The Sun Never Sets

In the latest episode of the Voice of Insurance podcast featured market leader Hugh Sturgess, CEO of Arch Insurance International, who leads an ambitious and fast-growing company that blends technology and human touch with expertise.

Arch Insurance International has been ‘really quick to triage and really clear about our appetite,’ providing the foundations for success in rising hard market conditions, says CEO Hugh Sturgess.

Host Mark Geoghegan asked Sturgess how he would like a broker to describe Arch International.

Sturgess said: “We try to be passionate about analysis, but also really quick to triage and really clear about our appetite.

“So that’s the thing that we probably changed the most five years ago, when the hard market sort of started to roar up.

“It was (that) if you’re not defining your appetites and living by them, then you’re doing disservice to the system and the efficiency of the role.”

Outlining Arch International’s profile, Sturgess said it was a $2bn premium business covering everything non-North American.

It has 12 offices around the world, adding Paris and Madrid last year, in what is a ‘fun challenge’.

In Europe, it offers cyber and is expanding in casualty lines. The UK regional presence is a ‘commercial combined, primarily property offering.’

London market peaking

Sturgess said Arch International emerging as a player in the London market was a highlight of his 19-year career at Arch, which involved working his way up from an underwriting vice president in Canada.

“So, I think one of the anecdotes when I first arrived was there was some question as to whether arch had a syndicate in the London market. I think we’re happy that we’ve changed that narrative. It’s a real turnaround,” he said.

Taking leadership positions was at the heart of its London market success.

“I would say right now, the classes that we’ve done leadership positions in, have a special aura to them within our business.

“Because we weren’t leadership focused for many, many years in the history of this London market business, and having established leadership and casualty contingency, terrorism, healthcare, A&H – having bona fide leadership now that’s a totally different relevance and presence,” he explained.

Geoghegan asked about deal flow into the London Market, which had hotted up in recent years. Was it peaking?

Sturgess opined: “Honestly, when you build it into that intellectual capital the London market possesses, we’re still very much in control of our own destiny in the sense of what that means for premium volumes and what that means for the reputation of London market”.

“The collective underwriting capabilities here are still hugely impressive in the sense of maintaining relevance, and it’s just really up to us. Can we be efficient? Can we be responsive as a group, as a community of underwriters?”

The Casualty debate

Geoghegan said Arch was one of the real experts on casualty.

Speaking in the context of claims issues in North American casualty, Geoghegan asked where Arch International stood on the ‘debate’ about casualty.

Sturgess pointed out that the London market operation was international and ‘non-US casualty.’

He explained: “We have grown that international casualty component from low double-digit millions to almost 10-fold or whatever.

“It’s a big growth factor. We like that class of business. We believe the rates have held up pretty well. We think the pricing discipline is still there. We think the trend is measurable and understandable, and therefore that’s a great class for us.”

Sturgess said the regional market operation was in great shape and under the right market conditions, it would ‘will absolutely grow more.’

It added good diversification to the portfolio, and he explained: “It’s a little more predictable, it’s a little bit flatter, and the rate changes are correspondingly, not quite so dramatic.”

Technology benefits

Geoghegan highlighted triage and automaton as two big technological advantages.

He described triage as a something which can prioritise multiple submissions, putting forward the ones which match the appetite of an insurer.

Geoghegan said this was very different from the old days of the London market where underwriters and brokers would jostle each other, and it was done on a first-come-first-serve basis.

Sturgess agreed that there was opportunity in triage.

“Triaging is a form of low hanging fruit efficiency that we should have probably all been doing 15 years ago,” Sturgess said.

“Truthfully, that efficiency is late coming, but it didn’t need artificial intelligence to fuel it. It’s just more our eyes have been open to sort of the responsibility to remain as efficient as possible.”

Asked about automation, Sturgess said: “It’s similar to how we think about things like AI and that form of kind of technology.

“We want to stay current on it, there’s pieces where we think we can participate, but we’re selective, and the promise of the technology is not a guarantee of success. It’s something that still needs to be tested.”