Let AI transact, and let underwriters sell – CFC CEO

The latest Voice of Insurance podcast episode featured Andy Holmes, CEO of CFC Underwriting, cyber-focused MGA.

CFC has been through a period of change at the top, but also steady growth in its business. Its new CEO, Andy Holmes, was previously its chief underwriting officer, and is the latest guest to grace the Voice of Insurance podcast.

Last year, the MGA hit nearly $1.25bn in gross written premium. In 2024, CFC aims to underwrite $1.5bn on behalf of its capacity providers. He is keen to use technology to optimise performance as part of the company’s continued growth.

Holmes took some time during the episode to talk about how the MGA wants to use artificial intelligence (AI). The emphasis is on selling and freeing up underwriters to forge relationships.

“From our perspective, we’re using it to both improve the customer experience, but also to improve our underwriters working lives,” he said.

He’s not concerned with talk about replacing people, but rather freeing up time.

“We see it differently in that, we’re writing small business, and a lot of the business is in our appetite, sweet spot, there’s nothing particularly nuanced about that company that gives cause for concern.

With rating models for pricing calibrated centrally, such business becomes almost a no-brainer, he suggested.

“It’s not the most interesting thing that he’s going to do that day is underwrite that risk. If you can get the machines to do the no brainer stuff, you can take the people with brains and personalities and characters, to do the stuff that only humans can do,” he said.

“To me, first and foremost, that’s selling – to go and build relationships with your brokers, their customers, and our digital distribution partners, but it’s also the fun thing,” Holmes added.

The goal, he explained, is to get the machines to do the transacting, and humans to do the selling. He noted a quote from Howden Group CEO David Howden: ‘insurance is never bought, it’s sold’.

Data and AI can deliver new insights into hot prospects, business that is most timely, or vulnerabilities that customers and underwriters may not otherwise catch, he suggested.

“All the data that comes in teaches the machine to more accurately predict our chance of success. That makes us a much more efficient business, and is better for brokers and customers,” he added.

Lloyd’s syndicate turns two

CFC launched its Lloyd’s Syndicate 1988, nearly three years ago, in the summer of 2021, set up by Asta, and accessing a portfolio that was already 21 years old at the time, with a new capacity provider to access the portfolio.

“Really, it was a startup 21-year-old syndicate, and from that perspective, it was able to achieve the results it did in its first year,” Holmes said.

He explained the rationale for setting up a presence at Lloyd’s, and also why the syndicate has been a good fit for Lloyd’s.

“There’s an enormous universe of capital out there that isn’t in the London insurance market. That capital when it does touch the world of insurance tends to experience it through catastrophe exposures, so high volatility high risk, and our portfolio is very different,” Holmes said.

“It is low volatility, high predictability, and we felt that there was an appetite from that capital to access our portfolio. The problem is, is we didn’t have a vehicle through which they could access it,” he continued.

“That is the Lloyd’s Syndicate, it turns interested capital into usable insurance licenses. And Lloyds has the best licenses in the world. At the same time, Lloyds in 2021 was looking to dial down its own volatility profile, and at the same time, get access to a small business portfolio, which doesn’t often come to London,” Holmes added.

The syndicate is highly atypical at Lloyd’s, he emphasised. It does not have a box in the Underwriting Room and is only active “one day a year”, on 1 July, when CFC’s MGA binders renew, with no dedicated staff for the remainder of the year.

“It is a virtual syndicate,” he said. “Therefore, the only operational costs it has are essentially managing agency charges and Lloyd’s charges. Outside of that it has no cost and therefore it was able to achieve the results it did in year one.”

Part of that experience is due to the volume of data the MGA has accrued in more than two decades.

Holmes said: “We have a single source of the truth, which is obviously one of Lloyd’s ambitions through Blueprint Two, and therefore we’re able to not only interrogate that data easily, but demonstrate it to people like Lloyd’s to say, this will be profitable. And actually, from John Neale down, [Lloyd’s] got that really quickly, and we’re able to create a syndicate in record time.”