The measured approach
IGI CUO Chris Jarvis explains how a commitment to discipline has helped the company outperform its peers.
IGI’s combined ratio has been below 90 percent in eight of the last 10 years – how do you achieve such consistency?
Our consistency in performance comes up a lot in conversations with industry professionals. They always want to know what our ‘secret sauce’ is. The answer is always the same: hard work, discipline and underwriting focus.
We have strong core principles that we stick to, one of which is understanding the business we write at a granular level. We work collaboratively and approach our business with a ‘single hub’ philosophy. The market has experienced a lot of so-called black swan events in recent years, and the firms recording outsized losses have done so mainly because of understating the materiality of their aggregate exposures or not fully considering the maximum possible downside. IGI takes a cautious and measured position in every business class in which we operate.
Our approach has proven extremely effective over time, especially during soft market cycles. But to continue underpinning IGI’s long-term profitability, this approach may need to be adjusted slightly to allow us to fully capitalise on improved market conditions and pursue a higher-growth model. However, our fundamental principles for managing risk and exposures are the backbone of our achievements and an unwavering part of our DNA.
How so?
We recognise that hard market conditions are emerging in some classes, but not all sectors, so a more nuanced approach is required. We see harder conditions in areas such as short-tail property and reinsurance, and adapting to a new landscape is the challenge we now face but is something we have always done well. Despite our growth, IGI is still a relatively small fish operating in a big pond, but our size enables us to be truly nimble and move quickly when required while remaining selective about new growth areas. For example, IGI entered the E&S market in 2020, and compared to some of our peers who are writing hundreds of millions of dollars of business because of attractive conditions, IGI has remained focused on a narrow segment of this business, which we are confident we understand.
What areas will you be targeting next?
We have built an excellent platform for supporting a diversified portfolio of specialty business, and we are in a strong position to tackle any new opportunities and build out existing lines still in their infancy.
We have increased our reinsurance treaty segment materially for 2023. Historically, IGI has had a modest treaty reinsurance offering, around 5 percent of the overall group premium – our current strategy is to increase that to at least 10 percent, given the improved conditions and opportunities. But as with everything we do, we will proceed cautiously in a measured fashion with close attention to our maximum possible downside.
What will we see from IGI’s underwriting strategy for the rest of 2023 and going into 2024?
Our strategy will remain as it has always been: a cautious and measured approach to disciplined and focused underwriting in every class of business. The focus on underwriting diligence is central to everything we do, which has helped sustain our profitability throughout the years.
With that in mind, we are enhancing several pricing tools and processes to improve pricing techniques, especially in some of our smaller classes. We are investing in exposure management to provide us with greater control and access to real-time data for the enhanced management of our overall portfolio. And we are also growing our internal delegated underwriting framework, resources and controls to give us better insight, control and management of our delegated underwriting facilities, which will create the right environment to underpin growth in this area.