Insurers to rely on acquisitions and partnerships to transform business

Facing sluggish industry growth and agile new competition, insurance executives are actively pursuing acquisitions and partnerships to transform and grow their businesses, according to a new report from KPMG International, Accelerated evolution – M&A, transformation and innovation in the insurance industry. In fact, 80 percent of insurance executives surveyed for the report expect to seek one to three acquisition targets or partnership opportunities over the next three years.

The majority of insurers are intending to make acquisitions that could transform their organization for the future, rather than merely enhance their current business and operating models. More than 60 percent of the 200 executives surveyed globally said transforming their business or operating model would be the key factors driving acquisitions, while just 21 percent identified enhancing their current model as the key factor.

“Insurers are competing for market share in a slow-growth environment, that is experiencing an influx of dynamic new insurtech players,” said Laura Hay, Head of Global Insurance for KPMG International. “They know they can’t rely just on organic growth to meet their objectives, so alliances and acquisitions become essential as insurers look to engage with customers in new and different ways, and gain access to innovative operating capabilities and technology infrastructure to reshape their business and drive future growth.”

Cross-border deals expected to dominate
In terms of geography, a majority of insurance executives are looking for inorganic opportunities outside their country of domicile, with 66 percent expecting to conduct cross-border deals, while just 32 percent say they expect deals to be focused domestically. The distinction is particularly telling with respect to partnerships and alliances over the next three years, with 39 percent expecting these to be cross-border and only six percent anticipating domestic alliances.

North America, particularly the US, is widely expected by the insurance executives surveyed to have the most insurance M&A activity in the coming three years. Asia-Pacific is projected to be the region where insurers have the most partnership opportunities, and Western Europe is expected to drive relatively more divestiture activity.

Identifying the right, transformational deals
Intending to do more deals is one thing, but are insurance organizations up to the challenge of identifying and successfully executing the right deals?  Only ten and seven percent of executives, respectively, say they are extremely likely to find a deal that is a strategic fit for their business and operating model.  Moreover, a majority believe their organization’s capabilities for deal sourcing, evaluation and execution are lagging, with 72 percent saying their deal sourcing objectives aren’t highly aligned with their corporate strategy and 72 percent rating their capabilities for evaluating a target’s strategic fit as moderate to low.

To accelerate their transformation goals, an emerging trend for insurers is setting up dedicated capabilities, including corporate venture capital (CVC) teams, to acquire and accelerate innovation. Eighteen percent of insurers surveyed indicated they either already had an established CVC or had plans to establish one, with the top ranked objective being acquiring innovation for business model transformation.

“To realize value from their deals, insurers need to rethink their approach and their capabilities,” points out Ram Menon, Global Head of Insurance Deal Advisory for KPMG International. “Insurers need to redefine deal success — from acquisition strategy to integration execution — set out a clear path for transformation applying holistic design thinking, accelerate innovation by standing up an inorganic innovation engine, and more importantly, resist short-term thinking. Transformation is not a ‘one-and-done’ event.”

About the report
For KPMG worked with Mergermarket to interview more than 200 global insurance executives involved in M&A, strategy and innovation initiatives at their respective organizations to learn about their outlook for the industry and their expectations as they plan to strategically deploy capital. The research respondents were divided regionally among firms in Asia-Pacific (33 percent), EuropeMiddle East + Africa (33 percent), and North America (33 percent) as well as by the segments Life (25 percent), Non-Life (25 percent), Reinsurance (25 percent), and Other (25 percent) (the segment ‘Other’ encompasses Insurance Brokers and Insurance Services). Companies needed to have a minimum of US$1.5bn in annual revenue to qualify for participation.

About KPMG International
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

SOURCE KPMG International

$12M GoFundMe for Humboldt Broncos to close Wednesday

CBC News

The Humboldt Broncos organization will soon be closing a GoFundMe that raised $12 million to support players and families affected by a crash that left 16 people dead and 13 injured.

The outpouring of support began 10 days ago after the team bus collided with a semi on the way to Nipawin, Sask., on April 6.

Kevin Garinger, president of the Humboldt Broncos, made a statement Monday evening about how the team plans to secure and manage the funds that have been raised.

Garinger said the Humboldt Broncos board of directors, with legal counsel from MLT Aikins, and advice from GoFundMe executives, has decided to close the campaign and take it offline at 11:59 p.m. MDT on Wednesday, April 18.

The donated funds will be transferred to a newly created non-profit known as the Humboldt Broncos Memorial Fund Inc.

An advisory committee is being established to make a recommendation for the allocation of funds.

‘Working to support our Bronco families’

He said the organization’s board of directors has immense love and gratitude for all those who have donated time and money to Humboldt Broncos fundraisers.

“If there is any light shining through this dark time, it has come in the form of love for one another,” he said. “Our families and our entire organization has been blessed to feel this love from people from around the globe.

“Our priority currently remains focused, as it has since day one, on working to support our Bronco families, especially now as they are celebrating the lives of their loved ones and supporting our players who are struggling to heal.”

Garinger also thanked fund creator, Sylvie Kellington. Kellington, who is from the small community, started the fundraiser in hopes of covering parking costs for the families who were at the hospital following the crash.

undraisers and donations outside of the GoFundMe will go to the Humboldt Strong Community Foundation, created with legal counsel from Robertson Stromberg LLP. Garinger said its mission will be to support Humboldt Broncos players, employees, families and volunteers as well as first responders, emergency personnel, teams, athletes, organizations and communities affected by the crash and its aftermath.

Only fundraisers and initiatives directed to the foundation will be endorsed, sanctioned by or held in conjunction with the Humboldt Broncos organization. Garinger said the team’s management will not be able verify any other fundraising events.

In an update posted on the GoFundMe page on Friday night, the Humboldt Broncos announced the team was getting assistance from western Canada law firm MLT Aikins LLP law firm which is supporting the organization pro bono.

“Know that we are working around the clock with our advisers to get the funds to our families as quickly as possible,” the post said.

“We appreciate your patience as this process takes time and thoughtful consideration.”

As of the latest update, 10 people from the Humboldt Broncos crash remain in hospital, with two in critical condition, according to the Saskatchewan Health Authority. Little is known about their specific injuries, except that 18-year-old Ryan Straschnitzki is paralyzed from the chest down.

If some suffer severe injuries, including paralysis and brain injuries, financial support could be required to pay for 24-hour care.

If someone needs to use a wheelchair, home modifications could be a large expense.

The cost of psychological and emotional recovery for team members and their families could also come out of the fund.

Insurance coverage also on the table

Because the deaths and injuries resulted from a road accident in Saskatchewan, some of the costs will be covered through SGI, the province’s public insurance company.

SGI president Andrew Cartmell said benefits available for people who are injured range from travel and accommodation costs for families visiting their loved ones in hospital to long-term rehabilitation and keeping their standard of living consistent.

No-fault insurance means that funds aren’t tied to the cause of the crash and can be distributed before the investigation is complete.

Saskatchewan insurance also covers funeral costs up to about $10,000, plus additional death benefits, including grief counselling.

Hockey Canada’s insurance program also covers the Humboldt Broncos players, coaches and staff, spokesperson Lisa Dornan told CBC News in an email.

Dornan said crisis management staff from both Hockey Canada and insurance provider AIG were on-site in Humboldt to help support the families by making funeral arrangements and organizing travel.

Both SGI and Hockey Canada said that money received by survivors and family members from fundraising campaigns would not affect their insurance benefits.

Smart Insurance Moves You Can Make Right Now

By Selena Maranjian | Motley Fool

1. Increase your deductible

For many kinds of insurance — car, home, health, and so on — your policy will feature a deductible. That’s the amount you’re on the hook for before the insurer will pay. Low deductibles can seem great, as you won’t have to produce a lot of cash after a car accident or flooded basement, but overall, a higher deductible can be better. After all, you can go many years without a claim and your monthly premiums can be significantly lower throughout that period.

Try calling your various insurers and asking how much lower your premiums would be if you increased your deductible. You may be able to save anywhere from 5% to 25% or more. Never hike your deductible to a level that you can’t pay if you need to, of course.

2. Shop around for lower rates

Another tip that applies to many kinds of insurance is very basic: Shop around for the lowest rates. Don’t just stick with your same old insurer, even if you’re receiving a “loyalty” discount. Spend an hour on the phone with a few competitors and compare apples to apples, specifying exactly what coverage you have and seeing what they would charge you. You don’t want to end up with a lower price that’s due to less coverage.

Give special consideration to any insurer you already have a policy with, as multiple policies can yield discounts. And keep an insurer’s reputation in mind, too. Don’t switch to one that’s not rated highly.

3. Maintain a clean driving record for lower car insurance rates

A great way to keep your car insurance rates low is to have a clean driving record. A single accident can send your rates up by as much as 41%, on average, for a $2,000 claim, per one report. Drivers with clean records get offered much better rates when shopping for a policy, too. You’ll want to avoid not only accidents, but also speeding tickets, DWI offenses, and more.

If you happen to have an incident on your driving record, it won’t be there forever. Its effect on your premiums will likely be reduced over time, and it might not make any difference at all after a few years. It can also help if you drive less. If you become a telecommuter and are driving much less now, let your insurer know, as your rate might drop. The fewer miles you drive, the less risk you present for an insurer.

4. Own certain cars for a long time for lower car insurance rates

Insurers view every make and model of vehicle differently. Do a little Googling, and you’ll find lists of the most costly and least costly vehicles to insure, and lists of the safest and least safe vehicles. Insurers favor safer cars and are likely to charge higher rates for cars that are associated with more claims and less-than-stellar drivers. Cars with a lot of safety features will be favored, too, while expensive cars will cost you more.

According to Insure.com, among 2017 models, the least expensive cars to insure include the Honda Odyssey LX, Jeep Renegade Sport, Subaru Outback 2.5l, and the Buick Encore, with average annual rates below $1,200. The most costly vehicles to insure include the Mercedes S65 AMG convertible, the Dodge GTS Viper, and the Maserati Quattroporte GTS, with average annual rates topping $3,000. If you tend to replace your car every few years, you’re keeping your rates on the steep side. Older cars can be far less costly to insure, and after a certain point, you might just drop your collision coverage entirely, saving even more.

5. Get life insurance if you need it

Don’t assume that because you’re only 25, or because you have no children, you don’t need life insurance. If anyone depends on you financially — your partner, children, parents, or even nephews or nieces — you need life insurance. Think, too, of anyone who has cosigned any loan for you, such as your parents, who might have helped you with school loans or a mortgage. If you expire ahead of schedule, you don’t want to leave them stuck with repayments.

We tend to ignore the possibility that we might die prematurely, but it happens to many people, and often by surprise. You don’t necessarily need a multi-million-dollar whole life policy. A relatively inexpensive term policy can be just fine, lasting only as long as you need it.

6. Consider a “life settlement” if you no longer need your life insurance

If you have a whole life insurance policy and you don’t need life insurance anymore, you may see little reason to keep paying those premiums. You can probably cash out and receive some money from the insurer — or you can look into a “life settlement,” which might pay more, though less than the face value of the policy, which is the amount that would be paid upon your death. With life settlements, a third party will buy your life insurance policy if it likes its odds of making a profit on it — often paying between 10% and 25% of your policy’s face value.

7. Think twice before filing a claim

If a tree falls on your house and splits it in two, of course file a claim with your insurer. But if you have a small claim, you might be best off not mentioning it. With several kinds of insurance, such as car and home, the more claims you file, the more your premiums likely will be increased. According to a CNNMoney article, “On average, filing a single claim — for anything ranging from a stolen bicycle to tornado damage — will result in your monthly premium being raised by 9%, according to a report released by InsuranceQuotes.com. File a second claim and premiums climb by an average of 20%.

 

READ MORE HERE: 

By Selena Maranjian | Motley Fool

Everything a Bride-to-Be Needs to Know About Ring Insurance

Everything a Bride-to-Be Needs to Know About Ring Insurance

With great rings come great responsibility…

Excerpted article was written by Erin Celletti | BRIDES

From the moment you say “Yes!” chances are, you’ll be rocking a shiny new addition on your left hand. While it may be the last thing on your mind during such a happy time, with great rings come great responsibilities—including insurance. Here’s what you need to know.

Why You Should Have It
Jewelry insurance can offer coverage of your precious baubles in cases of theft, loss, damage, and even disappearance. Whether you’ve left it behind on the beach, lost a stone at the gym, or had your ring stolen, ring insurance can offer financial protection and peace of mind when you need it most. While anything happening to your engagement or wedding ring is heartbreaking, knowing it’s properly insured can help to soften the blow.

Questions You Should Ask
When shopping for a ring insurance plan, you have to ask questions to know exactly what coverage you’ll be provided. Will you continue to be insured when out of the country? Are you covered for damage or just loss/theft? Will the policy adjust according to inflation? Will repairs or replacements be comparable? Can you use your own jeweler if you should need to? These and more should all be considered prior to selecting a plan.

What Will You Need?
You’ll need a certified appraisal that verifies and the size, specifications, diamond grading, cost, and purchase price—the whole nine yards. All of this information will be summed up in a formal appraisal, which jewelers and appraisers can provide. It’s a good idea to have one done whether or not you pursue insurance, but you’ll certainly need one for insurance.

When Should You Get It?
In short, the sooner the better. Your soon-to-be fiancé can insure the ring as soon as it is purchased and in his possession—much like you would insure a car prior to driving it off the lot. You might not initially be thinking of anything happening to your precious and sentimental token, but the sooner it’s insured, the sooner you’ll be protected. Once purchased, you or your fiancé can begin to shop for ring insurance providers, or purchase a rider (insurance extension) through existing homeowner or renter policies.

Canada takes out insurance against NAFTA’s collapse with Pacific trade deal

The Star | By Thomas Walkom

By agreeing to a new Pacific trade deal, Canada’s Liberal government has taken out what it hopes is an insurance policy against the collapse of NAFTA.

Canada’s decision to join 10 other nations in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership comes as negotiators huddle in Montreal in a desperate effort to keep the North American Free Trade Agreement alive.

Back in November, Prime Minister Justin Trudeau said that he was in no hurry to make a decision on the Pacific deal. But that calculation appears to have changed as prospects for a successful NAFTA renegotiation dim.

Canada did not get what it wanted in the important area of auto parts from the Pacific deal. Nor is it clear that it successfully exempted its cultural industries from the new deal’s free-trade rules.

Yet at a meeting Tuesday in Tokyo, Ottawa agreed to join anyway. The new pact, which includes Japan, Mexico, Australia, New Zealand, Singapore, Vietnam, Malaysia, Chile, Brunei and Peru, comprises only 14 per cent of world trade.

But for fans of free-trade deals — including most of Canada’s big business class — it is better than nothing.

And nothing is what Canada might get from the NAFTA talks. American President Donald Trump has repeatedly said he will pull the U.S. out of the three-nation pact unless Canada and Mexico meet all his demands.

Canada and Mexico have responded by saying that some of those demands, particularly one that would eliminate the right of NAFTA signatories to challenge one another’s trade practices before an independent panel, are deal breakers.

Yet Ottawa has also signalled a new willingness to bargain other Trump demands that it had once dismissed out of hand, such as his insistence on eliminating NAFTA’s investor-state dispute settlement system. This allows foreign companies to challenge domestic laws before special trade panels.

How will Canada’s decision to buy into the Pacific pact affect the NAFTA talks?

First, it will irritate the Americans. One of Trump’s first actions as president was to pull the U.S. out of this pact’s predecessor, the Trans-Pacific Partnership. He will not be amused that his good buddy Trudeau is going ahead with a truncated version of that Pacific deal before NAFTA is resolved.

Second, it may make some of the NAFTA issues more difficult. Under the Pacific deal, autos and auto parts may be traded among member nations duty-free as long as 35 to 45 per cent of their content is manufactured within the bloc.

Under NAFTA, the rules of origin are far stricter, demanding 62.5 per cent North American content. Yet even then Trump thinks they are too loose.

It’s not clear how he would respond to a situation in which Canadian auto manufacturers were following two rules-of-origin regimes, with the possibility of cross-over between them.

Third, Ottawa’s decision to join the Pacific pact puts paid to the already remote possibility that Canada and the U.S. might come to an agreement without Mexico.

Mexico is part of the new Pacific deal. If Trump doesn’t want direct free trade with Mexico, he’s unlikely to accept indirect free trade with it via Canada.

In the end, Ottawa didn’t get what it wanted in the new and revamped Pacific pact. It is signing side deals with Japan, Australia and Malaysia on autos. But it appears to have acceded to Japan’s insistence that weak rules of origin for auto parts remain in place.

It did not win an exemption for Canadian cultural industries within the deal itself. But it will sign so-called side letters on cultural matters with the other 10 nations when the deal is inked.

It’s not yet known what will be in those letters.

And while promoting the deal as “progressive” (Canada insisted that the pact’s name be changed to reflect this), Ottawa has raised little objection to Vietnam’s request that it be given more time to improve labour rights.

Politically, however, all of this is secondary. With NAFTA on the ropes, the Trudeau government needs to show that it can still pull off free-trade deals. The Pacific pact, however imperfect, is the one that can be most quickly done.

New report proposes national pooled longevity insurance program

Since Canadians rely on a patchwork of incomes to fund their retirement, the worry by many of running out of money is a real possibility.

A new report from the C.D. Howe Institute proposes a pooled risk savings program that could provide more security for retirees of advanced age. “Retirement will span beyond age 85 for more than half of 65-year-old Canadians,” wrote Bonnie-Jeanne MacDonald, senior research fellow at the National Institute on Ageing at Ryerson University and resident scholar at Eckler Ltd., in the report.

“Retiring Canadians want to protect their later years. We need innovative solutions now — ones that add definitive value but place no new pressures on the Canadian public purse.”

Annuities don’t always appeal to seniors, as they prefer to maintain control over their savings, the report suggested. Instead, longevity insurance could replace annuities as an income stream. However, the tax environment in Canada doesn’t favour private market longevity risk products, according to the report.

As such, MacDonald recommends a voluntary, national program — dubbed Living Income for the Elderly (LIFE) — that would allow retiring Canadians to buy into a pooled fund that would begin to provide steady income at age 85. At their discretion, Canadians would begin to allocate money to the fund at age 65, she suggests, and proportional monthly payouts would start at 85. They wouldn’t be able to make commuted-value cash withdrawals during the deferral period or the payout stage.

Those who live longer would benefit from additional security as the fund would distribute the investments of deceased participants equally among the remaining members. The so-called mortality premium would allow lump-sum bonus payouts as members age.

During the accumulation period, a members’ account in the fund would allocate investments in a relatively aggressive manner, the report noted. Upon reaching 85, the investments would revert to a more conservative portfolio designed to provide a stable, monthly payout. And the retirees wouldn’t have any investment decisions to make as a government institution would manage the fund’s capital, says MacDonald.

She stresses that the government, in addition to administering the fund, would need to address some of the proposal’s unfavourable tax implications.

Overall, the concept would increase stability for seniors living longer without putting added pressure on Canadians as a whole, says MacDonald. “LIFE will encourage retiring Canadians to proactively prepare for advanced ages while allowing them to maintain control of the vast majority of their financial savings,” she said in the release.

“The program will benefit not just Canada’s elderly population, but Canadians on the whole.”

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