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Speaker 0:
The US. Cyber market is definitely growing exponentially um worldwide. We're seeing that the numbers are at about a $14 billion market today and the expectation is that it's going to go up to 26 billion by 2026. And I think what's fueling it is just the necessity of the product in that. Um It's not just an insurance product that provides you with, with funds if there's any loss, but it's also a service that you're providing. And I think

Speaker 0:
the difference is if you think of yourself, um, you're the owner of a business or a large corporation and you come into work on Monday and there's a skull and crossbones on your computer and you're completely encrypted and down and they want you to pay a ransom to get back up and running. What do you do? It's a situation that companies have not faced before.

Speaker 0:
Um In the US, companies are used to property damage, companies are used to getting sued, but this is a very unique experience. And so what we provide in terms of cyber insurance is the service to get you from stock to go from my, my system is down to how we're going to get back up and running and then all the costs associated with it

Speaker 0:
and the policy covers a lot. So essentially it, it emanated out of data breach notification laws. So laws were passed. Um We don't have a US national law. Um but we do have state by state and each state has its own laws in terms of what needs to be done when you provide information to a company and that information is stolen.

Speaker 0:
And so the, the product really emanated of that out of that, what was taken and who do we need to tell about it? And then how do we fix the problem? And so what we provide essentially is, um, an attorney to, to let you know what obligations you have, whether it's with the federal government, depending on what industry you're in, um, whether it's your customers, whether it's your employees. Um, and then also fixing the problem, you know, do you have to recover the data? Who do you have to notify,

Speaker 0:
um, hiring a, a computer forensics firm to come and fix it? Um And so we at Axel, we are there for you to, to work with you. Um And our claims team is fantastic in terms of getting you there. Um And so that's essentially fueling the growth. It went from a situation back. Let's just use 2005, 2006, 2007 when it kind of started to grow and it was in its infancy and it was, do I even need this product? Is this a problem?

Speaker 0:
And then we read about all the high profile breaches, you know, in the newspaper, day after day after day and then,

Speaker 0:
you know, it started to get out there. Maybe I need this. Um, and then there was this belief. Well, it's large corporations, I'm a smaller entity. I don't necessarily need to get this, but now everybody is a victim. Um, and, and, and, and anybody can be hacked at any time. And there's an adage in cyber insurance. There's two types of companies, those who have been hacked and those who don't realize they've been hacked. Um And so it, it's an absolute necessity I think to, to have this product because of what we provide.

Speaker 0:
Obviously, we hear a lot about ransomware. But what is it, what, what are we talking about here? Why is it so expensive? Why is it such a big deal?

Speaker 0:
And we've seen really a change over the years in what ransomware has become and it's become a lot more complex. So at its core, ransomware is, um, the criminals have encrypted your system. So you would come into work, the entire system is down and there's some sort of ransom demand saying if you don't provide us with X amount of money, you will never get back on your system again.

Speaker 0:
Um Or there's the double whammy of um, not only are you down, you can't get back up, but we've also stolen all of your information and if you don't pay us money, we're going to release it to the world. And now it's gotten even more nefarious. It's an extra step and it's really more specific to health care, but they have pictures of, um,

Speaker 0:
someone in surgery or, you know, someone, um, you know, in the nude or, um, you know, being examined or um, someone has cancer and, you know, showing how awful this person is doing physically. Um And so those are all angles they use to try to extract the ransom from you. And so if you take just the garden variety ransom ware if you will the encryption.

Speaker 0:
So in that sense, it would be, your system is down, you cannot conduct business whatsoever. Now, let me just note it could be, your entire company is down, it could be one part of your company is down, it depends on the size of the company, a very large corporation. It would be every single system is down. It would, but it could be, your shipping is down, your payroll is down, hr is down something like that.

Speaker 0:
Um And then they would say, you know, to get the decryption key, uh We want you to pay this money to us. So what we're looking for is, do you have viable backups that are uncorrupted? Um And so in an ideal world you would say to the criminal. No, thanks. We're ok. We have our backups. We're gonna be back up and running hopefully pretty quickly. And that'll be that.

Speaker 0:
But then there's now the added, um, issue of, well, what have they taken and, and might they put that on the dark web for everybody to see. So it could be personally identifiable information of your customers. It could be confidential, business information, personal health information.

Speaker 0:
and the company has to decide, um, do we want to pay the ransom and trust the criminal that if we pay $10 million they will destroy this information and not put it on the dark web. Um And so it's really an economic decision and what you're also looking at is um the time it's going to take. And so, you know, essentially if I pay the ransom, I should be up and running in three days, that's three days worth of productivity.

Speaker 0:
If I don't pay the ransom, we might be down for three weeks and we can't lose the three weeks of productivity. So now we need to go ahead and pay the ransom. Um

Speaker 0:
or it's some sort of hybrid. It might be um you know, if we pay a certain portion of the ransom, we'll get this back. But we have backups for, for this and it, you there's actual ransom negotiators who do this for a living and that's one of the services that we provide. So

Speaker 0:
if a company doesn't have cyber insurance. There's no way they would know who to contact necessarily, um, to, to work with these ransomware negotiators and it is an actual negotiation. So it might be, um, we demand $10 million. Well, what do you have? And they actually show what we'll call a proof

Speaker 0:
of life. Here's an example of what we've stolen, we're going to release it. Um, and we would say, you know, we're gonna pay you 2 million and they say 5 million and it actually goes back and forth all the while behind the scenes trying to get the backups up and running and hopefully the backups would not be corrupted. So the cost in terms of insurance or without insurance is you need an attorney to figure out what your rights are. You need um,

Speaker 0:
a forensics firm to determine what information was stolen. You need the negotiator to, to do that. Um And also you need um, a company to recover the data. So it's not like if you have backups in five minutes, you turn a switch and you're up and running. You have to, it's a huge onerous process to get all of the data back from your backups up and running. So there's the data recovery expense and then there's the

Speaker 0:
business interruption expense. So if you're down for three weeks, how much profit are you losing in those three weeks. So we would cover that, we would cover the attorney we would cover the forensics, um, the negotiation, et cetera. And then after that, after you've notified folks and said

Speaker 0:
you're our customer, we've had an issue, your information has been stolen. There might be a lawsuit emanating out of that. And so then there's the third party lawsuit, class action lawsuit and we would cover, um, the cost of defending the lawsuit. We provide you with one of the top attorneys in the industry at a highly favorable rate and then work on settling that lawsuit. And then the final part is the regulatory aspect. So the government is involved as well

Speaker 0:
and what they're essentially doing is making sure that you're doing everything right and they can uh levy fines and penalties against the company and we would cover that as well. So when you think about ransomware, um I think people tend to just think about the, the number of the, the

Speaker 0:
dollar value of the ransom. So $5 million ransom demand, it's a $5 million claim. No, it's a lot more than that. So you might pay the $5 million ransom, still be down a week, have a week of business interruption and then all the ancillary costs that I discussed before.

Speaker 0:
So in terms of the underwriting process, um as the technology, in terms of what the hackers are using and just the technology in general has gone from more rudimentary to more complex. The underwriting process has become much more in depth um

Speaker 0:
in terms of the amount of questions asked. So II I joke and say, you know, when the first policy was sold, the question was, do you have a computer? Yes, here's a policy. And now we're looking into a lot, a lot more. So, um we have our base application where we ask certain questions and then we have a um a ransomware, a specific application and you would need to fill in both. Um

Speaker 0:
and really what we're doing is trying to just have an understanding of what is your security posture as a company. And there's certain things companies would need to have in order to get a policy. And also just how is the company viewing it in general just to get into the technology, for example,

Speaker 0:
every company that we would insure would need to have multi factor authentication for remote access. Um Also they would need viable backups. So in a situation where um there's a ransomware attack and the system is literally encrypted and there's nothing you can do. Um You need to, we need to make sure that that company has backups that are not attached to the network that ideally they could say to the criminals, we don't have to pay the ransom because we have backups and we can be up and running fairly quickly.

Speaker 0:
Um And then also patching, you know, anyone knows there's constant, you know, patches that you have to, you have to take care of and so are you, are you doing that? So those are

Speaker 0:
definite must haves, but then overall, we're looking at the company holistically um is, is the company um you know, invested in, in terms of cyber security and you know, not we have an it person and that person takes care of it. The CEO needs to be involved, the CFO needs to be involved, the risk manager needs to be involved. Um The Chief information Security Officer needs to be involved.

Speaker 0:
Even the marketing folks need to be involved because the marketing folks might say, hey, if we put cookies on our website that'll drive revenue or if we put pixels on our website to, to view what, what folks are doing that'll drive revenue, but maybe you're not allowed to do that. And so you need the legal team to make a determination. So we want to make sure that the company is taking it very seriously. Are they monitoring their systems 24 7? Um

Speaker 0:
You know, are they doing penetration testing? Are they looking at the dark web to look at, you know, traffic? Um Do you have endpoint detection and response in place? Um Do you have email filtering? There's a lot of things that you need to look at to make sure they have that. And then in terms of the ransomware, um as I had mentioned earlier, the backups, if, if you had a situation where um your system was encrypted and you, your, your, you know, your whole business is down, could you get back up and running fairly quickly?

Speaker 0:
So it went from years ago, it was really more of an it issue and you know, let, let that person worry about it to now the entire company needs to be involved. So what we're looking at, do you have these certain um security tools? Um Are you doing training? But also is it something that we feel the company is investing in and taking very seriously?

Speaker 0:
We work very closely uh with our broker partners. And so, um our, all of the business that we get is fed through us from a broker and the brokers are also um highly sophisticated in terms of their know-how. And we have incredible relationships with the top brokers and we work with them to determine what questions um you know, should we be asking um what do their clients need to have in order to get a policy?

Speaker 0:
Um should there, you know, should there be a claim we work very closely with them? And it's really a symbiotic relationship. It's not a case of, you know, they provide us with some business and then they're off to the side, they're with us the entire time and most of our clients, um we've worked with them for years and years and years through a broker. The last thing the broker wants to do is have to year after year, switch insurance. Companies, they want to, they want to have a long term relationship.

Speaker 0:
And at A XL, it's very important to have that long term relationship that we have a trust in them. That their cybersecurity posture is very strong and that they have, you know, top folks working on that from their end and they want to know that we're asking the right questions that we're providing the right service

Speaker 0:
is pre breach, post breach. And in the event of a claim, we are going to be there for you side by side, whether it's paying the loss or whether it's working with you to, to get through it and, and give and providing you with the top vendors. So, um it's a wonderful relationship we have with our brokers and we're very thankful for them. And

Speaker 0:
um I think that's what makes us one of the top markets because the brokers love working with us. Um I would note that because of the growth, there's been a huge influx of new insurance companies coming into the mix, whether it's literally a new insurance company or insurance companies that hadn't written Cyber before.

Speaker 0:
Um And that's where we really have an advantage in that we have over a 10 year track record of having, you know, the top folks on both the underwriting and claim side to work with them. And so there's really this trust factor that we have with our brokers.

Speaker 0:
So at XXL, we have a 24 7 incident response team. Um and that is part of the claims team. And it's one of the things that we're most proud of and we think it's extremely important for our clients, obviously hackers or data breaches or ransomware attacks do not occur necessarily between the hours of nine and five. So what would happen if there was a situation on a Friday evening? Obviously, you can't wait till Monday morning at 9 a.m.

Speaker 0:
So we have a 24 7 hotline which is um handled by members of the claims team.

Speaker 0:
Everyone on the team is an attorney with years and years of experience. They're working around the clock to make sure that they're on the phone for you. Should you be in your time of need? And so what differentiates us, I think from some of our competitors is that our claims team handles the issue themselves. Whereas some of our competitors would say just call this law firm, just call this um third party administrator and

Speaker 0:
they don't necessarily view or have the best interest in the customer. So for us, when we're handling it, our customer, our client, we are there for you. If you hire a law firm or you hire um a third party administrator, their customer is the insurance company, not the person. And so it gives our customers um a really nice sense of comfort knowing

Speaker 0:
this is the person who I'm gonna be speaking with, um who works for the company who understands the coverage. So there's two things that essentially you want your 24 7 team to do to go through the coverage. This is what we cover, provide to them. The understanding that I've handled hundreds or thousands of these situations and there's no problem. And where their value really comes in is in terms of what vendors do you need to hire. So for example, the system is down,

Speaker 0:
there's nothing a company can do. We would say, ok, for this type of situation, we're gonna, we, we want to hire this particular forensics firm. They have worked with this ransomware gang for years and years. They know exactly how to handle that or, you know, might be industry dependent. The these guys are great with manufacturers or municipalities. It depends. Um So we know what forensics firms to hire.

Speaker 0:
Uh we know what notification firms to hire. If we have to notify customers or employees, we know what attorneys to hire. And then also where the rubber really hits the road if you have a ransomware situation and there's a demand for, let's just say $20 million clearly, a company would not know how to handle that. And so we work specifically with companies who do the negotiations and would actually facilitate the payments. Um And so,

Speaker 0:
you know, should there ever be an incident with one of our insureds? You don't have to worry immediately. You're going to be on the phone with someone from our team who handles hundreds, hundreds of these, who are going to say, don't worry about it. You're going to be absolutely fine. We have the best in class vendors that we work with at the best price. That's another thing that I think is important

Speaker 0:
because of our market position in cyber. We're able to, um, work with the, the best at highly discounted rates. So if you don't have Cyber insurance and you want to hire a company, a or law firm, a, I'm going to make up the number, maybe they're charging $1000 an hour, we have them for $500 an hour.

Speaker 0:
Um And so it's a huge differentiating factor and it provides a lot of comfort. Additionally, in terms of that, if, if a company is hiring a law firm, the law firm then has to check back with the insurance company, it's an extra step. We don't have that. You're working straight with us. So if you have something on Christmas Eve, New Year's Eve, and believe me, we've actually had those plenty of times. You wouldn't believe it. But that is a good time for hackers to, to strike New Year's Eve or Christmas Eve thinking that they'll be closed. We're available to go. Um

Speaker 0:
And um, you know, it's a system that we've had in place for years. It works great. And I think it's something that really differentiates us additionally. Um We provide pre breach services before anything happens. So we again have best in class um experts who can work with you to make it to decide what do you need to fix. So there won't be a problem. So this would be a situation where um we felt that your security posture was good enough to issue you a policy.

Speaker 0:
But throughout the year, you're working with one of our recommended vendors again at a highly discounted rate to make sure that everything you're doing is proper. Um One of the things we provide is something called a tabletop exercise, which is a term of art for the industry. Essentially, it's just a dry run of what's going to happen.

Speaker 0:
So you don't ever want to have a situation where you haven't thought about what you would do beforehand. So if it's, you know, two o'clock on a Tuesday and there's a ransomware attack, you don't want everyone at the company running around all nervous, what do we do? What do we do?

Speaker 0:
So, a tabletop exercise is something that is very beneficial for our insurers to do. So, they've done it already in case there is a situation. So we would set our insured up with, um, a, you know, a best in class attorney, forensics firm and we would do kind of a dry run. Um, and that would be at a discounted rate.

Speaker 0:
So a lot of talk about ransomware. Um, if you were to just Google Cyber, it's always gonna be ransomware that gets all the attention. Um But there's a lot more, um, and a lot more that we cover and it's, it's the new weave that we really see is what I would call um, unlawful collection or wrongful collection privacy type claims. So every time you go on a website,

Speaker 0:
they're tracking what you're doing. And the question then becomes is, did they tell you, are you aware of it? Um And in many instances, the customer or the employee is not aware of it. And so we're seeing a lot of these class action lawsuits come out. Um And it's a real money maker for the plaintiff's attorneys and it's, it's something that, um you know, that, that companies really need to think about. So just some, some examples, um

Speaker 0:
one is um biometrics and so many employees when they come into work, it might be a retinal scan. Um And so does the employee know that, um you know what in terms, what is happening in terms of that information? Um You know, that's a lot more in depth information information you might not want to provide versus credit card information.

Speaker 0:
Um And so there's statutory damages associated with a violation of, in this case, it's called the Biometric Information Privacy Act. There's penalties of, it could be $500 per person, $1000 per person, $1500 per person, depending on how egregious it is and specific to this law. It's called a, uh it's every time. So if you have an employee who came to work for a year and they took a retinal scan

Speaker 0:
and either you weren't aware of it or you were aware of it, but they weren't securing it properly. Um You know, you didn't consent to it. Um, the damages could be astronomical. And so there's, there's biometrics, there's also um, the video Privacy Protection Act, which is essentially you're on a website and you're viewing a video and the company knows you're viewing that video and is that um a violation of the video Privacy Protection Act? Um

Speaker 0:
Additionally, we have what's called session, replay claims, which is what it sounds like. It's um the company has a replay of your session on the website. So you pick company A and you clicked ABC and D, they know that you clicked ABC and D and is that a violation of the law? Um

Speaker 0:
And, you know, it's not necessarily nefarious. Um It, it really is because they want to drive their marketing. So they want to know if you go on a website, what are you looking for? So, you know, if, if you're looking for shoes or, you know, um sporting equipment or, or this or that, um now they can target ads for you and that's really what it, what it comes down to. But the main thing we're seeing now is what we would call meta pixels. And so that is where essentially

Speaker 0:
the third party website is hooked up with Facebook or which is owned by meta. And so you're on a third party website and you're looking at ABC D and E that gets filtered to Facebook. And then when you're on Facebook, Facebook is now targeting ads to you because they know you looked at that. So it all comes down to, did they tell you they were going to do this? How long do they keep this information? And is it a violation of the law?

Speaker 0:
So that's something we really have to look at and ask questions about. So it's not just, um, are you going to get hacked? This has nothing to do with hackers, but this is, you know, are you aware of that? This is even an issue that's going on?

Speaker 0:
And plaintiff class action attorneys are chomping at the bit to bring lawsuits nationwide regarding these issues. So if you take large corporation X and they, they are actually taking your information and filtering it to Facebook or just using it for their own purposes and you're not aware of what they're doing or they're not safeguarding it properly. Um You know, that that's something that there could be lawsuits for

Speaker 0:
in terms of what's ahead for the cyber insurance market. What makes cyber a blessing and a curse if you will is it's always changing. So, if you think about other lines of insurance, whether it be directors and officers or property, um, or casualty, there aren't gonna be that many changes year over year. It'd be, you know, fairly, fairly static auto.

Speaker 0:
Um, but with cyber, it's completely different what we were thinking about in 2006 versus 2012 versus 2018, completely different. So, if you think of even just ransomware, um, you know, in 2016, no one ever heard of ransomware. And then in 2018, 1920 it's burgeoning and the original ransoms were $300 500 dollars. And now ransoms could be anywhere from, you know, 1 million to 5 million to 10 million. So it's always changing.

Speaker 0:
And then also the threat vector, how are they getting into the system is always changing? So we might say, you know, multi factor authentication for remote access is the most important thing. That's what you need. And then two years later,

Speaker 0:
now that's, that really has nothing to do with anything. Or your passwords need to be 18 characters long. And then we find out, well, really that doesn't make a difference or there's something called um a Pam tool, privileged access management. So who at a company has privileged accounts to do certain things and who doesn't. Um So maybe that's what we're focusing on, but that may change. And so it's just the cat and mouse game and the tactics are always changing. Um

Speaker 0:
in terms of what the threat actors are gonna do and, and then, you know, it's, it's responding and trying to get ahead of it. So in terms of what's to come,

Speaker 0:
we don't know in many senses. Um however, we do know, as I mentioned before that it's growing, it's, it's a product that is an absolute necessity

Speaker 0:
and the market penetration of how many companies have. Cyber insurance is still lower than you'd think. So, most large, large corporations of course have Cyber insurance, but a lot of middle market, smaller firms do not have Cyber insurance. And then we're looking at this worldwide. So Cyber insurance is much more prevalent in the United States than it is around the world. But there's certainly a need for it in, you know, the UK and France and Italy and Hong Kong and Singapore and wherever.

Speaker 0:
And so that that's kind of where we're going to see, see the growth now because of the growth. Um we've seen a lot of added competition into the market. So if I think back to 10 years ago, um this isn't an exact number off the top of my head, but, you know, maybe there, we would have had 8 to 10 competitors. Now we might have 30 competitors. And so we really have to differentiate ourselves from our competitors. And so what we discuss is we have the, the top on

Speaker 0:
the writers in the industry who are, you know, know what to ask. We have our 24 7 breach hotline to be there for you, um connections with the top vendors in the industry, whether it be law firms, forensic firms, um ransomware negotiators and we have a track record of paying claims and that, that's also an important thing there. The worst thing that could happen to an insured is they have a situation

Speaker 0:
and then the insurance company is trying to get out of paying a claim. That's not the case. Here, we are, we are looking to find you coverage in order to pay the claim. We're not looking to deny the claim. And when you work with our claims team, you know, you're gonna get

Speaker 0:
highly professional folks with years and years of experience, um, who are attorneys who have just a real understanding of this. And so in terms of what's to come, I think, you know, we, I think we're going to see the growth. Um, we're going to see different ways that, that the Attackers are, are coming

Speaker 0:
different types of lawsuits, different types of laws, um, that we're seeing whether it's, you know, in the US, specifically, whether it's state specific federal, um or it's international. Um, but it's a very dynamic, very interesting space to be in that that's always changing.

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Speaker 0:
the reinsurers and primary insurers are back from their annual jamboree in Monte Carlo. So what was the mood music like? What might it mean for contract renewals and the price of insurance in 2024? Well, to discuss that, I'm joined now by Abbi Hussein. He is equity research analyst at El Gordon Abbott. Thanks so much for joining us. Uh, in a nutshell, when it comes to contract negotiations between the reinsurers and insurers at the moment, to which side of the fence would you rather be on?

Speaker 1:
That's a good question. So I would say the mood music turned really last year in favour of the reinsurers. And the big question out there, which you've just postulated is is how long is that going to continue in favour of the reinsurers and the mood music suggests? Actually, it will continue to be in the favour of the reinsurers for the upcoming contract renewal on the first of January. And my view is, actually, it's gonna be in that favour for a number of years.

Speaker 1:
Why is that? So there's a number of reasons. Um, so the obvious reasons are climate change, uh, inflation. So let's take the the first one of those The climate change, for example. That's led to increased frequency and severity of natural catastrophes around the world. So, for example, hurricanes, uh, wildfires, uh, floods

Speaker 1:
and the insurers then have to pick up the costs. So the insured losses have amounted to hundreds of billions in the last five years. So each year for the last 5 to 6 years, the costs have tallied up 100 billion or so, uh, for each of those 5 to 6 years,

Speaker 1:
Um, and that average cost over the last five years is almost double what we've seen in the previous 20 to 30 year period. So there's been a massive ratchet ratchet up in, uh, in the costs of the industry is seeing. And so that's led to a number of reinsurers were just frankly decided. We can't price this risk and just exiting the market. So the supply side of, uh, the market has shrunk,

Speaker 1:
and those capital providers that provide the capital to the reinsurers or to this market have also suffered losses and have decided Well, actually, you know, we're not earning the returns that we had hoped for.

Speaker 1:
And so the capital hasn't replenished at the same rate you may have would have expected. But does that

Speaker 0:
then have a knock on effect on other parts of the insurance market? Do do Or does it just mean it's gonna be a tough time if you want to get cover for for climate change?

Speaker 1:
So I think the answer is both. It's gonna be a tough time if you want to get cover for these disasters. But

Speaker 1:
But at at the end of the day, you need to buy cover for these two things are gonna happen. So as a primary insurer, you're gonna face higher costs. Or if you're if you can't absorb those higher costs, you're gonna be looking at other ways in terms of managing, uh, the cover. And that might be that you buy less cover. So you might be taking a higher emission loss. So you might take a higher amount of the first part of the lost before the reinsurer steps in

Speaker 1:
and we're seeing limits or attachment points of these contracts increase, and we're seeing the prices of those contracts increase. And it may well be that the end customer, the end, uh, client so the owner. The owner of this building, um, may end up paying more for his cost of cover to the primary insurer. The prime insurer is paying more to the insurer, so there is a knock on effect here.

Speaker 0:
And you mentioned inflation was the other big big topic.

Speaker 1:
Yeah. So

Speaker 1:
I mentioned hurricanes and floods. And after those devastating disasters, we have to pick up and, uh, repair the buildings, repair the roads, repair the infrastructure, and there's a cost to that. And the cost has increased be just just because of inflation. Um, so supply chains haven't quite got back to normal Post pandemic. So the time to repair has elongated,

Speaker 1:
um, the costs have risen. Um, and so therefore, that needs to be picked up somewhere. And that is has to be reflected in the price as well.

Speaker 0:
And in the round, is there more capital coming into the reinsurance market at the moment or less.

Speaker 1:
So there is more capital coming in. Um, but not to the extent that, um that is required. So we estimate that around $100 billion of additional capital needs to come into the market to meet the demand for coverage. And the demand for coverage has increased for the very reasons why the capital has shrunk because of the increased frequency of of storms because of climate change. Um, so far this year, the estimates are that,

Speaker 1:
uh so far over the last 12 months, the estimates are only about 5 to 10 billion. Let's say $10 billion of capital has come into the market, and that's a big shortfall versus the 100 billion that needs to come in.

Speaker 0:
So who's normally the provider of these five or 10 billions? And do they just not have as much money now? Are they looking to get a return on that money by investing

Speaker 1:
somewhere else? So So this is a great question. So the providers vary from, uh, your traditional big reinsurers, uh, to your hedge funds, uh, to your pension funds. And the pension funds and hedge funds have come in in the form of what we call alternative capital.

Speaker 1:
And what's happening is that alternative capital hasn't replenished to the same extent as as we would we would have hoped, because they've suffered those losses recently. But also something else has happened. Interest rates have risen recently so bond yields are higher. Um, and so those pension funds can now make an easier return. But just through the traditional fixed income, um, asset markets just buying corporate bonds, for example

Speaker 1:
they're not having to hunt for yield as we had as they had to in in the low bond yield environment. And so the hurdle rate of money coming into the reinsurance market has increased. Um, and so, um, you're not seeing capital flowing back to at the same pace as we had in the past and to correct that. But what do you need? Well, the market needs to demonstrate the reinsurance market needs to demonstrate

Speaker 1:
it can generate higher ROES than it has in the past. Well, how is that going to happen? Well, you need to push up your pricing, or you need to adjust your contract terms to earn a better ROE. And if you can demonstrate that consistently, then you will attract capital into the market.

Speaker 0:
We've talked about the market in general, and we've had a a bit of a look at what's going on in if I call it climate risk. But are there any risks out there where actually as a reinsurer, You said this is getting an easier market. I can offer better terms for 2024 than than I've been able to in the past. So

Speaker 1:
So look, the the the is always nuanced. Uh, if I look at it in aggregate directly, they need to push up pricing and the contract terms need to be tighter.

Speaker 1:
But there are markets where the pricing is coming off. Um, the contract terms can be relaxed. So, for example, the directors and officers, uh, insurance that that product, the pricing is coming off. That's probably gone slightly too far. But that doesn't mean to say the reinsurers cannot make money. Um, the pricing is still adequate, but it doesn't need to keep.

Speaker 1:
It doesn't need to adjust upwards as it does, for example, in the catastrophe lines or property catastrophe lines where we're seeing 2030 50% price increases in the directors and officers, uh, product line you're seeing probably 5 10% fall in pricing.

Speaker 0:
Final question. You were saying a little earlier. The market needs $100 billion of capital, and it's got, let's say, 10 has turned up the sake of argument. How long is that supply demand likely to last

Speaker 1:
so simplistically. If at that current run rate, if we only gonna see 10 billion of capital coming into the market annually, it's gonna take another nine years at the current run rate.

Speaker 1:
Um, for the market to correct itself, for for it to reach the equilibrium that it needs to. So that means the reinsurers are gonna see those favourable conditions for a number of years. Now, will it really last nine years or so from this point onwards? Probably not. I suspect the pace of cattle coming in is going to pick up. As the reinsurers demonstrate

Speaker 1:
20% RES. 25% RE consistently. And if you see that, then I suspect the pace of capital coming in is gonna double. Um, and so I, I would guess

Speaker 1:
2 to 5 years, um, we will see these variable conditions last for for the reinsurers.

Speaker 0:
But what if someone said to you, That's all very well, Abbott. But that, uh, the amount of insurance that's needed will go up as well. You yourself said, uh so So if you put a sort of compounding figure on the rising demand for insurance. How much longer would that take for the two to

Speaker 1:
meet? So that's right. So I have assumed the demand for coverage is gonna stay static. And that's not it's gonna increase because of climate change because of inflation.

Speaker 1:
So, look, this is a crystal ball kind of question. And it may well be that this cycle lasts 10 years. The previous cycle, Um, or some of you know, of pricing prices increasing, Uh, that we had, uh, probably did last for 5 to 7 years,

Speaker 1:
so I'm probably gonna go with that sort of time frame. Uh um, just because, you know, suddenly there's a snowball effect of when capital starts to come in in a meaningful way. It comes in in in a really meaningful way. So I would still probably say sort of 5 to 7 years. Realistically,

Speaker 0:
we have to live with That is saying thank you for joining us. Thank you.

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Speaker 0:
joining me here in the studio, we have Pierce Williams, global insurance sales manager at Auto, and we have Jenna Hilton Group head of finance operations at Clear Group. Well, welcome to you both, Piers. I'm gonna start with you. Auto. Give us a sense of what it's about. And and what do you do there? Yeah. Auto is a finance operations automation platform. It's used by organisations across the global financial services and insurance industry.

Speaker 0:
There's a variety of different use cases for the platform from finance operations, automation, reconciliations, credit control, IB, a financial data management, Uh, and the the platform helps firms reduce costs, uh, improve controls and increase capacity. My role at auto is to work with clients to understand their processes, data and systems and then advise them on how auto can be deployed to their business. Uh, in order to drive optimisation and automation

Speaker 0:
and Jenna give us a sense of your role at Clear Group and And how does it fit in with auto?

Speaker 1:
So I joined clear back in 2020 brought in to oversee the client money operations. Um, across the whole group, I first met Piers and auto back in 2020 Piers kindly shared a demo with us, but at the time, we were going the very infancy of, um, changing our broken platform.

Speaker 1:
So we decided at that point to put that on hold, we have now successfully moved our broken platforms and now have started conversations with peers and also in how they can help us automate our back office processes

Speaker 0:
and staying with automation. The big topic of the day. Where do you think in the back and middle offices could use the most or the biggest scope for automation.

Speaker 0:
So I think that does depend. Obviously, on what type of, uh, insurance organisation you are the the size and scale of the organisation. Um, and I think it's fair to to say, over the the last number of years, there's there's been investment more on the the front office revenue generating customer acquisition platforms. Uh, and the back and middle office has has been a little bit overlooked. Uh, it's a cost centre rather than a a generating area. Um, but that's certainly changing. Um, and if we you know, we look at an organisation like clear and insurance broke,

Speaker 0:
uh, firm. Then really, the the greatest scope I see would be within the insurance broker accounting, finance, ops, credit control spaces and specifically within things like the the bank reconciliations, cash posting, allocation and ensure a statement. Reconciliation processes where going from a a manual world to an automated world, you you can easily achieve, uh, efficiency savings of upwards of 75%. Uh, on those processes,

Speaker 0:
even more so, if you're a A broker similar to to clear, it's a very acquisitive business, as many other brokers are in the market, uh, both growing organically and through acquisitions. Part of that is to build economies of scale and, uh, and and build, uh, more of a digitalized operating model. Uh, and a platform like auto can can really enable firms to achieve those objectives.

Speaker 0:
General, do you think that's fair? What? Piers has said that a lot of these back in the losses, they've been overlooked when it comes to automation.

Speaker 1:
Absolutely. We've We've spent a lot of money investing in our front end operations in terms of moving our broken platform and putting our whole group onto one platform in order to get the M I

Speaker 1:
and, um, the operations that we require to grow our business. We're now looking to invest in our back office, um, in order to maximise our outputs so we can redistribute our resources to help, um, improve our revenue in other areas.

Speaker 0:
And efficiency is obviously the key. But what does automation look like when we're looking at this process? From your perspective, what do you think?

Speaker 0:
It's a big change. I think that that's probably the the quickest and easiest way to summarise it. Uh, it's a change in in the way you operate from your employees to management and to the business as a whole. Um, it's always good to look at some examples. You know, Let's look at what the, uh, the car industry looked like in manufacturing,

Speaker 0:
but say, 40 50 years ago, you know, very, very labour intensive. Now, if you if you look at any plant, there's there's a lot more robotics there still skilled people, but but a lot of robotics driving that, um I think a great example I like to use as well is is think of the telephone exchange. Back in the 19 forties and fifties, you had people plugging in and and connecting calls, you know, now we we dial a number on our mobile device, and and we don't even think about, you know, the fact that that's automatically connecting us globally with with, uh, other people.

Speaker 0:
Um, but, you know, maybe let's look at, um, you know, more of a an example close to home with with a, you know, a reconciliation process, for example. Um, I guess at a high level that looks like one process. But there's actually lots of of small sub processes that enable a firm to complete that process. So for a reconciliation that could be the, uh, sourcing of data the transforming of that data matching of data,

Speaker 0:
uh, then investigating of any items that don't match and then finally, uh, generating reporting. So there's a lot of of of actual manual subs steps within that if we then compare that to, uh, an automated world where, uh, a staff member is not coming in in the morning and and doing all of those preparation processes, but rather you've optimised your process to perform overnight or in the early hours of the morning. That staff member is now coming in,

Speaker 0:
and they're skipping ahead four or so steps, and they're focusing just on that investigation just on that. Well, what actually do I need to do to To resolve the the non conforming items

Speaker 0:
automation can actually supplement that could automatically assign work to individuals within your team. So again, you're clearly segmenting workloads, Um, or even suggesting with intelligent automation. You know, what do you need to do to resolve, um, that item? And then there's various other things, like workflow so moving away from sending endless emails, chasing endless emails to connecting processes via via workflow.

Speaker 0:
Um and and really? Yeah, it's it's that wholesale change in in the way that you work, and and and that's a cultural change. I think you know, we we've talked about that. It's, uh, a AAA real shift in in how the business operates today versus how it's going to operate in the future. General, with all that in mind, it sounds so streamlined,

Speaker 0:
but there must be a lot of cost savings as well

Speaker 1:
going into this No, absolutely. And I think with tools like auto, it allows firms to think about restructuring and redistributing heads into other areas in the department where they can actually look to build revenue. Um, we are clear.

Speaker 1:
Don't like to, you know, get rid of people. So we do like to, um, redeploy people into other areas such as claims HR, our other back office, Um, cost centres, as it were. Um, what I really like about the auto tool is that, you know, my team can come in in the morning. They can look at what's been reconciled overnight and then focus on the key, the key elements that need need addressing.

Speaker 1:
And in that, you know, you get points on commission rates where we could look at the commission rate differences that's built into the system, go back to the business and say, Well, part of our business is only 25%. But actually another part of the business is only 30. And then try and marry up what the differences are and then look to improve our revenue from that perspective.

Speaker 0:
And if I could, you can add to that. I think that's a really good point. There is. I think people look at automation with a bit of fear in terms of oh, we're going to remove heads. But actually, I think that's very, very rarely the case. What? What? We actually consider it more as is again using those people in different ways for value add. It's a very competitive marketplace. Skilled staff are at an all time shortage, Um, and especially

Speaker 0:
those within financial services. You know, finding that skill set is hard, so people really want to hold on to their talent and actually moving manual tasks away from these skilled people. It increases employee satisfaction. It helps you better motivate them and actually retain your your skilled staff, which really are, you know, the the the lifeblood of any organisation and the driving force behind its success.

Speaker 0:
So piers, when we look at things like credit control and age debt, how can automation help with those two issues in the industry?

Speaker 0:
I think to start off, it's It's definitely a AAA huge challenge within the market, whether that's from a broking, an MG a or an insurance perspective. Um, I know of many organisations that either are perhaps not collecting all of the the money that they're owed. They they're not able to. They they don't know that they're not, You know, a lack of knowledge is a lack of ability to do something about, uh, an issue,

Speaker 0:
um, or they're sitting on a lot of unallocated cash and again that they don't know where that cash has come from, or or what that cash is for. So you have these these big stacks of, um, you know, uh, money that that you can't do anything with. Um, But how can you You know, how can you perhaps overcome those challenges? Um, so I think it starts by having all of your, uh, information, uh, and data both internal from your policy admin. Uh, ER PS. General Ledger platforms consolidated into a single solution.

Speaker 0:
You have all of your external data whether that's banking, data, statements, Remittances, Um, in the insurance industry, it comes in all shapes and sizes. So but essentially having a centralised platform to consolidate all that information conform all of that information but then also manage that information, so provide some filtering and some account structures. So you're not looking at, say, a million transactions, but you're looking at smaller sets of of 10,000 transactions.

Speaker 0:
Uh, and then if you can have automated processes to remove manual work, you're gonna free up your staff time to be able to investigate the items that that don't conform automatically. Those insights that you're delivering to the business in real time, um, are also going to enable those staff to to more effectively work, um, and ultimately help you reduce your unallocated cash. And also any age debt that you you might be, uh, you might be holding on your books.

Speaker 0:
Jane does a lot of that ring true for you and clear

Speaker 1:
Group as well. Yeah, absolutely. With the growth that we've recently had, we've seen an increase in volume which in town has given us an increase in cash increase in transactions. And with that comes with its own problems, particularly with moving on to a new system. Culturally, teams need to learn new processes change. And with that, we're finding definitely difficulties with, um, allocating money is so again, with the use of auto and tools like auto, we'd be looking to streamline that process

Speaker 1:
as well. Sure.

Speaker 0:
And another thing to add is is you know where you do see those issues that are repeating over and over again. Uh, in your process, having a an automated solution allows you to drive M I and reporting to give you that root cause assessment. So, actually, if it's a persistent data entry issue from from someone outside of the the back of middle office, maybe that's a broker or an underwriter. You can then actually drive educational. Um, you know results of that and look to improve things from from the base up essentially

Speaker 0:
and look, you'd have had to been living under a rock to ignore the A i news earlier on in the year. How do you see a I and machine learning affecting the back and middle offices? So I think there's a a certainly in in the industry at the moment there's a lot of hype around A I How much it's actually being utilised, I think has I think that genuine is use usage of a I in the industry. But how much is is a question I'm a little bit sceptical of, Um also caution, Um,

Speaker 0:
all of the the the insurance firms I work with around a I because they look at it and and come to us and say, How are you using a I, um uh you know, can we not have a I making these decisions. It's important to remember often what we do at auto is financial control solutions

Speaker 0:
and within a financial control process. There is a defined logic in which, you know, data conforms to or it doesn't uh and people think a I is is gonna, you know, actually overcome that A. I will make mistakes just like a human will make mistakes. You'll have human error. You'll have a I error.

Speaker 0:
So rather than a I replacing and making decisions for a process end to end, I actually see it supplementing, uh, what people are already doing within an organisation, providing suggestions, um, providing, you know, options for approval or rejection, for example, rather than actually removing and and making wholesale decisions. It's very much a supplementary capability rather than this capability, which will will solve everything in,

Speaker 0:
uh, in one go. So at auto, we're actually focused on machine learning and intelligent automation. So how can we supplement what users are doing? I like to think of it a bit like a you know, an F one car. How can we, you know, improve those sort of small, fractional elements of a user's day to day job by giving them more power at the click of a button

Speaker 0:
rather than necessarily trying to, you know, come for some big wholesale change. Um, but focus on, you know, using their skills and supplementing their skills with the best technology. Generally think supplementing is the key word there. It's not going to come and replace everything but help.

Speaker 1:
No, absolutely. I think we have to

Speaker 1:
Technology It allows people to make better and informed decisions, which will then help drive the business towards its initiatives and its strategy that it wants to achieve. I think, um, with a I technology there is a lot of hype about it, but it can actually help move businesses forward by giving it the tools giving it the the information that the business needs in a lot quicker, dynamic way

Speaker 0:
with all this in mind, and it's all very impressive technology. But the industry itself is perhaps quite slow to adopt new technology. Why do you think insurance in particular is pretty slow at this?

Speaker 0:
I think that, you know, certainly it's, uh, an industry. Perhaps that hasn't had some of the, uh, the the pressures that other industry have to to move forward with new regulations. Um uh, and ultimately, I think it's been a a very profitable and consistent revenue generating,

Speaker 0:
uh, industry for a number of years Now, um, and that's probably meant that, uh, businesses have sat on their laurels a little bit. Um, whereas now we're going into an economic climate that is a little bit less favourable. Uh, business fundamentals are in more and more scrutiny by investors, shareholders,

Speaker 0:
um, et cetera. Uh so focusing on, um, those kind of key foundational capabilities within a business is really coming up as actually. Now, we we need to move and and and modernise so that we can, uh we can ensure we're satisfying our stakeholders. And I think

Speaker 1:
for smaller brokers, um, size brokers, they haven't got the the appetite to want to invest in that sort of technology.

Speaker 1:
Um, or necessarily the expertise For as you get a medium large size brokers like clear, for instance, we've invested heavily in our front end. We're now looking to invest in our back end to help satisfy our P investors, um, but also support our teams and and move the business forward,

Speaker 0:
and it comes there as well. There is sort of a, you know, a I guess a barrier to entry because, you know, technology comes at a cost. And and for those smaller businesses, you're not

Speaker 0:
again. We're not talking about removing people from the process. We're talking about supplementing their job and making them them better. And for a smaller organisation where you're perhaps not going to get a bigger percentage increase or improvement to that, you know the appetite. The business case, just the numbers don't always always line up. Whereas as soon as you become that medium upward size business, it's a very different conversation. I think that's a really useful place to leave it. Piers Jenna, Thank you very much. Thank you very much. Thank you.

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Speaker 0:
Hello and welcome to this ensure TV Update. I'm your host Rory Palmer Making the headlines A CSA discontinued two products in the UK and Flood Appoint Bridget Rosewell as its new chair.

Speaker 0:
First up. Five insurance industry veterans have set up Mods, a new venture which automates insurance verification for property managers and for auto dealers.

Speaker 0:
CEO and co founder Frederick Wait, a veteran entrepreneur, has assembled a team with varied insurance industry experience to launch this latest venture. Now. Prior to forming motives, he established BC FA software platform, acquired by VER. Four in 2006, and Analytics platform Yodel, which was purchased by Duck Creek in 2016, both of which are in the insurance space.

Speaker 0:
Now four highly experienced insurance executives join him in the leadership team, each containing years of experience across several key areas of the industry.

Speaker 0:
Next up, AXA has decided to stop offering ACSA First and ACSA Residential let policies in the UK, both part of the insurer's retail intermediary home strategy. The decision relates to policies with a start or renewal date on or after September 1st 2023. Now, according to a CSA, the products will no longer be available to sell and will not show on its panel for broken partners, and similarly, renewal invites will not be offered.

Speaker 0:
Also making the news In this update, Aviva has announced it will buy Barclays UK home insurance portfolio Now. The acquisition, which comprises 350,000 customers, will support Aviva's ambitions to further grow its retail insurance business and will complete sometime in August. Now, Aviva has been a strategic partner of Barclays for 18 years, where it's underwritten and provided servicing and claims management for Barclays Home insurance customers.

Speaker 0:
And finally, Flood Re has appointed Bridget Roswell as non executive director and chair. Currently, Rosewell is the NED of audit and risk for the UK Infrastructure Bank and non executive director of Northumbrian Water. Now she has a wealth of experience across various industries, most recently in infrastructure, utilities, financial services and transport. She also served as the chief economic advisor to the Greater London Authority from 2002 to 2012.

Speaker 0:
Well, that's all we have time for on this update, but I'll see you here on insure TV next time

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Speaker 0:
well, captive insurance can come in a number of ways, but typically you would start with a relatively small, uh, cell cell company, for instance, which is a, uh, perhaps a cheaper and easier way to start out. You can use it to create a bastard sit behind the fronting company.

Speaker 0:
Uh, you could if you're large enough, look at, uh, a full insure a full, uh, company sitting as a reinsurer behind behind a fronting company or even there may be some ways where it may even be appropriate to have a standalone insurance company, uh, taking risk if you're perhaps looking at risks which may not just be in the UK market.

Speaker 0:
I think a lot of, uh, MGAS are concerned about capacity. Uh, they're seeing capacity less and less capacity providers who want to be involved in the business. Uh, they're seeing that some capacity providers, um uh, are have got lots of alternative ways of using their own capital. And always the concern for an MG A is, um, keeping keeping the capacity available to them.

Speaker 0:
And there's always a fear, I think for and MG A that the capacity provider could decide for reasons completely unconnected with their own business that maybe it's not a class that they want to keep supporting.

Speaker 0:
I. I think the, uh if you can start to build in, uh, use of your own capacity, I think you start to give a longevity to the relationship you have with a fronting company. So I think it sort of deepens those ties. I think for the fronting company, there are definite pluses as well, because clearly your MG a is actually taking part. It's got skin in the game, and that has to be good.

Speaker 0:
Well, the risks are you're participating in your, uh, your original risks. So if you have do have issues with, uh, you know, loss histories in a particular year, then you'll share that along with the fronting company. But those can always be mitigated

Speaker 0:
if you have a class of business where there could be, um, maybe few but large losses, then those your involvement in those would be capped in some way. So there's plenty of ways of structuring a reinsurance programme, which will mean that you have a manageable exposure.

Speaker 0:
Well, you won't be surprised to know that I'll say duty in Guernsey, but clearly other financial centres are available. Uh, Bermuda is an obvious one, and there's different ones around the world, you know, some which may have a driver for some people, but in Guernsey you would typically speak to an insurance manager, and there is a number of those who are licenced on the island.

Speaker 0:
The insurance manager can then basically take you through the whole process of feasibility. Try to work out how it works, Will it? Will it work the size that it needs to be, and crucially, the capital requirements that it will? It will lead you to Would it be a sell? Is that appropriate to be a sell or or would it be a standalone company? But its insurance manager will guide you through those things, and that's obviously what we can do for a client.

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Speaker 0:
It's important nowadays for us as a business, particularly, Crawford is involved in global risk management not only in the TPA front but in loss, adjusting and other specialty parts of the business as well

Speaker 0:
to utilise a combination of technology and people,

Speaker 0:
I think all too often we find ourselves at a time where technology is at the forefront of where it's been for a long time and it's seen as the Saviour of a lot of some of the issues that the industry has faced. I think we have to be conscious that we have to have the right people in place to use the correct technology to deliver the best outcomes for customers. So it's essential. But it needs to be paired with the correct people. And that's where Crawford likes to position itself of its customers and its clients.

Speaker 0:
I think it's a multitude of factors. There's a lot of focus on technology as being the Saviour for the claims industry in particular,

Speaker 0:
but what we need to focus on is making sure that the customer is always kept at the heart of what we do on a daily basis.

Speaker 0:
Efficiency and cost saving is obviously at the forefront of everyone's mind, particularly with large Corporates, self insured captives, et cetera.

Speaker 0:
And technology is a great aid in bringing down those particular costs. But we have to use it in an effective and in a safe manner, particularly for customers, and protecting perhaps vulnerable customers as well. So I think using technology in the correct way is probably a trend that is being focused on by a lot of a lot of our competitors as well as ourselves. So so that's That's probably the most prominent factor

Speaker 0:
partnership. It's It's the key word for us, particularly in Crawford TP A.

Speaker 0:
We don't we don't view our clients as clients. We view them as partners. We invest our time, our money, our resource and developing long term relationships with those clients. We want to treat their business as we do our own, making sure that we produce what they would like to produce for their own customer as well. So collaboration and partnership is probably the key message we'd like to deliver there.

Speaker 0:
Yeah, at Crawford, we're lucky enough to have the facilities and the resource to develop in house, so a lot of our technologies are in house built and owned, which is crucial for us. It allows us to maintain quality, improve

Speaker 0:
efficiency and provide consistency to the customer as well. So we are always open to collaborating, and we do collaborate with some external partners. But we pride ourselves in our ability to develop from in house and based on the relationships that we have with existing customers.

Speaker 0:
It's a It's a again, this go back to the word where I was talking about partnership. We're there to not hold in the hands of our customers because they're experienced clients. They understand what they need their risk portfolio. They understand what they need for that portfolio to perform. We're there just to make sure that we're guarding them

Speaker 0:
in the correct manner. So there's a multitude of ways in which we do that. We have fantastic on boarding and implementation teams. So from day one before an account goes live, we have several teams, particularly within TP, that will walk through a planned infrastructure of implementation with a client so that that client knows exactly what they're going to expect from the day of first claims,

Speaker 0:
driving down total cost of risk. I've had several meetings this morning already where it's the key point, the key focus area for a lot of corporate clients in particular

Speaker 0:
driving down the total cost of risk. But getting to understand exactly what the drivers are behind those particular factors is what is important for us as a claims business and risk management function if you like. So we need to make sure that we understand the needs of those particular clients and those customers and then utilise the systems and the technology and the people that Crawford as a business, have globally to assist in driving down that total cost of risk.

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Speaker 0:
well going through the experiences we are at the moment. We were required back in October 21 by Pen Underwriting Limited and it's been an interesting journey. Firstly, when we went through that process of talking to different people, my one bit of advice to people is, make sure you get acquired by somebody that you like dealing with people that you get on with. They're really, really friendly guys, very easy to talk to, and from that point of view, the integration has been a very smooth and easy process.

Speaker 0:
It would be naive to say you don't get pinch points because you will do They're a much bigger company and we are a much smaller company and so during the integration process, you're going to get those points. But the support you get with a larger company and the support that we get within Penn is great. Be that on the risk and governance, the whole compliance side be that just within the IT world as well. So from that point of view, overall, I would say it's been really good and the guys are a great group of people,

Speaker 0:
so if I take them one at a time. The cash market, The area that we play in is quite a niche area. We have more limited distribution, but we have a team that really know what they're doing. Led by Pat Wood and Anthony Broom, they know their subject inside out. They work closely with their brokers, and it means that they can focus on writing the right risks and building their relationships with their brokers that they need to service, get to know the client, get to know the customer at the end and make sure that we write the right business for the right price.

Speaker 0:
So on the UK P I, the marketplace is slightly different. It hardened an awful lot, and it started to not be so hard. Service is still a key factor. Brokers have been very frustrated by the lack of service, particularly by some of the larger insurers out there. And we find that mum it's the fact that we pick up the phone. We talk directly to brokers that enables us to win business.

Speaker 0:
It also means that we're able to look at those risks that perhaps other insurers are quite quick to not be so keen to look at, whereas at mum we have the expertise, the background and the knowledge to be able to look at those. And we also make sure that our cover is always expanding and growing as we start to move forward. And so that's one of the things that we're constantly looking at as we get into this next stage of the market.

Speaker 0:
I think the biggest challenge right now is probably coming from the risk and governance, the compliance we're having to do a lot more work as ms on consumer duty and on risk management and on fair value. That all takes time. And that also means as well as taking time. It's going to take more money. And so for Ms Right now, as we're moving into a different cycle within the market, you've got to make sure that you're still charging the right price.

Speaker 0:
You've got to make sure your product is fit for what the client needs, but that you're getting the right price so that you can make an underwriting profit which will keep your carriers happy. And juggling those three things is quite a tough ask for MGAS. It's very easy just to focus on one of those, and if you forget one of them, then you're going to end up in trouble

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Speaker 0:
Hello and welcome to this ensure TV News update. I'm your host Rory Palmer. Now, in this update, Zan Insurance published China's first white paper on Generative A I and Lloyds. This is the Net zero insurance alliance, but first up international insurance broker Haen has launched its telematics Data services right here in the UK.

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The product called How and Drive utilises over a decade's worth of driving and claims data from Europe, as well as data from in in the UK to optimise insurer loss ratios and reduce risk in insurer portfolios. So it involves a beacon being installed in the vehicle which sends intervention communications to improve driving behaviour. And every policy holder,

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regardless of age or driving experience, receives a driving behaviour score based on the data collected. Now, this score enables policyholders to reduce their premiums at renewal, making insurance more affordable for a wider range of customers.

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How and drive comes to the UK after a successful rollout in Europe, where it's been used by more than 250,000 policyholders since 2018.

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Next up, Zong, an Insurance and Zan technology have released China's first ever white paper on generative artificial intelligence technology, which is predicted to emerge as an essential strategic asset for insurance companies in the future. Now this white paper provides an in depth analysis of more than 30 specific areas

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where a IGC technology could be implemented in the insurance field, including product design, actual science, marketing operations and customer service. Additionally, the technology has the potential to optimise daily operations and improve research and development efficiency for insurance companies across the board.

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The document also highlighted obstacles faced by the industry in utilising technology, such as copyright hurdles, difficulties in adapting insurance data for model training and risks over customer data confidentiality.

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And finally, Lloyd's announced its resignation as a member organisation from the Net zero insurance alliance with immediate effect, making it the 10th major insurance and reinsurance player to offer its resignation. Lloyd said that despite this, it will continue to support the UN S Principles for sustainable insurance

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and sustainable development goals, adding it remains committed to delivering its sustainability strategy, including supporting the global economy's transition now. Prior to this, Lloyd's chief executive John Neil did urge the Climate alliance for insurers to make its membership rules less prescriptive or risk the whole thing falling apart.

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Well, thank you very much for watching. We'll see you right here on TV next time.