to be associated with them.
What are your hobbies outside of work?
My wife and I are blessed to have three children (8,6,3); their needs aren’t entirely compatible with hobbies. That said, I love skiing, cooking and travel. My new year’s resolution is to take up Judo.
The article below, by Jonathan Franke, Tech, Media and Cyber Broker at New Dawn Risk, was originally published in Insurance Day in January 2021.
The market must be more proactive in terms of understanding and reviewing policy wordings, to accommodate the new exposures relating to 5G-enabled products and technologies…
The next 12 months will see the scaling up of the worldwide roll-out of 5G networks, with North America, Europe and East Asia leading the way.
The importance of 5G has grown since the onset of the pandemic. With much of the world switching to remote working and with the prospect of home offices becoming the new norm, businesses and individuals are requiring faster, more reliable data speeds. Companies are also adapting to network management across multiple locations to continue operating efficiently.
When it comes to data transmission and storage, the majority of the developed world will soon swing towards 5G, as we continue to transition to a progressively cloud-based economy, and that change brings with it a brand new cyber threat landscape – one that is yet to be clearly understood.
Before considering the insurance challenges 5G brings, it is important to understand exactly what 5G is. It builds on the evolution and development of its predecessors, 3G and 4G, allowing societies to smoothly transition into the increased usage of smart devices and offering faster wireless browsing and streaming. According to Ofcom, 5G is “much faster than previous generations and also offers greater capacity, allowing thousands of devices in a small area to be connected at the same time”.
The 5G roll-out will continue to enhance the expansion of the internet of things (IoT) in almost all industry sectors and many homes, as more and more smart devices connected to the internet become essential equipment. While this technology explosion is welcome, not all manufacturers of IoT devices have made cyber security a priority within their business plans.
Globally, there are now billions of interconnected devices, all communicating with each other; these devices have wide-ranging and differing security controls, leading to an unimaginable number of potential vulnerabilities for criminals to exploit. A lack of shared security standards for IoT devices means network breaches and hacking have the potential to travel widely and loopholes occurring between two unmatched systems could easily be exploited by organised criminals.
All this means criminals have already recognised an opportunity to access seemingly secure networks almost undetected. Consumer and individual data could be compromised simply by having a domestic smart meter to measure electricity and gas usage. However, even more significantly for business insurers, 5G is being used in various industry sectors, from farming to manufacturing.
Investment in monitoring
Pre-5G networks have fewer “traffic points” and this means security monitoring and scanning is simpler, less time-intensive, and less expensive for businesses. However, 5G’s dynamic software-based systems have led to a huge increase in traffic points, and to take account of this, both business-to-business and business-to-consumer companies must prepare to invest in more sophisticated and increased levels of monitoring of their networks, controls and technology.
Companies will need to place more and more reliance on IT experts to ensure adequate protection is in place, in spite of a widening IT skills gap. And they will have to do so at speed – planning for the increased risks associated with 5G should already be well developed. Those who have taken their eye off the ball, perhaps distracted by adjusting their operations to cope with Covid-19, run the risk of increased vulnerability.
The same applies to cyber and technology insurers. They have a responsibility to be 5G-ready too, in terms of making sure their cyber insurance offerings are up to speed and they are providing their clients with adequate protection. It is also a responsibility for insurers to ensure their breach response providers are well informed about the developments and roll-out of 5G, as well as being able to respond even quicker to incident notifications and to start negotiations in the case of complex ransomware demands.
In 2021, we will see cyber insurers and buyers scrambling to be ready for the roll-out of 5G; wordings are likely to change, and coverage could be challenged. Some better-informed and more proactive insureds may start to enquire into manuscript wording to cover the threats relating to 5G-enabled products and technology; it is up to insurers to understand these threats and to learn how to respond to these questions before clients come knocking.
This could make 2021 an even tougher year for this already challenged class. A new and unexplored threat is likely to unsettle insurers and it also poses the questions of how new or changed risks should be rated on a premium basis. Given an increasingly litigious and claims-active cyber sector, we would expect rates to increase and possibly capacity to constrict for new business in the year ahead and 2021 could be a difficult year for cyber insurers and buyers alike.
The original article can be viewed here
