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The Actuary The magazine of the Institute & Faculty of Actuaries

ACE APH move highlights rise in broker replacement ahead of Solvency II

ACE US has placed its asbestos, pollution and health hazard (APH) account with Towers Watson in a move which the consultant believes is a sign of growing demand in the broker replacement market.

According to the firm, the new win adds to existing business in the run-off area, which it expects will continue to grow due to several factors. Solvency II capital requirements will become ever more important and poor-performing books of business may well be cancelled and put into run-off. In addition, soft market conditions and a turbulent economic climate will further enhance the appeal of potential cost savings which brokers and insurers can realise from outsourcing, Towers Watson believes.

Paul McCarter, claims managing director at Towers Watson, said: "Clients can avoid both losing out on interest on funds and having large balances uncollected by implementing solutions to expedite their legacy reinsurance and insurance collections."

Ross Howard, European chief operating officer of Towers Watson’s reinsurance business, added: "The reinsurance broking industry is evolving rapidly, and the proliferation of the broker replacement market is likely to continue."

Towers Watson has been offering broker replacement services since 2009. It is a specialist service offered mostly in the run-off market.