An aviation MGA startup story

Bruce Carman is the founder and chief underwriter of Hive Underwriters, the MGA he set up in 2017 and can rightly claim to be “an underwriting led business”.

Now in its eighth underwriting year, Hive Underwriting is “larger than was planned”, its founder and chief underwriting officer told the Voice of Insurance podcast. Aviation war maverick Bruce Carman created the specialist managing general agent (MGA) in 2017 and has risen to a book including multiple lines of aviation business together representing $125-130m gross written premium.

If you’ve ever felt daunted at the web of jargon, not just within insurance, but within aviation insurance business, check out this episode. Carman employs what he calls “the mother-in-law test” to determine whether it can be explained to a lay person when asked ‘what one does’ over the dinner table.

Together with host Mark Geoghegan, Carman carefully takes the listener through the evolution of the market – including the ‘AVN 52’ cover that arose following the 9/11 attacks – all the way up to the Russia-Ukraine war and the tangle of aviation hull war risk lawsuits between aircraft lessors and insurers since Russia confiscated dozens of airliners on the ground.

A leading aviation and war underwriter since the late 1980s, with more than 30 years’ experience at the heart of the Lloyd’s market, Carman has successfully expanded Hive, beyond its core war risk origins, and to employ 15 people, 11 of them full time, nine of whom are underwriters or traders.

Carman thinks the phrase “an underwriting led business” is “probably overused” in the market but, based on its headcount alone, is a fair comment in Hive’s case. This is not just about the headcount but also his own ethos as the boss.

“That’s part of the reason why I call myself the chief underwriting officer,” Carman said. “Because Founder, CEO, president, whatever you want to call yourself, at the end of the day, it’s just a title. I’m here to do a job which is trade on behalf of the capacity, and I have a handle on every risk that goes through the books.”

Carman learned his trade as a war underwriter at Atrium Underwriters. However, this level of underwriting risk ownership is “much higher” than what he experienced in his previous salaried roles as an underwriter within a traditional balance sheet insurer, he observed.

Smart use of technology is part of the arithmetic, Carman emphasised, with a low headcount and a high proportion of underwriters, meaning a sizeable investment in technology has also been a priority.

“We are efficient, and we have to use systems in order to sift and file. And I think systems is what does the heavy lifting, really,” Carman said, noting that predictive foresight is more than “cunning marketing words”.

He recalled a cartoon of a CEO going into the modelling department, after a hurricane, and telling the analysts they’re all fired, before adding: “they didn’t see that coming, either!”

Carman said: “Hindsight is a beautiful thing, and we as insurers use predictive technology to try and forecast and foretell. What does that look like from a malicious damage, war risk perspective?

“We partner with a bouquet of very clever people, the intelligence providers. We’ve done this for many years…and their job is to tell us not just what’s occurred and what’s happening around the world, but most importantly, to make predictions and forecast,” he added.

Turning foresight into insight was at the heart of Carman’s thinking when he founded Hive.

“Foresight is really what I’m interested in, which is foretelling what might happen next. That knowledge led underwriting philosophy is at the heart of Hive’s DNA, and that was the starting point when I wanted to set something up, creating the map of exposures, saying with some accuracy, what is on the ground at any one time at any one airport. Because that’s the thing that underwriters are concerned about.”

The tool is called Sentinel, and was developed specifically for Hive, combining the kind of satellite transponder data and plane spotting apps that people sometimes download, with the granular exposure information, to together form a real-time “up-to-the-minute” aviation intelligence tool, employed as an underwriting as well as exposure management aid.

“That’s real time, what’s happening here and now, but I’m interested in the forecasting, and that’s the human capital piece, which tries to distil down the politics, the movement of the troops on the ground, and the chitchat and the chatter on the waves, if you like,” Carman said.

He used the example of DHL flights to and from Baghdad in 2003, using intelligence of insurgents filmed “within the perimeter wire” of the airport.

“The assured was somewhat perturbed and surprised that we had this level of information at the time. We said ‘we think this risk is worth some more money’. Well, the market didn’t. We effectively walked away from the risk at the time, but six weeks later, the aircraft was shot down. That’s the definition of knowledge led underwriting – using the intel and acting on it,” Carman said.

He was cautious to give sweeping statements about whether the outlook, from a war risk or political violence perspective, has worsened in recent years, but conceded that “the world is more divided” than at any point since the end of the Cold War in 1990.

Asked about fears of a conflict between China and Taiwan, Carman revealed Hive has reduced its exposure to the area “by some 90% in the past year and a half”, but also suggested the market wasn’t pricing in risk appropriately around the globe.

“Undeniably there’s an increased risk; you have to say that,” he said. “But it disappoints me that I work in a market that’s not a spot market. There’s undeniably more risk in Lebanon and Israel today, and yet the market isn’t charging for that.”