American health insurers scared of single-payer health insurance

Daniel
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American health insurers scared of single-payer health insurance

American insurers are afraid Democrats will impose government run single-payer health insurance. In fact, single-payer is the basis of a potential conflict between the insurance industry and Congressional Democrats.

Notably, US Speaker of the House Nancy Pelosi sent a top aide, Wendell Primus, to brief insurance executives on the issue.  Primus told executives Democratic leaders have no immediate plans for single-payer in a private meeting, The Intercept claims.

Primus told insurers that House Democrats will concentrate on strengthening Obamacare and lowering drug prices rather than single payer. For instance, Pelosi wants legislation that will make it easier to manufacture cheaper generic drugs in America, Primus said.

Healthcare reforms stalemate

Democrats cannot enact single payer because Republicans control the upper house of Congress, the Senate, and the White House, Primus said. Senate Republicans strongly oppose single-payer, but President Donald Trump has voiced support for the idea in the past.

As Speaker of the US House of Representatives, Pelosi is the most powerful Democrat in Washington. However, Pelosi cannot enact laws without making deals with Trump and Senate Republicans. Enacting single-payer, or Medicare for All, will require a vote of the Senate and the House and a presidential signature.

The United States is the only large democracy without a single-payer national health insurance system that covers most citizens. However, many Democratic candidates promised “Medicare for All” to voters in the 2018 mid-term elections.

Insurers are afraid of Medicare for All

Medicare for All refers to plans to expand Medicare, America’s federal health insurance system for seniors, to all citizens. Under Medicare, the US federal government operate acts as an insurance company, collecting premiums and paying claims.

In fact, Medicare is America’s largest health insurer covering 59.1 million people in July 2018. In addition, Medicaid a health-insurance program for the poor administered by the 50 state governments covers another 75.1 million Americans.

American health insurance companies like Blue Cross and Blue Shield are afraid they cannot compete with Medicare for All. Notably, Medicare offers far lower premiums because payroll taxes finance it.

Almost all Americans over 65 (the qualifying age for Medicare) participate in Medicare. Thus, health insurance executives fear their business will disappear under Medicare for All.

Correspondingly, some politicians, including US Senator Bernie Sanders, are proposing Medicare for All schemes that will ban private health insurance. The rationale for banning private insurance is that Medicare will work better if the rich take part.

Beyond Medicare for All, insurers are afraid that Congress will cut funding for government-funded but privately administrated Medicaid programs. Specifically, some Republicans have been trying to destroy Medicaid for decades. Blue Cross Blue Shield alone offers seven million Medicaid policies.

High drug costs threaten insurers

Another fear is that Congress will not address high drug prices in America. High drug prices threaten insurers because most US health insurance policies cover almost all drug costs.

Tellingly, the world’s top-20 selling drugs cost three times more in the United Kingdom than the United States. Additionally, University of Liverpool researchers found US drug prices were six times higher than costs in Brazil, Reuters reports.

Finally, insurers fear that Medicare for All will eliminate their most lucrative business, employee health coverage. Most American workers receive private health insurance financed by their employers through their jobs.

Almost all of that insurance comes from private health insurance companies like United Healthcare. Employers deduct the premiums from the workers’ pay to fund the system.

Rising premiums threaten insurers

The obvious fear is most employers will stop offering health insurance if the government provides coverage for free. These fears are well-founded because almost no employers in countries like the United Kingdom provide health insurance.

However, health-insurance costs are rising in the United States and leading to labour unrest. High health insurance premiums were one of the main causes of a contentious teachers’ strike in the state of West Virginia in 2018.

On the other hand, 84% of Americans with employer-provided health insurance claim to be happy with it, Vox reports. Thus, Democrats like Pelosi fear a backlash from mostly middle-class Americans who are happy with the current system.

Single-payer is the greatest risk

In the final analysis, Congressional action on Single-Payer health insurance will probably have to wait until 2021 or later. However, the debate could shift dramatically, if President Trump decides he needs Medicare for All to win the 2020 presidential election.

Only 40% of Americans approve of President Trump, FiveThirtyEight calculates. Hence Trump could have to do something dramatic like support Medicare for All if he wants a second term.

Therefore, Medicare for All is not likely in America soon, but the issue will not go away. Thus single-payer is the greatest risk to American health insurance companies.

French reinsurer SCOR sues Covea over ditched takeover bid

Hristina
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French reinsurer SCOR sues Covea over ditched takeover bid

Paris-based reinsurer SCOR is taking legal actions against French peer Covea, after the latter issued a press release stating it is pulling away from a future merger between the two companies.

SCOR announced it is going to seek criminal actions against both Covea and Thierry Derez, Covea’s Chief Executive Officer. SCOR will also be seeking its rights against Covea’s advisors on the prospective deal – Barclays and Rothschild. Covea and Derez will face both criminal and civil charges, while Barclays and Rothschild only civil ones.

SCOR deemed Covea’s takeover attempt “hostile and unfriendly”, which led to Derez’s resignation from SCOR’s Board of Directors. SCOR also announced it is going to present its case to the Financial Markets Authority (AMF).

Tensions between the two companies started in August 2018, when Covea first approached SCOR with an acquisition offer. In September, SCOR firmly declined the offer stating that the merger would be “fundamentally incompatible with SCOR’s strategy of independence.” Despite that, Covea did not cease its hostile takeover attempts.

“In business, when you disagree it’s normal, it’s ‘business-as-usual’.

But from there to tipping into a torrent of ignominy, mud and allegations, it’s incomprehensible.”      

Thierry Derez, Covea CEO

In fact, the French insurer had plans to renew negotiations with SCOR, once the three-year commitment not to increase its shareholding beyond the threshold of 10% had passed in April 2018. Even despite Derez’s removal from SCOR’s Board of Directors, Covea intended to seek a “friendly transaction.”

However, the insurer changed gear by revealing the company’s decision to back out from any acquisition deals with SCOR in a press release. The announcement came during market hours, which led to SCOR’s shares falling to €36 per share.

In retaliation, SCOR announced its intention to file suits against Covea and Derez, stating that the CEO had had access to SCOR’s “sensitive and strictly confidential documents”, which he used inappropriately. The decision to file suits follows Crédit Suisse’s withdrawal as an advisor for Covea, as the bank saw issues relating to “compliance with the laws and regulations in force.”

Covea fired back, claiming that SCOR’s allegations are groundless. The insurer intends to come up with a strategy to fight against these “serious, unfounded and prejudicial accusations.”

Speaking to Le Monde, Thierry Derez said he was astonished by the allegations. He added: “In business, when you disagree it’s normal, it’s ‘business-as-usual’. But from there to tipping into a torrent of ignominy, mud and allegations, it’s incomprehensible.”

SCOR came under serious critiques from its investors and shareholders for declining Covea’s initial offer. Covea’s proposal was evaluated at €8.2 billion (US $9.6 billion), which meant a price of €43 per share, well above the market price of a SCOR share at the time.

The reasoning behind SCOR’s decline was that such a deal would have “detrimental consequences for the Group, as well as its shareholders and employees.” The reinsurer also pointed out that a merger with Covea “reflected neither the intrinsic value nor the strategic value” of the company.

Catherine Berjal, President of French investment fund CIAM, brought to light reports that SCOR’s management had planned on resigning in the event of a successful deal with Covea. She accused SCOR’s Board of Directors of unlawfully using salary payments as a technique to prevent a takeover, and as means to stop the management from even considering the deal.

She also addressed SCOR directly by inviting the CEO, Denis Kessler, to outline his proposals for increasing the company’s share price above the level offered by Covea. However, this meeting never took place.

While these allegations against SCOR were never brought to the authorities, SCOR’s intentions to sue Covea are already in full motion. The reinsurer is mainly targeting Derez, as he played an instrumental role in this “unacceptable misconduct”, which was committed with the aim of “wrongfully favouring the preparation and submission by Covea of its unsolicited proposed combination with SCOR.”

Metro Bank admits to £900m accounting error

Daniel
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Metro Bank admits to £900m accounting error

The risk of catastrophic failure in the financial sector is far greater than many observers believe. In fact, Britain’s Metro Bank admits to making a £900 million accounting error.

Specifically, Metro Bank underestimated the risks it is taking on commercial real estate loans by £900 million ($1.2 billion), Bloomberg reports. Moreover, Metro Bank’s real estate loan risk is 50% greater than previously reported, The Guardian estimates.

In addition, Metro Bank gave some real estate loans a 35% risk weighting when the weighting should have 100%. Hence, Metro Bank underestimated the risks taken on some loans by 65%.

Consequently, Metro Bank’s share price fell by 40% on the day the accounting errors were exposed. Metro Bank shares traded at $28.75 on 18 January 2019 and $14.75 on 31 January 2019.

In addition, major shareholders such as the US mutual fund giant Fidelity have been dumping Metro Bank stock, according to The Financial Times. Fidelity cut its Metro Bank holdings from 8.53% to 7.9% on 30 January 2010, Bloomberg estimates.

How risky are Britain’s High Street banks?

Metro Bank is the newest and least stable of the United Kingdom’s High Street Banks. The High Street Banks are major national financial institutions that cater to everyday customers.

Most of the High Street Banks are historic institutions, like Lloyds Bank and Barclays, or multinational institutions like Santander and HSBC. Metro Bank has been expanding aggressively since its formation in 2010.

Notably, Metro Bank claims to have added 100,000 new accounts and six branches in 4th Quarter 2018. However, Metro is still a very minor player in the British banking sector it operates just 66 branches. In contrast, Barclays operates more than 1,500 branches in the United Kingdom.

Shades of 2008

The accounting scandal at Metro Bank raises serious questions about the stability of British banking. The underestimation of risk is reminiscent of the miscalculation of subprime mortgage risk at American banks that triggered the Great Financial Crisis of 2008.

For example, there were the notorious NINJA (no income, no job) mortgages some American lenders issued in the early 21st Century. Bankers underestimated the risk of the NINJAs, and then packaged them into mortgage-backed securities that were sold on the open market.

Metro Bank is reminiscent of some of the lenders that collapsed during the 2008 financial crisis. American financial institutions that collapsed included the fast-growing Wachovia and American Home Mortgage.

Like Metro Bank, those institutions were accused of underestimating risks from real estate loans. In addition, there were numerous accusations of accounting errors.

Notably, Metro Bank founder Vernon Hill has been accused of poor governance and questionable ethics. For instance, Hill was accused of paying tens of millions of pounds to a firm owned by his wife. Importantly, the Financial Services Authority refused to allow Hill to serve as Metro Bank’s chairman.

Is it 2008 Again?

Not surprisingly, Metro Bank suffered the worst one-day drop for a British bank stock since the 2008 financial crisis.

However, there is one key difference between the situation at Metro Bank and 2008. The Bank of England’s Prudential Regulation Authority (PRA) detected the accounting errors in Metro Bank’s loan book, The Financial Times reports. Thus, the regulators are doing their job.

Alarmingly, analysts spotted the Metro Bank accounting errors 18 months ago but regulators only acted in late January, The Financial Times reports. However, the UK’s banking ethics regulator, the Financial Conduct Authority, is not investigating Metro Bank.

The Metro Bank scandal shows that the risks in the financial sector are still great. However, regulators are working and spotting accounting errors.

Risk managers need to keep a close watch on the banking sector because some bankers are returning to their pre-2008 ways. The risk of a major financial crisis triggered by bank failures is increasing.

Metro Bank demonstrates that a banking crisis is still one of the biggest threats to the global economy.

Britain strikes post-Brexit insurance deal with Switzerland

Harsh
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Britain strikes post-Brexit insurance deal with Switzerland

The United Kingdom and Switzerland have agreed on a deal that will allow the insurance sectors of both countries to trade freely with each other post Brexit.

The deal was struck between Phillip Hammond, the British Chancellor of the Exchequer, and Ueli Maurer, the President of the Swiss Confederation and the Head of the Federal Department of Finance, at the World Economic Forum in Davos, Switzerland.

It will come into force once Britain completes its exit from the European Union (EU).

The new deal is similar to the existing insurance agreement that the EU has in place with Switzerland. It replicates the deal struck between the UK and the US last December, which was on the lines of the “covered agreement” on insurance that the US and the EU have between them.

According to the joint statement published by HM Treasury: “The UK-Swiss Direct Insurance Agreement, like the EU-Swiss Direct Insurance Agreement, allows non-life insurance firms to branch into one jurisdiction from the other with greater ease through mutual recognition of solvency requirements.”

This agreement is the latest in a part of deals being negotiated by UK officials to ensure continuity of the country’s insurance industry after Brexit. The deal with Switzerland is considered to be a critical one thanks to the size of the country’s insurance industry.

Swiss investment in Britain’s financial services sector exceeded £11 billion back in 2016, making it the second-largest investor in the UK’s financial sector after the US. That’s why Chancellor Hammond believes that the deal is critical to the health of the British insurance industry.

“The UK insurance industry contributes approximately £35bn to our economy and employs over 324,000 people,” Hammond said after the agreement was announced.

He went on to add, “Links to financial industries like the Swiss insurance market are important for global financial systems and it’s vital that trade continues between our two countries so firms have the certainty they need to continue to do business and invest in the UK’s bright future.”

The news has been welcomed by insurance companies, with Patrick Connolly, chartered financial planner at Chase de Vere, telling Financial Times: “This is positive news. While Switzerland is a relatively small country it is a hugely important centre for finance and insurance sectors, which make up a significant part of the UK economy.

However, this is only one step forwards and more challenging negotiations are ahead, as the UK tries to prepare for life outside of the European Union.”

The British Insurance Brokers’ Association is lobbying for a Brexit transition period so that insurers don’t take a hit in case of no deal, which would lead to a hard landing for brokers. The UK’s Treasury committee has also constituted an inquiry into the fate of the country’s financial services sector in the post Brexit era.

The committee has been tasked with prioritizing which financial services verticals should be given preference during negotiations with the EU and other countries. It will also examine how a new trade scenario will affect the entire financial services sector as a whole.

BIBA unveils 2019 Manifesto – Risks & Opportunities

Harsh
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BIBA unveils 2019 Manifesto – Risks & Opportunities

The British Insurance Brokers’ Association (BIBA) has just launched its 2019 manifesto – titled Risks & Opportunities – in the Houses of Parliament in the presence of senior government officials, ministers, Lords, MPs, insurance industry professionals, and the media.

The manifesto contains a total of 26 commitments and 30 calls to action, based on the feedback from members and factors impacting the current insurance industry landscape.

BIBA points out that the manifesto needs to be reinvented annually to account for the changing times in the insurance industry on the basis of feedback from members of the body and their customers.

Graeme Trudgill, BIBA Executive Director

This would allow the trade body to identify the ongoing issues facing the insurance industry, such as creating a level playing field for brokers, and take steps to address them.

According to Graeme Trudgill, Executive Director of BIBA, “Members have made clear to us that we need to address the impact of external factors such as sweeping changes to market practices, changing regulation and legislation as well as Brexit that hinder innovation, provision of customer service and opportunities in the insurance broking sector.

“Having said this, there are positive signs of progress to help those people with challenging insurance needs through developments in creating smarter signposting to appropriate insurance providers including brokers. We will be building on that during 2019.”

Insurance innovation

In line with the trade body’s commitment of focusing on prospective opportunities for insurance brokers and their clients, the manifesto contains an entire section dedicated to the rise of insurance technology, InsurTech.

BIBA is committed toward helping its members take advantage of the innovation and the opportunities unlocked by the rise of InsurTech. So, it will assist them in scaling up their digital capabilities to benefit from this trend.

BIBA would also create a “dating-service” that will help its members get in touch with technology providers who will help them take full advantage of the opportunities that the InsurTech digital revolution is bringing.

The service will also help members understand the change in risks associated with this digital revolution.

Trudgill goes on to add: “The Manifesto is built on feedback from members and they have been united in their view that risks are changing and the commitments we have made for 2019 reflect this. We will be providing new guidance on terrorism insurance in conjunction with Pool Re. We will also provide information that members can use to help clients understand their cyber-risk.”

Brexit uncertainties

The BIBA manifesto lays special emphasis on the topic of Brexit. The body believes that the UK’s decision of leaving the EU will create a lot of uncertainty for insurance brokers as well as their customers.

BIBA has incorporated seven calls to action, including motor insurance and trading solutions, to address this point.

BIBA’s Chief Executive, Steve White, points out that the impending exit from the EU means that the insurance sector is “facing a time of unprecedented change” but at the same time, it also presents an opportunity of “mitigating the risk and grasping the opportunities.”

According to White: “The proposed Withdrawal Agreement does not have a solution to allow the 2,775 UK insurance intermediaries with passports to trade in the EEA leaving millions of EU retail and commercial customers facing uncertainty in their insurance arrangements.”

BIBA remains concerned that the current arrangements are not favorable for insurance brokers. One of the biggest problems that they face is of servicing their EU clients and helping them in case of renewals, handling of claims and placement after Brexit.

Hence, the body will continue working with the government to close the loopholes and ensure that the UK’s insurance sector remains competitive and continues thriving even after Brexit.

Mondelez sues Zurich for $100m after cyberattack claim gets rejected

Walid
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Mondelez sues Zurich for $100m after cyberattack claim gets rejected

Snack maker Mondelez is suing Zurich North America for $100 million in a lawsuit that could bring big changes to the way multinationals deal with their insurance coverage.

Mondelez is suing the Swiss insurer for declining to foot the cleanup bill after the company was hit by the infamous NotPetya cyberattack in summer 2017, according to the Financial Times. Zurich argued that the attack was an ‘act of war’ and therefore not covered under the policy.

The global snack company said it lost 1,700 servers 24,000 laptops as a direct result of the cyberattack. The NotPetya malware was designed to encrypt files on users’ computers, and then users would be asked to pay a ransom in bitcoin to decrypt the files, thus classifying the incident as a ransomware attack.

In its full-year 2017 results, Mondelez said that “the malware affected a significant portion of the company’s global Windows-based applications and its sales, distribution and financial networks across the company.”

By the end of December 2017, the company incurred a total of $124 million, among them $30 million in incremental expenses as a result of the incident and $84 million as part of the recovery effort.

Earlier in its second-quarter 2017 results, Mondelez stated that its net revenues decreased by 5% because of the incident and currency headwinds. In addition, the incident caused a 2.7% decrease of its ‘Organic Net Revenue’ – defined as net revenues excluding the impacts of acquisitions, divestitures, and other business operations and financial costs.

Zurich rejects Mondelez claim

After having completed its own investigation, Zurich rejected the claim and decided not to pay up, citing an ‘act of war’ exclusion clause in the insurance policy. The clause is a standard and commonly terms used in policies by insurers to limit their exposures.

The exclusion usually states that a policy would not cover losses as results of:
“hostile or warlike hostile or warlike action in time of peace or war, including action in hindering, combating, or defending against an actual, impending or expected attack by any government or sovereign power.”

In this case, the Russian government is the sovereign power that Zurich refers to, while backing its argument with the White House and other Western countries statements.

Indeed, on February 2018 the US government officially placed the blame on Russia, calling it “the most destructive and costly cyber-attack in history.”

The White House statement also said that the attack was “part of the Kremlin’s ongoing effort to destabilize Ukraine and demonstrates ever more clearly Russia’s involvement in the ongoing conflict.”

Ukraine was the first country hit, the malware quickly spread beyond that country to infect computers at companies across the globe.

Robert Stines, cyber law specialist at US-based law firm Freeborn, told the Financial Times “It’s a pretty big deal. I’ve never seen an insurance company take this position,”

Stines added “It’s going to send ripples through the insurance industry. Major companies are going to rethink what’s in their policies.”

However, the Russian government has formally denied any involvement in the cyberattack. In a conference call with reporters, Kremlin spokesman Dmitry Peskov called the allegations groundless and said it was part of a “Russophobic” campaign by Western governments, according to Reuters.

Not surprisingly, Mondelez disagrees and called Zurich’s move ‘unprecedented’, partly because claiming an act of war would require Zurich to prove that the Russian government was the main perpetrator.

Global insurance and risk management firm, Marsh & McLennan, too considers that NotPetya was not ‘warlike’ and should not trigger the war exclusion.

The case, filed in Illinois court (2018-L-011008), is reportedly the first legal dispute concerning how businesses can recover costs arising from cyberattacks.

Needless to say, this will be watched closely by the insurance industry globally.

California could increase auto insurance rates for women by fighting gender discrimination

Daniel
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California could increase auto insurance rates for women by fighting gender discrimination

Strangely, the California Insurance Commissioner could increase auto insurance rates for women to fight gender discrimination.

To explain, new regulations in California prohibit the use of gender in calculating car insurance rates, a press release indicates. Thus men could pay less for vehicle insurance, and rates for women could increase.

In detail, most people believe auto insurers in the United States charge men a higher rate because accident rates for men are higher. Not surprisingly, American men have long complained about unfair insurance rates.

Gender equity leads to higher insurance rates

Former California Insurance Commissioner Dave Jones heard the complaints.

His agency, the California Department of Insurance, issued The Gender Non-Discrimination in Automobile Insurance Rating Regulation. The rating, which went into effect on 1 January 2019, will force insurers to charge men and women the same rates for vehicle insurance.

A similar experience in Europe indicates auto-insurance rates for some women could double under regulation. For example, an 18-year old woman’s auto insurance premium increased by 50% in the United Kingdom in 2013, The Telegraph reports.

Women’s car insurance rates increased in 2013 after the European Commission forced the insurance industry to adopt gender-neutral pricing in December 2012. The EU adopted gender-neutral pricing after the Court of Justice of the European Union ruled the EU’s guarantee of gender equality applied to the insurance industry.

However, there is no guarantee of gender equity in the United States Constitution. Therefore, state administrators and legislatures determine insurance rates in the United States.

California Insurance Commissioner Dave Jones
California Insurance Commissioner Dave Jones

California is apparently the first American state to apply gender equity to auto insurance.

Interestingly, California law mandates that companies base auto insurance rates only on a driver’s safety record.

Yet regulations formerly allowed insurers to use gender as a factor in determining auto insurance rates.

Jones’ action closes that loophole and guarantees gender equity in vehicle insurance.

Gender equity minimal effect

The effects of gender-neutral pricing on auto insurance are unclear because of disparities in premiums.

For instance, women aged 40 to 60 years pay more for vehicle insurance than men with comparable driving records, a 2017 Consumer Federation of America survey indicates. However, a 20-year-old man with a perfect driving record will usually pay more for car insurance than a woman with the same record, The San Francisco Chronicle reports.

Hence, the new regulation’s impact on vehicle insurance costs in California could be minimal. For instance, the regulation could impact only drivers under a certain age, probably 30.

Risk pricing controversy

The real issue in the gender auto insurance rate dispute is how insurers determine auto-accident risk.

The auto-accident risk is hard to determine because people tend to misrepresent their driving records. For example, many drivers will not report minor accidents.

Moreover, driving records only list violations drivers were ticketed for. In fact, it is not uncommon for very bad drivers to have clean records.

Under those circumstances, auto insurers use a wide variety of questionable factors to determine accident risk. In fact, some US auto insurance companies give students who get good grades lower premiums. The hope is good students are more responsible and better drivers.

Additionally, some auto insurers will increase rates for persons in certain professions. For example, a teacher might get a lower rate while a person in a risk-taking job like firefighting, the military, or sales will pay more.

Surprisingly, California still allows some questionable criteria for determining accident risk. Notably, the state still allows insurers to use marital status as a risk factor. Thus, the state will still face charges of discrimination from singles.

Technology could reduce discrimination

The real problem facing insurers is that it is hard to get an accurate picture of an individual’s driving habits.

For example, insurers have no way of knowing if a driver is more prone to risky behaviour on the road. In addition, insurers have no way of knowing how much a person really drives.

Technology could change this by enabling Usage Based Insurance (UBI). Under UBI an insurer could set premiums based on the mileage a person drives. In addition, discounts could be given for obeying traffic laws, refusing to drive at night, or driving at a lower speed.

Current UBI schemes utilize wireless telematics devices that transmit driving data to an insurer. Several US insurers like Progressive have been offering UBI and telematics for years. However, the public is resistant to the idea, even though it offers lower rates, because of fears of privacy violations.

Thus gender equity could force the widespread adoption of UBI in America auto insurance. Expect UBI to become popular if more countries and states adopt gender equity for auto insurance.

Dubai-based Yallacompare raises $8m for MENA expansion

Harsh
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Dubai-based Yallacompare raises $8m for MENA expansion

Dubai-based financial comparison platform Yallacompare has raised $8 million in its latest round of funding, led by venture capital firm Wamda Capital and STC Ventures.

New York’s Argo Ventures, the venture capital arm of international insurance provider Argo Group, also joined the financing round. Overall and with this latest investment, Yallacompare total capital reaches $17.4 million.

Originally, Yallacompare launched with the website domain named compareit4me.com in August 2011, which mainly focused on car insurance within the United Arab Emirates (UAE). However, the startup quickly expanded and underwent a rebranding to tap into region’s fast-growing general insurance market.

In addition to insurance, website customers can now compare many other financial products such as credit cards, different types of loans, bank accounts, and also purchase insurance through its online platform.

Yallacompare CEO Jon Richards believes that the “latest round of funding represents a ringing endorsement of our direct-to-consumer financial services model.”

Jonathan Rawling, Yallacompare’s chief financial officer, considers that the big challenge in the region is to bring offline customers to online. The awards winning startup could serve as a catalyst to support that ambition.

In fact, the trend is already changing as the number of people buying insurance online in the region increased by a multiple of four in 2018. Yallacompare doesn’t want to miss this opportunity so it will use the Series C funding to expand its workforce by 50% to boost its presence in Egypt, and also work on enhancing its market share in Kuwait and the United Arab Emirates.

The company already has a presence in Egypt, so it is likely that the funding will go toward hiring a dedicated team for that market.

MENA insurance opportunity

Yallacompare claims to control 76% of the online insurance sales market in the six countries of the Gulf Cooperation Council (GCC) last year. That’s a great position to be in as the size of the GCC insurance market is estimated to hit $44 billion in 2021. Thanks to double-digit growth in countries such as the UAE, Oman, and Saudi Arabia.

The growing proportion of online insurance sales means that Yallacompare’s revenue opportunity will increase in the GCC. But the company is clearly looking to expand into the broader Middle East and North Africa (MENA) region that encompasses 22 countries and presents a bigger opportunity.

Yallacompare is currently operating in three countries – Egypt, Jordan, and Lebanon – outside of the GCC that form a part of MENA. The company will probably look to increase its reach in this region going forward as the insurance industry will grow at a faster pace than the economy thanks to low penetration.

Insurance penetration in MENA countries is just a fourth of the global average. The growth of digital sales channels is expected to increase penetration in this area as it will allow online insurance players to pass on the benefit of lower operating costs to customers.

That’s why venture capitalists are betting on Yallacompare since it gives them a nice avenue to tap into this market.

According to Oleg Ilichev, head of Argo Ventures, “Our mission is to discover and empower entrepreneurs who are reinventing financial services. We believe that Yallacompare’s goal of educating and simplifying the purchase of financial products aligns nicely with our beliefs.

Ilichev praised the startup by adding: “Yallacompare’s management team has done an outstanding job of positioning the business as the leader in this space. We are excited to help the company expand across the region and offer new financial products to its customer base.”

Five risks from Brazil’s newly-elected president Jair Bolsonaro

Daniel
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Five risks from Brazil’s newly-elected president Jair Bolsonaro

Brazil’s newly elected President Jair Bolsonaro is proposing radical policies that could destabilize his nation and South America.

Observers fear instability because the far-right Bolsonaro is a controversial figure with bizarre political beliefs. For instance, Bolsonaro admires Brazil’s military dictatorship of the 1960s and 1970s, labels Climate Change a hoax, compares indigenous people to animals, and calls his opponents Communists, The Guardian reports.

Insurers must pay attention to the situation in Brazil because of the potential risks from Bolsonaro’s radical policies. Moreover, some of Bolsonaro’s policies could be a threat to Brazil’s neighbours.

Five Potential Risks posed by Bolsonaro include:

1. War between Brazil and Venezuela

Bolsonaro is an outspoken critic of Venezuela’s radical left-wing President Nicolás Maduro. In fact, in 2017, Bolsonaro pledged to “do whatever is possible to see that government deposed” in a statement about Maduro.

Brazil’s new president has announced no specific actions against Maduro. However, Brazilian newspapers have claimed Colombia’s government supports Brazilian military action to remove Maduro.

In addition, The Guardian reports some Venezuelans believe Brazilian military action against their country is imminent. Moreover, Maduro himself has said he thinks Bolsonaro is planning “a military adventure against the Venezuelan people.”

A major risk is a US-backed military operation or coup against Maduro. In fact, US President Donald Trump whom Bolsonaro admires, stated he is “not going to rule out a military option” for Venezuela. However, Trump did not say what a military option is.

Potential risks include combat between Brazilian and Venezuelan forces, or guerrilla war stemming from a Brazilian occupation of Venezuela. Another risk is that Maduro will launch pre-emptive military strikes against Brazil, or arm Brazilian leftists for guerrilla war against Bolsonaro.

2. Regional instability

Bolsonaro is open to the idea of a US military base in Brazil to counter “Russian influence” in South America, Fox News claims. In particular, Bolsonaro fears Maduro’s close ties to Russia.

Such a base could prompt Maduro to host a Russian military base in Venezuela. A greater risk is Maduro will reach out to China for help.

Another risk is that other South American powers like Argentina will invite Chinese forces to their soil to counter “American imperialism”. China’s People’s Liberation Army is establishing bases overseas. Notably, China has major economic interests in Argentina it will want to protect, Reuters reports.

A final risk is a regional arms race with South American nations buying large amounts of weaponry they cannot afford to protect themselves from American, Brazilian, or Chinese imperialism.

3. Indigenous people unrest

Bolsonaro could trigger a conflict between Brazil’s government and indigenous people.

On his first day in office, 2 January 2019, the new president transferred certification of indigenous land from the National Indian Foundation to the agriculture ministry. In detail, that action could transfer ownership of indigenous land to miners and farmers, The New York Times reports.

This could lead to conflict between miners and indigenous people over land. Notably, Bolsonaro’s agriculture minister Tereza Cristina Correa da Costa Dias is being accused of accepting money from a landowner accused of murdering an indigenous leader.

An obvious risk is fighting between indigenous people and Brazilian authorities. Another danger is that Maduro could arm indigenous Brazilians to tie down Bolsonaro’s military with guerrilla warfare. Thus, Bolsonaro could trigger unrest or guerrilla warfare in Brazil.

4. Sparking ethnic violence

Another risk is that Bolsonaro’s policies will spark civil unrest among the poor and African-Brazilians.

Residents look on as Brazilian military police officers patrol Mare, one of the largest complexes of favelas in Rio de Janeiro, Brazil, on March 30. - Mario Tama
Residents look on as Brazilian military police officers patrol Mare, one of the largest complexes of favelas in Rio de Janeiro, Brazil, on March 30. – Mario Tama

Bolsonaro is dismantling a division of the education ministry designed to expand educational opportunities for black Brazilians, The New York Times reports. In addition, critics are announcing Bolsonaro’s action as unconstitutional.

5. Destabilizing Brazil

The situation in Brazil is reminiscent of that in Venezuela where elected radicals undermined democracy with extremist policies. The difference is that Venezuela’s radicals were extreme socialists, whereas Bolsonaro is of the far right.

Additionally, Bolsonaro’s personal story is like that of Hugo Chavez, the deceased founder of Venezuela’s authoritarian socialist regime. Like Chavez, Bolsonaro is a former paratrooper and populist with radical beliefs.

Chavez destabilized Venezuela by rewriting the constitution to make himself a dictator. Civil unrest, economic collapse, hyperinflation, and an attempted military coup marked Chavez’s years in power.

By 2017, Venezuela had become so chaotic its government cannot maintain law and order. For example, Medium writer Erik Brown charges that pirates are openly operating off Venezuela’s north coast. In particular, pirates killed 15 to 20 sailors in an attack on Guyana-based fishing vessels in Venezuelan waters in 2018.

Thus the greatest risk is that Bolsonaro’s chaotic leadership could completely destabilize Brazil and other parts of South America.

EU seeks tougher scrutiny over Huawei 5G cyber security risks

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EU seeks tougher scrutiny over Huawei 5G cyber security risks

The European Union (EU) is worried about potential cyber security risks from Chinese technology companies. Several members are concerned with China’s behaviour in the cyber realm, and calling for regulations reinforcement in the upcoming 5G spectrum auctions.

Huawei, one of China most successful tech company, is often the cited culprit over the security concerns. The company is accused of being a tool that could be used by the Chinese government for espionage.

The fears come from China’s National Intelligence Law, which states that “organizations and citizens shall, in accordance with the law, support, cooperate with, and collaborate in national intelligence work.”

Western governments interpret this as a risk that Huawei would be forced to build “backdoors” in its equipment to give China access to sensitive data. Besides, the company has run into hot water recently, having its chief financial officer, Meng Wanzhou, arrested in Canada on 1 December 2018, for allegedly taking part in Iran sanctions fraud.

The United States, New Zealand, Australia and Japan have banned Huawei’s telecom infrastructure to varying degrees. In Europe, Brussels is encouraging its members to evaluate the options carefully before making decisions.

As once the auctions are complete, the involved members wouldn’t want to be in a scenario where an infrastructure provider with probable security risks is supplying equipment to an entire continent.

“We are urging everyone to avoid making any hasty moves they might regret later,” commented an unnamed diplomat who spoke to the Financial Times.

Several EU members have already hardened their stance on Huawei. The Czech Republic’s cybersecurity agency has issued a warning that Huawei’s products pose a cybersecurity threat, while the Belgian cybersecurity agency is reportedly considering a ban on the Chinese company’s products.

No evidence of backdoors

Meanwhile in the UK, British Telecom (BT) has decided to remove Huawei products from the core areas of its existing 3G and 4G equipment, and doesn’t plan to deploy its products during the 5G rollout either.

BT’s stance is surprising as Huawei has set aside £1.5 billion ($2 billion) to be spent over the next five years so that it can address the security concerns raised by the British intelligence and security agency GCHQ (Government Communications Headquarters).

Moreover, Huawei firmly denies any improper links with the Chinese government, and researchers including GCHQ have never found any evidence of such backdoors.

Germany’s Federal Office for Information Security recently found out that its network infrastructure wasn’t any less secure when compared to its rivals such as Europe’s Nokia and Ericsson, along with South Korean Samsung.

Despite the concerns, Huawei has already made headway in some EU member countries. T-Mobile Poland, for instance, launched the first fully functional 5G network in the centre of its capital Warsaw, and is tapping Huawei to build its 5G network further.

Altice PT, the largest telecommunications service provider in Portugal, signed a partnership deal with Huawei to develop and implement 5G services in Portugal. In all, the Chinese tech giant has made deals with telecom providers and had its infrastructure scrutinized in several other European countries.

That’s not surprising as Huawei has been known to provide telecom equipment at competitive rates, and there have been reports suggesting that the security concerns could be overblown.

The Chinese company is also allowing telecom operators to put security firewalls in its 5G network architecture so that they can view, monitor, and control the information flowing through. These efforts seem to be working in the company’s favour as the Huawei Cyber Security Evaluation Centre in the UK mentioned in its annual report that the company has “fulfilled its obligations” to the country’s government and telecom operators such as O2, EE, and Vodafone.

But the overall negativity surrounding Huawei means that the EU can be expected to play an important role in the region’s 5G infrastructure rollout by closely auditing and vetting the participants so that it can minimize any supplier-related risk.

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