Weekly Wrap: Vero updates broker distribution model

Weekly Wrap: Vero updates broker distribution model | Insurance Business

Weekly Wrap: Vero updates broker distribution model
Vero updates broker distribution model
Vero has announced a change to its broker distribution model as the company looks to build on relationships within the market.

The company has announced a spilt in its focus as they look to build on two key markets in international and commercial intermediaries.

As part of the re-shuffle, Vero has announced two senior management changes with Sam Sanfilippo, currently Vero’s national manager, taking on the role of international intermediaries national manager, and Anthony Pagano, currently Vero’s state sales manager NSW/ACT, appointed commercial intermediaries manager.

Andrew Mulvogue, EGM of Distribution at Suncorp Commercial Insurance, said the changes will help to better reflect the broker market.

“While Vero’s existing teams in our intermediated business are very strong, Vero believes it can align its resources and capabilities better to how the broker market operates,” Mulvogue said.

“The aim is to build a business model that focuses on the two distinct broker groups: international intermediaries and commercial intermediaries.

“This ensures clearer accountability and clearer focus on how we develop our broker relationships and manage a commercial insurance-wide business around these two important and distinctly different groups.”

Mulvogue explained what the changes will mean for the company and brokers moving forward as two dedicated teams will help grow Vero’s business.

“A dedicated team for international intermediaries, under one leader, ensures greater oversight of our interactions with the international brokers.

“Likewise, a dedicated team under the one leader for the commercial intermediaries enables this team to focus on growth in the, broker and cluster groups across metro and regional areas,” Mulvogue continued.

Mulvogue noted that while the distribution model of the company has changed, Vero will still follow its existing claims and underwriting model to better serve brokers.

“The aim of this change is to ensure that we have the best possible business model in place – along with the right people – to deliver a great experience for all our broker groups and our end customers,” Mulvogue continued.

“The changes in distribution align to our existing models of underwriting and claims to deliver a streamlined outcome for our customers and brokers.”

Christchurch insurance litigation yet to peak
A partner with a leading New Zealand law firm which acts for insureds says he believes the highest point of litigation is yet to come.

Head of litigation at Anthony Harper, Peter Woods, said insurance work was steadily increasing and he believed it would continue for a couple more years.

While the firm’s property team had seen a reduction in work, he told NZ Lawyer magazine: “The litigation team has seen no such downturn.”

The key areas of work for the litigation team were arising out of insurance claims for commercial property, business interruption and residential property.

“We’re nearly five years on and there are still a large number of residential and commercial claims out there that haven’t been resolved. There is still a lot of work to do,” he said in the latest edition of NZ Lawyer magazine.

The key trend he had noticed was that the really challenging claims were now starting to surface, and he felt the highest point of litigation was still to come.

“The insurers have worked through the easier claims and now we are dealing with complicated multiple insurance, multiple tenant and common area claims.

“The standard insurance claims for both commercial property and residential property are still growing, and we are getting those hard claims out.”

Woods leads the EQC Group Action where the owners of more than 130 properties are investigating a challenge to EQC’s interpretation of its statutory standard of repair.

He told NZ Lawyer he anticipates this will form the next phase of cases as more dispute the quality of the work that’s being done on the earthquake repairs or reinstatement.

“We may also start to see some claims come through against brokers,” he said.

Woods also predicted some problems arising for firms who act for both the insurers and the insured.

“I think this could lead to some potential conflicts, which may prove difficult to manage,” he said.

Tough times lie ahead for US and European insurers
As the implementation of the new Solvency II rules looms nearer, European insurers are starting to feel the pinch as their share prices experience steep falls.

Dutch multinational firm Aegon, owner of the US insurer TransAmerica, saw its stocks lose as much as 23 percent this month after announcing that its capital surplus would end up lower than expected. The same thing happened to Amsterdam insurer Delta Lloyd, which experienced a 43 percent plunge in share prices.

These gave smaller European insurance companies a fright, leaving them wondering how to comply with the new rules in Solvency II while also dispelling doubts about their companies' overall financial health and minimizing the risks involved.

The aim of the European Union's Solvency II is to bolster insurers' resilience against market catastrophes, which are historically expected to happen once in every 200 years. Smaller insurance companies are expected to comply with the standard model, which obliges them to have a higher capital, while larger firms can make their own internal models that have to be approved by regulators.

But while regulators have spent more than a decade planning its implementation, only Germany's Hannover Re has secured approval for its internal model so far. Some executives think that the Dutch regulator is particularly tough on the insurance market, but many of them think that the risks extend outside of the Netherlands, and that most share prices are vulnerable.

"We see risk skewed to the downside from Solvency II. Even in the best case scenario of a benign result, we do not expect share prices to react positively," said Gordon Aitken, analyst at RBC Capital Markets. The opacity of the talks between regulators and insurers also adds to the uncertainty of investors in determining companies at risk.

Solvency II is set to be introduced on January 2016, but insurers are given 16 years to comply with tougher valuation methods. Still, the staggering amount of red tape and the risks involved that will put European insurers at a disadvantage to their US rivals can make the new rules a bit harder to implement.

"It will take one or two years before people have a level of comfort with the new rules and uncertainty about them declines," Felix Hufeld, head of Germany's BaFin, told Reuters.