Assignment Task

Question 1 – Learning Outcome 1

You are the Operations Manager for NL Ltd, a medium-sized insurance broker that specializes in commercial risks.

NL Ltd plans to remain an independent insurance broker but is experiencing difficulties competing in the insurance market in which it operates. It recognizes these difficulties could be addressed by growing its business and becoming more efficient through the wider use of technological capabilities.

The Board of NL Ltd has therefore decided the acquisition of another insurance broker, that is already successfully harnessing the use of technological capabilities, will be the most appropriate way to grow its business.

Identify, with justification, three significant advantages for NL Ltd if it grows by the acquisition of another insurance broker. Explain, with justification, one significant action NL Ltd could take to maximize the technological capabilities it will obtain through the acquisition of another insurance broker.

Question 2 – Learning Outcome 2

You are the newly appointed Managing Director of KR Ltd, an insurer that underwrites a wide range of personal and commercial insurance products.

KR Ltd`s previous Managing Director left six months ago, at a time when agile working was being introduced. Subsequently, KR Ltd lacked senior leadership direction, which resulted in managers and employees being inconsistent in their day-to-day decision making.

Adherence to agreed processes has not been consistently met, as defined in KR Ltd`s internal service standards. This has resulted in a varied customer experience for its policyholders and criticism from its panel of insurance brokers. These brokers have also complained about KR Ltd`s missed deadlines and poor record keeping.

Feedback from KR Ltd`s newer members of staff shows they lack direction in their personal development and feel isolated, due to the agile working environment.

You are considering these operational issues.

Identify, with justification, an appropriate management style you should introduce to KR Ltd. Explain briefly three significant actions you would take to improve KR Ltd`s operational performance. Explain briefly one key management skill you should use to deliver each of the three significant actions you have explained in (b).

Question 3 – Learning Outcome 3

You are the Company Secretary for TF Ltd, a family-owned insurance broker.

TF Ltd intends to list its ordinary shares on the London Stock Exchange (LSE) within the next six months. This intended listing is likely to raise several corporate governance issues for TF Ltd.

You are aware of the following:

TF Ltd`s Chairperson is the founder of the business. The Chairperson also works for one of the insurers with whom TF Ltd has a business relationship. All Non-Executive Directors (NEDs) of TF Ltd were appointed by the Chairperson and are all members of the same family. The Chairperson`s nephew is the Chief Risk Officer and is rarely challenged by TF Ltd`s Board on his risk management decisions. All TF Ltd`s Board members have been on the Board for more than 15 years. TF Ltd`s strategy, given its forthcoming listing, is to grow rapidly. TF Ltd`s Board have asked you to review its corporate governance issues, prior to TF Ltd listing its shares on the LSE.

Explain, with justification, three significant corporate governance issues that will need to be considered by TF Ltd before the ordinary shares are listed on the LSE. Recommend, with reasons, two actions to address the significant corporate governance issues you have explained in (a) above.

Question 4 – Learning Outcome 4

You are the Underwriting Manager of GR plc, an insurer. One year ago, GR plc provided delegated underwriting authority to a managing general agent (MGA).

The first annual audit of the MGA by GR plc highlighted the following issues:

The premium discounts offered by the MGA on new and renewal business are often more attractive than those that GR plc offers. There is a wide interpretation by the MGA of GR plc`s risk acceptance criteria, resulting in some policyholders being outside of GR plc`s risk appetite. There is a slow transfer of data from the MGA to GR plc. This is in breach of the service level agreement, which accompanies the delegated authority. You are concerned that the MGA`s service does not meet the high service performance delivered by GR plc.

Identify, with justification, the common function within GR plc that is most impacted by greater premium discounts offered by the MGA. Identify, with justification, the common function within GR plc that is most impacted by some policyholders being outside of its risk appetite. Identify, with justification, two common functions within GR plc that are most impacted by a slow transfer of data from the MGA. Recommend, with reasons, two significant actions GR plc could take to improve the service performance of the MGA.

Question 5 – Learning Outcome 5

You are the Claims Director for LL plc, a commercial property insurer. LL plc intends to reduce its claims handling costs while maintaining its current high level of service.

To achieve this cost reduction, LL plc is planning to outsource its claims handling activities for all individual claims up to £15,000 in value. Additionally, LL plc wishes to manage the expectations of all its stakeholders through the provision of appropriate claims handling information.

After reviewing potential claims handling partners, CC Ltd has been identified as the preferred outsourcing provider.

As part of the review process, the following information about CC Ltd has been provided to LL plc.

Fee income:

2022: £7,000,000

2021: £5,800,000

2020: £5,000,000

Profit before taxation:

2022: £1,820,000

2021: £1,276,000

2020: £1,000,000

Number of claim handling staff:

2022: 70

2021: 70

2020: 65

Number of claims handled:

2022: 95,000

2021: 63,800

2020: 50,000

Staff retention:

2022: 80%

2021: 91%

2020: 94%

Number of complaints:

2022: 2,375

2021: 945

2020: 500

Service Level Agreements (SLA) met:

2022: 89%

2021: 96%

2020: 98%

Average claims settlement time:

2022: 21 working days

2021: 16 working days

2020: 15 working days

Complaints as defined by CC Ltd`s internal measures, not as defined by the FCA.

You are required to analyse the above information and come to a decision on whether CC Ltd should be appointed.

Explain, based solely on the information above, four issues that need further investigation by LL plc. Identify, with justification, one additional item of information required for each of the issues you have explained in (a) above that will assist LL plc in finalizing its decision. Identify, with justification, two stakeholders who will find the additional information you have identified in (b) above the most useful.

Question 6 – Learning Outcome 6

BD plc, an insurer with significant property and liability accounts, is facing uncertainty about the future cost of claims in its insurance portfolio.

Approximately two years ago, BD plc widened its risk appetite and also commenced underwriting cyber liability insurance.

BD plc has identified that climate change is having a significant impact on claims frequencies in several countries in which it operates.

Explain, with justification, the difficulty for BD plc in estimating the cost of cyber liability claims. Explain, with justification, the difficulty for BD plc in estimating the frequencies of climate change-related claims.