Tell us about your experience in the Marine industry. You were an underwriter for a number of years weren’t you?

Thanks for this question. I’m suddenly feeling very old!

I graduated with a degree in Economics from Warwick University in 1979 and shortly after, commenced work as a noting clerk on an underwriting box at Lloyd’s. I have been in the London Insurance market for my entire career, which now spans four decades.

For the first 22 years I worked on the underwriting side at Lloyd’s marine syndicates and I have underwritten most lines of marine business. In 2001, I switched to broking and for the next eight years I worked initially on the reinsurance side but latterly as Head of Marine Hull in London, as well as working in the Company market at Swiss Re. In 2018, I set up my own consultancy company. In addition to working for Miller, I also provide consultancy services to a Lloyd’s syndicate, carry out independent peer reviews and am the insurance adviser to an artificial intelligence software company.

What is your role at Miller? 

My role at Miller is really to provide an ex-underwriter’s input to assist the producing brokers to better reconcile the needs of the client with the requirements of the underwriter, subject to the confines of the capital regimes, whilst maximising the data opportunities that may exist. 

My other external roles detailed above give me (and I really hate the phrase) an almost unique ‘helicopter view’ of the industry. These complementary roles enable me to, hopefully, assist the Miller team to perform to an optimal level on risk advice that the modern broker is required to have in order to differentiate themselves from their competing peers.

I do not believe we are yet in a hard market. We are in a hardening market. The specialist and better brokers and risk advisers perform better than their competitors the harder the market becomes. My role within Miller is to assist brokers to create (where necessary) and increase that differentiation through embracing a broad range of related aspects of the insurance and reinsurance industry for the client’s benefit.

To what extent have client needs changed during your career and if so, how?

The needs of direct clients over time have remained relatively unchanged, namely to minimise cost of risk, whilst removing volatility. Cost of risk is defined as retained losses plus insurance cost. What has changed (and dramatically at that) is how the insurance market has developed products that in many cases are bespoke and specifically tailored to match that individual client’s needs to enable them to better manage their cost of risk.

A good example of fairly recent new offerings from the market is cyber cover, which enables clients to manage their cyber risk. Previously uninsurable, cyber insurance cover reduces the balance sheet volatility previously unaddressed due to restrictions in the then prevailing offerings through cyber loss exclusions.

In terms of the base changes for the providers of risk capital and their deployment of that capital there are numerous factors at play. One of the key drivers is the effect in Europe and beyond of Solvency II, a subject I plan to address more broadly in future insight articles.

What do you see as the most important industry and insurance developments? What are the recent market trends?

Technological developments, I think, are having the greatest impact on insurers and reinsurers. Access to ‘big data’ now exists and the use of artificial intelligence software enables the analysis of vast amounts of data that human beings are unable to efficiently evaluate without that assistance. It is the identification and then the harvesting of statistically significant data that enables underwriters to better assess and more accurately manage risk. The better underwriters can manage and assess risk, the better they can differentiate between top quality and poorer quality risks and offer prices and terms and conditions that will better reflect the risks being assumed.

Certainly, going in to 2020, underwriters need to continue to apply remedial action to poorly performing portfolios. This had already commenced in 2019 through a round of cash rises across almost all the specialty lines of business. Going forward, (if I crystal ball gaze) I would suggest that in many cases, although underwriters are still searching for some more cash, they are more in need of less risk.

This can be achieved in several ways, through various risk transfer techniques which may include increased deductibles, aggregate deductibles and, for sophisticated insurance buyers, a move towards more captive solutions.

Captives can provide a very satisfactory solution to assureds the harder the market becomes but they are not necessarily suitable for all clients, especially those who may be more risk averse. There are many pro’s but also some con’s for captive solutions. I believe that sophisticated advice and analysis is required to provide informed solution options for clients to consider. The age of the modern, and far more professional broker has arrived. This modern broker has morphed from offering mere transactional advice to being risk advisers and quasi risk managers, working in close partnership with their assureds. This is the journey we are all on together.