Underwriting instinct is at the heart of (re)insurance

Russell Group’s Suki Basi on the need to be ahead of the curve.

The Lloyd’s of London market faced the very real prospect of an extinction event in the mid-1990s, following the huge losses it suffered between 1988 and 1992, totalling billions of dollars.

These losses largely arose because of a combination of asbestosis- and pollution-related claims and the market practice of placing inter-syndicate/inter-company excess-of-loss retrocession for catastrophe losses.

This led to what became known as the London Market excess-of-loss spiral.

It was a dark time for the market, which impacted Lloyd's solvency and liquidity. It was also Russell Group’s introduction to the arcane workings of a market that enjoyed a reputation for being innovative and creative while at the same time being hidebound by a culture of operating in silos.

Data and analytics propulsion

The Lloyd’s market had to think quickly and creatively to unravel the spiral so that it could quantify the market’s claims losses, which is why it asked Russell to provide the data and analytics engine, working as part of a much larger team of market experts that propelled the Equitas vehicle on the road to run-off, settling prior-year liabilities. It was certainly innovative for its time, and effective.

Equitas was pioneering because it had to succeed. The alternative was simply unthinkable. Yet Lloyd’s also has a long history of pioneering new insurance solutions. For example, it issued the first motor policy in 1904 and introduced cyber policies in 1999. The market has always been ahead of the curve.

Russell has a shorter history of being ahead of the curve – we have only been in business for thirty years, while Lloyd’s, of course, has been in business ten times as long as that.

Underwriting instincts

We have a long-standing tradition in the (re)insurance market going back 30 years. We are part of the market DNA and think with an instinctive underwriting mentality. Our history of providing innovative data and analytics solutions to underwriters, brokers and corporate represents impressive longevity for a technology provider, which continues to take pride in its independence today.

We were there for our aviation underwriting clients when 9/11 occurred, our analysis of the tragedy providing a reliable number within hours of the event, while other market operators had to experience weeks of uncertainty.

Threat events and scenario dynamics

We have always responded to a rapidly changing threat event scenario dynamic as increasing global connectivity has changed the shape of risk. In the wake of the 2008 financial crisis, Russell responded with the release of new financial risk models. Our Alps Energy solution was developed in 2007 in response to customer demand, then marine was introduced in 2017 in response to the Tianjin disaster.

‘Russell thinking’ is now reported by international media and the phrase ‘connected risk’ is a mantra that is extolled across the underwriting and broking speciality classes. Our business model has always been to thrive in uncertainty, and the corporate world has come on board to promote our thinking on outcome-based solutions, a subject I will touch on in tomorrow’s article.