Month: August 2020

The impact of Covid-19 on the insurance sector

The outbreak of the Covid-19 pandemic has had a huge and devastating impact across the world with its ramifications starting to be discerned across various sectors such as health, finance and aviation. This has threatened the global supply chain which resulted in an economic stall.

The insurance industry has not been spared with new questions arising as the crisis unfolds. Stakeholders want to understand the business’ exposure to the virus as well as what the future holds for the insurance market.

As an MSc Actuarial Management student, joining a student society and hosting events that impact the professional sector I am training has added a lot of value to my studying experience. As Co-President of the Actuarial, Insurance, Risk and Quants Society (AIR-Q), it was an honour to work on the ‘Impact of COVID-19 on the insurance sector’ webinar. The session was AIR-Q Society’s take on investigating and tackling these issues. The event’s keynote speakers, Mr Michael Tripp, Mr Dimitrios Velmachos and Mr Asif John, gave their thoughts on the implications of the pandemic to the UK insurance market, risk management techniques and the future of data analytics in modelling insurance products. The speakers also addressed any questions posed by the attendees based on their vast knowledge and experience in insurance. The event was hosted and moderated by one of our society Co-presidents, David Flanigan.

Why Covid-19 is not a ‘black swan’

This question was initiated by Mr Velmachos, an entrepreneur and insurance executive by profession. He highlighted that the black swan notion was brought about by the theories discussed by Nassim Taleb in his book, ‘The Black Swan: The Impact of the Highly Improbable’.

The notion was based on the similarities between Covid-19 and author’s definition of a black swan.

According to the definition: First, nothing in the past can convincingly point to its possibility. Second, it carries an extreme ‘impact.’ Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.

Dimitrios explained that the pandemic does not fully satisfy the properties of a black swan. In fact, many warned the pandemic would happen, including influential people like Bill Gates who clearly stated that the world was not ready for the next pandemic.

With such discussions setting the mood for the forum, the speakers then delved into the insurance world by giving presentations on how various classes of insurance have been impacted in the UK.

Impact on general insurance

Mr Tripp’s discussion focused on the impact of Covid-19 on general insurance segments. As a general insurance actuary working at Mazars UK, Michael stated that actions taken by the government to curb the spread of the virus has resulted in a myriad of general insurance claims. For instance, several corporations have been counting their losses following regulations by the government to close business providing non-essential services. As a result, there has been an increase in business interruption claims prompting insurers to review their policy wordings.

Michael further stated that travel insurance business has also experienced an influx of claims due to cancellation of flights after many states issued travel bans. This argument was also backed up by Mr Asif John, an actuary by profession and founder of ARGenesis consultancy, who emphasised that many travel insurance policies did not exclude coronavirus from cover. Hence, insurers are expected to settle any claim that may arise from these policies.

John highlighted that classes such as commercial liability lines and credit insurance are likely to encounter significant losses in the long haul. For example, a number of health workers have taken to legal action against the NHS claiming negligence by the government in ensuring that personal protective equipment was delivered on time, thereby endangering their lives.

Nonetheless, some general insurance lines have had better claim experience since the pandemic emerged in late 2019 as pointed out by both Michael and John. Classic examples include motor insurance and household contents whereby fewer claims have been reported due to the imposed lockdown. This move by the government resulted in many individuals normalising working from home, thereby leading to a significant reduction in the use of vehicles. With fewer cars on our roads, there have been fewer accidents occurring.

There has also been a reduction in theft leading to fewer burglary claims reported. However, Michael also brought out the fact that the lockdown has also resulted in companies relying on IT systems to deliver value to their clients. As such, there might be an increase in claims relating to cyber risk in the future, and insurers should thus tighten their policy wordings on this cover.

Impact on life and health insurance

The impact on both life and health insurance seems to go hand in hand due to the short timeframe between diagnosis and death. This has led to an increase in both the morbidity and mortality experiences as highlighted by John. The country’s health insurance sector is thus facing losses as a result of the high number of coronavirus cases. The dramatic reduction of health workers available to attend to other serious cases such as cancer will exacerbate future morbidity experience.

Besides the significant impact on mortality, Michael also pointed out that the shock experienced in the financial markets will also impact life insurance companies. This stems from the fact that they have long term liabilities and as such tend to hold long term assets. Extreme market volatility will negatively impact both the income and capital on these assets such as equity, thereby creating tremendous asset-liability management risks.

Data analysis as a tool for risk management

Being an AI and data science specialist, Asif stressed the importance of data analytics to the current situation, in particular, areas which actuaries should start focusing on. Adoption of data techniques through the use of advanced models will, therefore, succour in eliminating data issues at the input stage leading to credible forecasting.

Analysis of data at a granular level is also key for insurance companies as highlighted by Dimitrios. Granularity helps in properly understanding the data thus making aggregation of datasets into different segments easier. Better risk management techniques may also be identified as a result of having detailed data as risks will be classified and assessed homogenously.

Dimitrios also touched on the importance of incorporating epidemiological features in the modelling process in order to expand the dimensions of the output. This will help in analysing the worst-case scenario hence help in pricing and reserving and proper risk management.

What does the future hold for insurers?

Insurers need to seize some of the opportunities arising out of this crisis. It is clear that the traditional distribution channels have been disrupted indicating the need for accelerated digital transformation. Process optimisation is inevitable for insurers as working from home has become the new norm. The introduction of additional covers such as telemedicine will also be a boost to the insurance penetration in the future.

Thank you!

Being part of AIR-Q has been an incredible addition to my master’s experience: I have gained much deeper knowledge of the actuarial field, networked and built many new friendships. Myself and my fellow Co-Presidents of AIR-Q Society (Rocio Plasencia, Juan Sebastian De La Torre, Evangelos Santas,  Adam Upenieks, David Flanigan and Peter Vodička) would like to thank the speakers, attendees and the Business School’s events team for making this webinar a success. Special thanks also go to Leon Cuthbertson from the events team for assisting with the event. We’d always like to hear your thoughts, so follow us on LinkedIn or  Instagram!

Lucy Nondi, MSc Actuarial Management (2020)

Career advice for insurance and risk management students

Join a student society to network and learn

As an MSc Insurance and Risk Management student, I jumped at the opportunity to join the Actuarial, Insurance, Risk, and Quants Society (AIR-Q) as one of the Co-Presidents. Joining AIR-Q Society has been an excellent way to build my network and to delve deeper into the field I want to pursue a career in by speaking to alumni working in the sector.

How to break into the insurance industry

As a soon-to-be MSc Insurance and Risk Management alumnus, it is crucial to understand what to expect in the future which is why it was incredibly rewarding to work on hosting a webinar in May with the Chartered Insurance Institute (CII), Insurance Institute of London (IIL) and AIR-Q. The session was specifically aimed at master’s students interested in following a career in the insurance industry.

We had more than 30 attendees join the forum with questions for our panel of six, including three alumni, led by Vivine Cameron. I am very grateful to the six panellists who shared their career advice and professional trajectories. They were:

  • Vivine Cameron: Education Partnerships Manager
  • Afsar Ali: Cyber Analyst at Guy Carpenter (alumnus)
  • Amanda Yek: Actuarial Placement Analyst at Markel International
  • Irem Yerdelen: Client & Business Development Director, Corporate Risk & Broking segment, Willis Towers Watson (alumnus)
  • Louise Healy: Recruitment Consultant at Allianz Global Corporate & Specialty
  • Stephanie Nightingale: Head of Risk Reporting and Underwriting Risk Oversight at Chaucer Syndicates

 

The different career paths in insurance

There are plenty of roles involved in the insurance businesses, such as underwriting, claims, brokering and loss adjustment among others. Which path you decide to pursue will depend on your abilities, your interests and which path is most dynamic when you are graduating. During my master’s studies, I gained a better understanding and deep insights into the industry. Topics like insurtech, digitalisation and startups are trending in the insurance industry.  There is a lot of space for innovation and many companies are developing new tech and generating brand new products that are more transparent, are easier to understand and are increasingly accessible to existing or unique customers, which makes it a very exciting time to enter the industry.

A fast-track to being awarded CII professional certifications

One of the benefits of studying the MSc Insurance and Risk Management at Cass is the possibility to study modules which award credits towards the professional CII certifications. Thanks to Vivine, we were able to understand the advanced benefits we will have towards our CII qualifications. She provided us with unique guidance on which insurance roles exist. Asfar Ali, Cyber Analyst at Guy Carpenter shared valuable tips into which  next steps we need to take to be awarded the CII diploma and spoke about company sponsorship to receive the qualifications.

Career advice from our panellists: enjoy the process

Each future graduates is different. We have unique skill sets and distinctive ambitions in short-term and long-term.  The majority of us are concerned as to which career path we might follow now and in the near months. Irem Yerdelen, an alumna and the Client & Business Development Director, Corporate Risk & Broking segment at Willis Tower Watson is a fellow graduate of the MSc Insurance and Risk Management. Irem was able to tell the online attendees how the course benefitted her career. Her professional journey started in Istanbul and after pursuing her master’s degree, she decided to stay in London to pursue her career. Irem gave an important message: “doing a master’s is a great step for your career. When looking for a job, think about which option is the best for you but don’t forget to enjoy the process!”

Job-searching online

Due to the significant changes the insurance sector and many dependent sectors are facing, job-searching is going to be completely different from what it used to be. Most recruitment processes and interviews will be fully online. Louise Healy, Recruitment Consultant at Allianz, talked about her experience in the recruitment sector and gave us some valuable insights. Louise highlighted how candidates need to demonstrate their soft skills and suggested we show our genuine personality, saying, “Be natural, show who you really are.”

Thank you!

Myself and my fellow Co-Presidents of AIR-Q Society (Rocio Plasencia, Evangelos Santas, Lucy Nondi, David Flanigan, Adam Upenieks, and Peter Vodička) would like to deliver a special thanks to guest speakers for a great session and for answering all the audience questions.

Juan Sebastián de la Torre, MSc Insurance and Risk Management (2020)

 

Landing a job in China

Joining a student society: my experience in the Cass Chinese Career Society (CCS)

As an MSc Business Analytics student, I’ve found being a Co-President of a student society one of the most rewarding experiences of my studies, as I’ve allowed to practise some of the skills I learned in the events we host. One of the greatest things about joining a student society is that you get to surround yourself with amazing people. They are your peers, alumni or guests that you may never have had the opportunity to know if you hadn’t decided to click on that event link. They all shine in a way or another and may inspire you at some point in your life when you are least expected to be inspired but need it the most.

In a career-focused society like the Cass Chinese Career Society (CCCS), we are all working hard towards the same goal so you can find the support you need to pull you through the sometimes inevitable difficult times when you are overwhelmed by the interviews and tests that you need to get prepared for while carrying the burden of your coursework piling up. 

Landing a job in China

The ‘Landing a job in China – International Banks’ webinar was the second in the series of employability webinars hosted by Cass Chinese Career Society (CCCS). For students who are considering a banking career, this webinar was particularly useful as it invited three Cass alumni who now work in HSBC and Standard Charted in China and are at different stages of their professional life.

Attending the webinar

As a quick response to the unprecedented change starting in March due to the pandemic, CCCS introduced a series of employability webinars that focus specifically on exploring job options in China. Each webinar was generally divided into two parts: a discussion of the alumni’s daily work life, their career advice and tips, followed by a Q&A session. With an economic outlook that may worry some students, at CCCS, we felt organising these webinars could help our current students gain insight from alumni to prepare for the future.

105 students joined the Wechat group chat for the International Bank webinar while 45 students joined live on Cisco Webex platform. This webinar was very well received by our participants. The group chat was filled with gratitude when the webinar ended with a few students commented it gave them a lot more confidence in job-hunting during this difficult time.

Top tips to securing a job in China

Aside from key skillsets such as communication, leadership, analytical skills and teamwork, graduate schemes for foreign banks in China pay great attention to whether the candidate presents a good match with the company culture. For example, HSBC’s culture is ‘Open, Dependable and Connected’, so it can be very useful to think before the interview about how one’s experience and the way you behave can show these key values. For Standard Chartered in China, the company prefers candidates with a more proactive personality and who show great potential for business expansion. Despite the positions being based in China, English will be used mostly throughout the application process.

Another great piece of advice we get from the alumnus is about application strategy. To better manage risk in the process, it is advised to divide the applications into top, medium and low levels of difficulty of being selected. If you are interested in a career in finance, you can try applying for positions in different sub-sections a bit more widely such as securities, private equity, venture capital, trust fund etc. and then compare the offers.

Learning more about the banking industry in China

In general, banks have a very clear career path such as ‘Analyst – Associate – Associate Director – Director – Managing Director’ while the name of the positions may vary across banks. People are usually promoted every 2-5 years depending on own performance. Graduates in international banks have overall good credibility in the job market and therefore more choices in their following career development.

The alumni also talked about the responsibility, challenges and benefits of different job positions they have been in such as front desk roles, credit analyst and graduate role in detail. A detailed summary of the webinar content can be found in this article in Mandarin.

Iris Wang, MSc Business Analytics

 

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