Earlier this year, Alta Signa published a review into how ongoing shifts in the legal and regulatory landscape are underpinning the risks corporate leaders face. In a recent interview with Insurance Business, Maximillian Moll (pictured), branch manager, DACH, for the independent MGA touched on some of the trends in capacity, pricing and claims that are reshaping the financial lines market – and the key challenge facing the space today.
The question all MGAs in the FL insurance market need to ask themselves is how to stay meaningful, Moll said. For instance, Alta Signa was meaningful in a hard market that was short of capacity, but now there’s plentiful capacity. So, the question is how to ensure that participants come to the business when they don’t have to – and the answer lies in delivering exceptional service.
Alta Signa has tried to differentiate itself by working across multiple product lines and not remaining a mono-liner. "This will take time because starting a new product line requires a significant upfront investment as you need to hire the right expertise in order to be able to write that specific line of business successfully,” Moll said.
“So, for our existing lines the focus has been on creating critical mass and profitable portfolios,” he said. “We will grow where it's interesting and what we’re looking at right now is niche business but also complex business where we can demonstrate our technical capabilities to support the clients and the brokers where they are having trouble finding the right partner to place risk.
“We also place the plain ‘vanilla’ risk but, right now, depending on the market, you might have 20 to 30 carriers competing for that business. We’re happy to write it, but not at just any price because we want to have a healthy book. And a healthy book is about managing capacity, managing the premiums, and maintaining focus on the technical underwriting.”
The insurance industry tends to have a short memory. There was a reason for the hard market conditions that emerged, Moll said, and that came down to prior year claims under-reserving. “Now the market is softening again, we don’t want to jump into making the same mistakes of the past. "
Reducing premiums and increasing limits is all well and good if underwriters believe in the risk they’re writing, he said, but there has been a trend away from doing the right due diligence. “I often see that our competitors are asking for less information and our clients tell us we’re the only ones asking for certain information, which is a bit worrying.
“I believe, we can literally insure everything, if we do understand the risk. But if we don’t understand the risk, then we’re operating in the dark. And that’s a real challenge that I see right now. Because there’s pressure from the capital saying, ‘you have to grow’ but if that’s not backed by understanding the risk, then you’re not growing in a very intelligent way.”
Now five years into its journey of serving the European specialty insurance market, Alta Signa is entering its ‘scale-up’ phase, Moll said, which gives the team a slightly different view of what’s happening in the market. “We realise that the market is softening and we do not want to grow at just any expense,” he said. “We want to grow in a sustainable way that is healthy for us, our brokers, our clients and our risk carriers.
“Because in the end, if we grow too aggressively and have to remediate our book after one or two years, it doesn’t help our clients and our risk carriers will not be happy because they trusted us with the underwriting pen, and we need to deliver on that trust.” As a result, he said, the approach that makes the most sense in today’s soft market conditions for FL is for us (Alta Signa) to diversify our (its) product portfolio".
“One of the other areas we looked at was the W&I business over the past three years. We had a business plan, identified an underwriting team and we were finalising the insurance capacity placement. However, with a sudden increase in the market interest rates, the M&A deal flow dried up, so we decided that it was not the right time but it’s something we still may be looking at in the future. Because it’s often about timing."
