The Insurer TV: Insurtech is an “accelerator” for US program space

The insurtech revolution in the wider P&C sector has proved to be a catalyst for growth in a US MGA market increasingly seen as a home for innovation and flexibility for its speed to market, according to participants in the latest instalment of The Insurer TV’s monthly Prospective series.

This month’s episode focuses on the fast-growing US program sector, which is already estimated to account for up to $60bn of premium volume.

And the president of Amwins’ underwriting division Bob Petrilli said that a growth driver had been the changing role of insurtech.

“We went from just a few years ago seeing insurtech as a disruptor, to then becoming an enabler and now I’d say it’s an accelerator, on many levels,” he commented.

He said the efficiency of technology solutions had allowed program administrators to up their game, while the data capture and analytics that some insurtech solutions allow enable MGAs to be a “better instrument” for carriers and reinsurers to access the market.

“On the underwriting side, being able to capture the data and things like AI and robotics – these are ways in which we can start looking at vast amounts of underwriting data in a very minute way to make better decisions,” said Petrilli.

Michael Beasley, president and CEO of hybrid fronting carrier Trisura Specialty Insurance Company, said the program space is the best home for new and emerging opportunities in lines of business.

“Traditional insurance carriers can spend six months to a year trying to wrap their heads around whether this is going to work or not. A fronting company and one or two reinsurers can get comfortable in a couple of months and that product can get deployed into the market very quickly,” he commented.

Phil Edmundson, CEO of tech-enabled MGU Corvus Insurance, said his firm views risk capital as one of its four sets of customers alongside policyholders, brokers and its own team.

“Ultimately we are not successful as an MGU if we don’t produce superior returns for our insurance and reinsurance partners by leveraging the data and the underwriting insights we have that lead to better decisions around pricing and risk selection,” said the executive.

His colleague, CUO Mike Karbassi, pointed to specific ways Corvus uses technology in its core cyber offering.

“We leverage a non-invasive IT security scan which is really a crucial component of both the underwriting process and our loss-prevention strategy,” said Karbassi.

Quickly producing an AI-driven risk score on submissions allows the MGU to get a more meaningful insight into the security posture of any organisation, he added.

It also enables Corvus to automate a significant portion of its submissions, while on more complex risks empowering its underwriters to make data-driven underwriting decisions based on objective risk factors.

Insurtech profitability key

Hybrid fronting carriers participating in this episode were keen to emphasise the importance of insurtechs delivering profitability for their capacity providers.

“You have to have scalability as well as profitability, and I think that’s very hard to achieve in insurtech right now,” said Trisura’s Beasley.

Pat Rastiello, president and CEO of Accredited Specialty Insurance Company, noted that what many entrants to the insurtech space have brought is access to customers.

“It’s great to have the distribution but what really counts for us are the algorithms to be able to make underwriting profit, and capacity really follows the underwriting profits,” he commented.

If that profitability continues to improve, then the insurtech segment of the program space will continue to be a vibrant market, attracting interest from reinsurers, he said.

Petrilli said that the data-capturing capabilities brought by insurtech does give MGAs the ability to make capital providers more comfortable with assuming the risk, however.

Click below to watch the latest episode of Prospective, which this month focuses on the US program insurance sector – a subsegment of the US property casualty insurance market that has undergone a transformation over the last decade.

Prospective: US program sector | FULL