REG Reviews
3rd March 2025
Last month, brokers were seen to be consolidating agencies to prioritise key insurer relationships, the FCA intensified its crackdown on misleading financial ads, fraudulent claims sky-rocketed and industry professionals pushed for enhanced AI training to bridge the gap within insurance.
Read these articles and many more as we bring you all the important news and views in the insurance and financial services world…
A recent analysis carried out by Broker Insights shows that more and more brokers are cutting on the number of insurers they work with, particularly smaller carriers they place less policies with.
By consolidating agencies and directing more business through fewer providers, companies can manage costs more effectively, enhance service quality, and negotiate better policy terms.
The latest Broker Insights research highlights this trend, examining how policies shift across markets.
According to Eleanor Haig, data manager for Broker Insights Market Movement Index: “We’ve seen a considerable rise in brokers consolidating agencies. At the same time, we’re also seeing brokers moving policies more, particularly with lower premium ones, showing they work effectively with a reduced number of insurers.”
The Q3 Market Movement Index by Broker Insights tracks broker risk placement, insurer preferences, and policy shifts using an expanded £4.6bn dataset.
Moreover, the research also highlights that brokers are lowering the number of insurers they work with, especially in commercial motor. As Haig adds: “We measured whether brokers have decreased their markets by more than 5%. The proportion who have done this are represented in the slide, so for commercial motor, just over 50% of brokers have reduced the number of markets used by 5% or more.”
Not to mention that Broker M&A activity is driving agency consolidation, reshaping insurer relationships. Paul Anscombe, CEO of Seventeen Group notes that this has both pros and cons: insurers manage fewer brokers and gain efficiencies but often face higher commission costs.
The commercial motor sector experienced the largest decline in insurers, likely due to significant losses in the motor insurance market in 2023. As a result, several MGAs faced capacity challenges.
According to Haig, the main shift in the market has been the exit of micro insurers, with nearly twice as many leaving commercial motor as entering.
Kieron Burrows, head of insurance at Konsileo noted that while fleet insurance remains volatile, new MGAs have emerged without major departures. However, the specialist vehicle sector, including taxis and couriers, has faced several exits and capacity issues, he added. Some providers have focused on direct sales for smaller clients, while others, like Flock, cater to fleets rather than single vehicles.
A key challenge is the lack of insurers offering tailored terms for volume deals. Strong broker relationships, like those at Konsileo, have helped some taxi drivers secure coverage in a tough market.
Broker Insights research also shows that The rapid exit of micro insurers is causing market instability, leading 55% of brokers to consolidate and favour larger, established insurers.
MGAs remain vital despite market challenges, with larger ones evolving to compete with insurers, according to Anscombe. He noted that while some major insurers support smaller brokers, others focus on larger firms, creating space for MGAs to thrive.
Their agility, lower costs, and equity opportunities attract underwriters, while brokers must assess MGA stability to ensure reliable coverage.
On an ending note, Haig reports that: “Overall, brokers are taking a hard look at where they are placing business. If they are only using a market occasionally, there’s still a cost with this and they may have other markets to use, so making reductions can be the right strategy.”
President Trump’s new tariffs announcement, particularly the 25% import tax on steel and aluminium imports and the various trading uncertainties could cause long term negative repercussions on the insurance sector according to Kenneth Saldanha insurance lead at Accenture Americas.
Saldanha says: “The short answer is that geopolitical instability is whipsawing (insurance) companies”.
These trade war ambiguities are also the main cause of the halt in business lines that rely on global exposure, particularly insurers that rely on economic data to underwrite business.
Saldanha noted that insurance growth is closely related to GDP and if global markets become unsettled, so will insurance as a whole.
He emphasised that: “If geopolitical risks trigger a global trade war, GDP could take a hit, shrinking the risk pool and reshaping the industry”, indicating that “insurance growth mirrors GDP within a few basis points.” So a fall in economic performance will immediately influencer underwriting.
Moreover, Trump’s Tariffs imposed on Canada and Mexico could also lead to an increase in auto insurance premiums by 8%, averaging $2,502 by the end of 2025, as higher costs for cars and auto parts will lead insurers to raise premiums to cover the increased claims expenses.
Saldanha also added that disruptions to supply chains caused by COVID-19 and port strikes are already affecting the sector, translating into expensive building materials and other important necessities.
Now, the real issues lie in insurers’ ability to juggle between these disruptions, increasing costs and the urgency of remaining competitive.
Customers expect timely and guaranteed claims payout when needed while insurance professionals want to cut back on expenses and stay profitable. However, the latter could become problematic if customers are ignored, which could lead them to walk away.
While insurance is known to be old school, digital transformation and the adoption of advanced tech and AI is starting to shape many of the firms operating in the market.
Now both customers and watchdogs are expecting much more from firms, which is forcing companies to adopt new technologies that foster automation and AI in order to catch up to all of these changing expectations, regulations and overall market trends.
Senior brokers from the UK’s top firms gathered at an Insurance Age roundtable to discuss the evolving market landscape, highlighting five critical themes that will shape the industry’s opportunities and challenges in the coming years.
The insurance industry has shifted from viewing data as an afterthought to making it a core driver of efficiency and innovation. AI and automation have improved decision-making, but smaller brokers still face challenges.
According to Damian Baxter, CEO at Machine Learning Programs (MLP): “The biggest change over the last five years is that brokers have moved from recognising the potential of data to actually implementing solutions that make a difference.”
Experts stress the need to structure data for real impact, not just speed up processes but also unlock new opportunities.
Automation and e-trading play a crucial role in enhancing efficiency and decreasing operational expenses. While insurers have been slow to roll out these tech advancements, the fast pace by which brokers have digitalised their processes in the last few years is remarkable.
On a contradicting note, roundtable attendees make a point about the importance of not replacing brokers, but enhance their role which will allow a non-negotiable degree of personalisation.
As Baxter reported: “AI and machine learning should not be seen as tools to replace brokers, but as ways to enhance their ability to make informed decisions faster. There is still a gap between what is technologically possible and what brokers trust, but that gap is closing.”
Many brokers are lowering the number if insurers they trade with in order to better service delivery and cut back on useless processes. However, consolidating insurer-broker relationships can cause further issues especially in niche markets where there isn’t enough competition.
Experts see strong growth opportunities in life sciences, financial services, transport, logistics, and property insurance, fuelled by changing risks and rising investment.
However, brokers must navigate challenges such as the ongoing strict regulatory laws imposed by the FCA, economic upheavals, and talent shortages.
Success will depend on adopting flexible business models, using technology to improve operations and regulatory adherence, and maintaining high service standards despite market disruptions.
AI is being used to analyse customer data and identify cross-selling opportunities, but its effectiveness relies heavily on data quality and integration.
Even though some brokers are onboard and embrace AI for target sales, others doubt its accuracy.
Success in cross-selling relies on precise timing rather than broad approaches, with data insights helping to target clients when they are most receptive.
Transparency is also key as brokers need to understand AI-driven decisions to build trust.
At the end of the day, AI should enhance human expertise rather than replace it, improving both efficiency and the customer experience.
Younger generations are praised for their open mindedness, adaptability and flexibility, particularly for being innovative, bringing fresh ideas to the table and adopting technology.
This is no different for younger hires in the insurance sector; still, thought leaders have clashing views around the subject and the portion of innovation directly linked to younger employees.
Many experts believe millennials and Gen Zers have innate capacity to integrate technology in their everyday lives and jobs and being more comfortable using it. This directly translates into their automatic positive reaction to learning new technologies and being open to experiencing new things.
When speaking with Insurance Times, Dave Connors, chief executive and founder of DistriBind said: “Because we are looking to be innovative, it’s very helpful to have people coming in with an open mind. We had employees with a little more experience [in the business], but it didn’t work out as they were set in their ways.”
However, innovativeness shouldn’t only be attributed to younger age groups, as this could become discriminatory, but instead to any person who’s “determined, creative and have a ‘can do’ attitude”, according to Lucy Reed, talent acquisition executive at NFP.
Strict regulations can also cause a problem to innovativeness which is something that we have seen in the case of the LA fires, where extreme regulations imposed by the state drove many insurance firms out of California.
Experts such as Laura Court-Jones who works at the comparison site Bionic, believes that strict FCA rules can also negatively impact creative innovation. Since the watchdog isn’t planning to let go of any compliance rules it puts forward, insurance firms and professionals must find a workaround for being creative, and experiment with new technology to position themselves as modern providers who deploy innovative ways to deliver positive outcomes to their customers.
Research done by the Center for Aging Better charity discovered that firms don’t want to hire a person who’s over 50 as they’d be inflexible compared to younger hires. However, this is wrong from different perspective.
First, a mix of older and younger hires could make a business stronger as they would be bringing differing ideas based on both experience and creativeness.
Second, more experienced employees know more about regulation and compliance, and with the FCA tightening their grip on insurance organisations, all hands should be on deck, both younger and older employees.
So striking the balance between these generations is key, and will enable an abundance of fresh ideas, innovativeness and experience to serve the insurance market’s best interests.
In a significant escalation of regulatory efforts, the Financial Conduct Authority (FCA) took action against nearly 20,000 misleading financial promotions in 2024, marking a substantial increase from 10,008 interventions in 2023. This nearly double rate of intervention underscores the regulator’s intensified focus on ensuring transparency and fairness in financial advertising.
The FCA’s crackdown has primarily targeted advertisements from claims management companies (CMCs), with a notable 9,197 promotions withdrawn. These actions often pertained to potentially exploitative claims related to housing disrepair and motor finance, which are particularly targeted at vulnerable consumers. The regulatory body also expressed concerns over promotions related to cryptoassets and debt solutions, highlighting the diverse areas requiring vigilance.
Lucy Castledine, the FCA’s Director of Consumer Investments, emphasised the agency’s commitment to safeguard consumers from deceptive financial practices. “We have seen a growing number of misleading and illegal financial promotions,” she stated. “We have stepped up our efforts to make sure that financial promotions are clear, fair, and accurate.”
Adding to its preventative measures, the FCA has implemented the Section 21 Gateway, requiring firms to obtain explicit FCA permission before approving promotions for unauthorised entities. This measure aims to boost the regulatory framework against the backdrop of an increasing trend in fraudulent activities such as ‘ad spoofing’ and clone scams, where fraudsters impersonate legitimate firms to deceive consumers.
The agency also issued 2,240 warnings about unauthorised or potentially scam firms throughout the year and encouraged social media platforms to enhance their proactive efforts in identifying and preventing illegal promotions. These platforms have become hubs for “finfluencers” who may unknowingly or deliberately push deceptive financial products.
As the FCA continues to navigate the complexities of digital advertising, it underscores the need for all stakeholders, including social media networks, to uphold stringent advertising standards to protect consumers from financial harm.
By taking these actions, the FCA aims not only to reduce the incidence of financial fraud but also to create a safer, more trustworthy environment for financial transactions in the digital age.
“With financial promotions increasingly under scrutiny, particularly those targeting vulnerable customers, it is crucial for insurers to ensure that their advertising is not only clear and accurate but also ethical. This shift is not only about avoiding fines; it’s about developing trust and credibility in a sector where consumer confidence is imperative. The recent crackdown by regulatory bodies like the FCA highlights the urgent need for transparency and fairness, pressing insurers to closely examine and refine their marketing strategies.
As enforcement tightens and the public becomes more aware of their rights, firms that prioritise ethical marketing can differentiate themselves, building a reputation for integrity that could translate into increased customer loyalty and market share. Insurance firms must now proactively engage in practices that prioritise consumer protection as a core aspect of their business strategy. This includes implementing rigorous internal reviews and compliance checks to ensure that all advertising materials are free of misleading information.“
The NHS Confederation has urgently called on the UK government to reconsider the use of private finance in the development of hospital infrastructure. This plea follows a revelation of a “broken” capital investment system, with the NHS grappling with severely dilapidated property across England.
In a recent report, the Confederation advocated for a model similar to that of the Welsh government’s approach, which has seen successful private sector participation in health infrastructure. This recommendation comes in response to an alarming deficit in necessary funding, with the NHS falling £3.3 billion short of meeting a new 2% productivity growth target despite a £3.1 billion increase allocated in the latest autumn Budget.
Matthew Taylor, chief executive of the NHS Confederation and a former adviser to Sir Tony Blair, highlighted the critical need for alternative financing options to bridge this funding gap. “It’s not about opening the floodgates to private finance but creating opportunities for the NHS to secure the essential investment it needs,” Taylor explained.
Private Finance Initiatives (PFIs), which were heavily utilised during Blair’s administration to fund public sector projects like hospitals and schools, were discontinued by the Conservative government in 2018 after a National Audit Office report criticised the model for causing excessive taxpayer expense without clear benefits. Despite this, localised uses of PFIs have persisted in various sectors, and recent adaptations in Wales under the Mutual Investment Model have shown potential benefits by increasing public sector stakeholding, thereby enhancing governance and transparency.
The Labour government has also shown a renewed interest in PFIs, especially with plans to potentially finance significant projects like the Lower Thames Crossing. This shift comes after a government-commissioned review last year revealed that England had spent £37 billion less on health assets and infrastructure compared to other countries since the 2010s, leading to a record high maintenance backlog of £13.8 billion.
To ensure efficient use of capital funds, the NHS Confederation has recommended streamlining approval processes for new construction projects and devolving decision-making to local entities. A Department of Health and Social Care spokesperson affirmed the government’s commitment to resolving these longstanding issues, noting, “We are ensuring that every penny of the additional £26 billion health and social care funding is spent effectively to provide safe, suitable environments for patient care.”
As the NHS faces ongoing challenges with its aging infrastructure, could the call for a mixed financing approach be a solution to modernising its facilities and enhancing healthcare services across the nation?
Insurance fraud is on the rise and the stats show that it’ll only keep increasing year on year, with Allianz UK detecting £157.24m in fraudulent claims in 2024.
This represents an staggering increase of 10% (£142.38m) from 2023, which Allianz compares to approximately 90 fraud that could be valued at £430,000 a day.
The insurer reported that these fraudulent claims, including exaggerated or completely made up ones across personal commercial, and specialty insurance, totalled over £141 million. Additionally, false information provided by applicants during the policy process led to more than £15 million in application fraud.
Allianz added that fraud prevention increased by 9% year on year due to rising policy abuse, misrepresentation, and ID theft, including a surge in ghost brokers.
Property insurance fraud saw more fake and exaggerated theft claims, with commercial lines experiencing a 29% increase.
In personal lines, Allianz highlighted that voice analytics helped detect opportunistic fraud that might have previously gone unnoticed.
According to Ben Fletcher, director of fraud at Allianz UK: “Insurance fraud is a serious problem that pushes up the cost of policies for honest consumers and adds to insurers’ costs.”
He also added that: “The increase in the amount of fraud can be attributed to several factors. The ongoing cost of living challenge and financial struggles people are facing is driving some people to commit insurance fraud.”
Finally, Fletcher also emphasised the company’s strong commitment to detecting and preventing fraud through various methods.
Allianz collaborates with the police and other insurers to stop fraudulent activity and takes legal action when necessary. He warned that those attempting fraud risk facing serious criminal charges.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are introducing firm regulations to enhance the operational resilience of the UK financial sector. This regulatory initiative responds to recent disruptions, notably the July 2024 system crash caused by an update from cybersecurity firm Crowdstrike, which affected approximately 8.5 million Windows devices and significantly impacted services, including the aviation industry.
David Thompson, a senior consultant at Branko, detailed the substantial interruptions experienced by airlines and airports, illustrating the urgent need for enhanced regulatory measures to prevent similar incidents in the future. The financial sector’s ability to withstand such operational shocks is crucial for maintaining market integrity and financial stability.
Scheduled for full implementation by 31 March 2025, the new framework mandates that large insurers and brokers demonstrate their operational resilience. This requirement is part of a broader strategy to manage risks in an increasingly volatile e geopolitical environment, as noted by Matthew Connell of the Chartered Insurance Institute. Connell pointed to the vulnerabilities associated with the growing reliance on cloud-based data storage, which could lead to significant disruptions if compromised.
Furthering these efforts, the FCA and PRA issued a consultation paper in December 2024, titled CP24/28 Operational incident and third-party reporting, which outlines more prescriptive rules for incident reporting and the management of third-party suppliers. These provisions aim to facilitate early reporting of potential disruptions and ensure rigorous oversight of critical third-party services.
This regulatory update highlights the commitment of UK regulators to protect the financial sector against operational vulnerabilities, ensuring that firms are equipped to manage and mitigate potential disruptions proactively. By setting clear expectations for resilience and response strategies, these measures not only protect consumers but also enhance the overall stability and confidence in the financial system.
This move aligns with the government’s broader regulatory objectives, striking a balance between promoting innovation and maintaining strict oversight to secure good outcomes for customers and the market overall.
The insurance sector acknowledges the transformative potential of Artificial Intelligence (AI), yet a significant lack of in-house expertise is hindering its adoption. This insight comes from a recent GlobalData poll, where 24.4% of over 120 industry professionals identified this skills shortage as the main barrier to integrating AI technology.
Charlie Hutcherson, an associate insurance analyst at GlobalData, emphasises the crucial need for skilled professionals. “Without the right talent, insurers will struggle to implement AI-driven solutions effectively,” Hutcherson noted. To overcome this, companies are urged to focus on AI education and training to secure a competitive advantage as AI technology becomes increasingly prevalent in the industry.
The poll also highlighted other concerns inhibiting AI adoption: 21.3% of respondents pointed to a lack of customer understanding, 17.3% expressed scepticism about AI’s readiness, and 13.4% mentioned the absence of customer trust as significant issues.
In a proactive move to close the AI knowledge gap, upskilling programs in AI, data analytics, and machine learning are being recommended. The training initiatives are essential for equipping employees with the necessary skills for effective AI integration. For instance, a study by Tata Consultancy Services in June 2024 revealed that 83% of businesses believe AI is crucial for growth, and 67% plan to use it for innovation.
However, the pace of workforce growth in the insurance sector has not kept up with the industry’s needs. According to the London Market Group, the workforce in the city’s marketplace grew by only 2% annually from 2021 to 2023, lagging behind the premium growth average of around 7%.
Speaking to Insurance Times, Ekine Akuiyibo, Chief Operating Officer at Socotra, stressed the importance of adapting to new technologies, saying, “The industry has to recognise there is the need for a new skills set.” This sentiment underscores the broader industry challenge of evolving skill requirements in the face of technological advancements.
Additionally, collaboration with universities and technology providers is seen as a strategic move to enhance AI capabilities within the sector, suggesting a path forward through educational partnerships and innovative training solutions.
Pet ownership in the UK is on the rise, directly translating into a big opportunity for the pet insurance market. However, this industry is facing significant rising costs challenges particularly attributed to the fluctuating pricing rates.
Pet insurance premiums have risen by 21% from February 2023 to March 2024, according to Pearson Ham. However, the industry is also grappling with several other challenges, including claims inflation, customer dissatisfaction, and problems within the veterinary sector.
Additionally, data from the ABI in August 2024 revealed that pet insurance claims reached £1.2 billion in 2023, marking a 20% increase from the previous year.
When speaking to Insurance Times, founder of the Pet and Equine Insurance Sustainability Network Sharon Brown, reported that the consumer price index (CPI) for veterinary and pet related services has jumped from 100 in 2015 to 167.1 in November 2024, exacerbating pet insurance costs.
What’s worsening the situation even further is that pet insurance’s claims frequency is higher than a lot of other principal insurance segments.
The FCA also discovered that pet insurance claims payouts have risen, with maximum benefit policies up 15.8% to £733 in 2023.
The cost of insuring older pets is also rising, fuelled by a surge in pet ownership during the Covid-19 pandemic, which saw 3.2 million new pets in UK households as reported by the Pet Food Manufacturers’ Association.
Brown suggests that preventive wellness solutions could be potential solutions to this vicious rising premiums cycle. She’s also convinced that it’s up to the veterinary sector in itself to innovate more in order to overcome these debilitating cost challenges, hence standardising prices.
Furthermore, The pet insurance market is struggling to provide value and positive customer outcomes, with 61% of complaints ruled out by the Financial Ombudsman Service in the first half of 2024 related to declined claims, far higher than the 29% across all industries.
Similar to any other insurance product, pet insurers must communicate better with their policyholders, fostering transparency, collaboration and long-term innovation to improve results for pets, policyholders and the insurance sector as stated by Brown.
In a significant policy overhaul, the UK government is set to revamp public procurement rules to better support local small and medium-sized enterprises (SMEs). The proposed changes are designed to make it easier for these businesses to compete for public sector contracts, a move expected to stimulate local economies and job creation.
Under the new guidelines, local councils will have the flexibility to prioritise small businesses for contracts, a shift aimed at keeping public spending within local communities. This approach is anticipated to not only boost local growth but also encourage innovation.
Cabinet Office minister Georgia Gould highlighted the government’s commitment to reinvigorating local economies by stating, “We want every department to understand that supporting SMEs is their responsibility.” She outlined the government’s plan to set specific “stretch targets” for departments to increase their engagement with SMEs, ensuring that a larger portion of the public procurement budget is spent with smaller businesses.
Additionally, companies awarded public contracts will now be mandated to list job vacancies in local job centres, facilitating employment for local residents and helping to reduce unemployment rates.
The changes are a response to feedback that the current procurement process is overly complex and exclusionary, preventing many capable small businesses from participating. The government’s annual spend on goods and services exceeds £400 billion, yet SMEs have historically received a relatively small share of this.
The shift in procurement policy is part of a broader government effort to reduce dependence on large multinationals and cut spending on expensive consultancy contracts. By redirecting funds to support local businesses, the government aims to enhance the economic resilience of communities across the country.
These changes set to strive for a more inclusive and equitable distribution of public sector opportunities, ensuring that the benefits of government spending are more widely felt across the UK’s diverse communities.
Last month, the FCA urged motor finance firms to allocate sufficient resources, financial institutions expedited technology adoption to tackle regulatory hurdles, underinsurance presented a pivotal challenge for brokers, and insurers came under the spotlight concerning environmental and social responsibilities...
Last month, the Consumer Duty Alliance launched a clarifying guide to assist firms preparing their annual board reports, premium finance requests soared amid cost-of-living pressures, the FCA set out measures to combat domestic financial abuse and REG achieved its ISO 27001 certification...
Last month, the growing threat of summer floods was highlighted, urging both policyholders and insurers to take proactive steps. The FCA's Market Watch 79 emphasised the importance of strong data management in surveillance against market abuse, firms were reminded that the Consumer Duty is not a 'one time requirement', but a continuous effort, and REG is excited to sponsor the upcoming MGAA Annual Conference and collaborate with MGAs about the value of partnerships…
Last month, the FCA urged financial firms to improve their treatment of politically exposed persons (PEPs), a major IT outage led to a potential rise in claims, the UK motor insurance sector faced major underwriting losses due to the current economic and political climate, and the insurance industry is supporting $19 trillion in net zero investments by engaging in greener projects...
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Last month, experts dispute FCA concerns over brokers’ compliance with fair value, whilst the regulator tightens focus on premium financing firms, banks are warning customers about “quishing” scams, scientists achieved a breakthrough in DNA data storage, the FCA reveals ongoing issues of workplace misconduct in the London insurance market, emphasising the need for cultural change...
Last month, the FCA reviewed life insurers' bereavement claims processes, brokers were advised to revisit policies ahead of Employment Rights Bill enforcement, ISO introduced new global ESG guidelines to accelerate adoption of sustainable business practices and O2's AI "granny" rollout is shaking up scamming attempts...
Last month, the BoE planned for tougher liquidity rules, insurers and brokers joined forces to prioritise better consumer outcomes, reforms to pension support were explored to close advice gap, smaller firms were urged to focus on their ESG impact and legacy systems still prove a challenge for many insurers...
Last month, the FCA updated its guidance on 'polluter pays' and redress liabilities, the regulator also announced strategies around 'unnecessary regulation,' insurance fragility in the US was revealed in the wake of LA fires, a shift to AI hiring was noted among UK firms, and REG Technologies partnered with Insurance Post to discuss the regulatory challenges facing MGAs and insurers and the role of technology in easing the burden.
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