Gaining an edge in a tough market for political violence – Liberty Specialty Markets Q&A

An interview with Jennie Beard, Underwriting Manager for War and Terrorism, Liberty Specialty Markets, on how to navigate the challenging market conditions facing the political violence (PV) insurance business.

The PV market has had a lively five years. Do you think it’s mature or still changing fast? And how does LSM’s underwriting journey fit within the macro story?

The market is continuing to develop and mature.  I wouldn’t consider it to have fully matured yet, but it’s certainly grown in size, in terms of gross written premium, and product ability, since 9/11. Given the ever-changing geopolitical landscape our market must continue to evolve as the risk landscape changes. Liberty is a leading market in the political violence and terrorism (PVT) class, writing this class as a global product line, with underwriting representation in almost all continents. We consider ourselves to be experts in this field with more than 200 years of dedicated PV underwriting experience between us. Many of the team have been writing this class since 9/11 and have seen its evolution and large loss shocks. Being one of the early writers in this class, we have naturally evolved from offering predominately S&T business to now writing a global PVT portfolio, with this our appetite and product range have grown also. With a $250m maximum line size we are committed to this class long term and utilise our underwriting expertise from every corner of the global to get closer to our clients, better understand the risk landscape from a local perspective and utilise data provided by our security consultants sources to better price our risks.

The geopolitical risk environment is heightened for a variety of perils, from war risks to strikes, riots and civil commotion (SRCC). Amongst this, the PV market is soft. Given this challenging situation, what’s your approach?

There is certainly a lot going on in the world from a geopolitical risk perspective. However surplus capacity, and relatively benign loss activity in the market since 2022, is driving softer market conditions. At Liberty, we offer our clients underwriting experience and data we have collected by writing this class for this long. We harness the 200 years of experience our global team to better understand local dynamics and emerging risks. We look to partner with established well risk managed clients, that are looking for a long-term partner. Being a mutual, we are not beholden to short term shareholder targets, and are therefore able to offer a long-term view.

Last year was called a ‘Super Year of Elections’. At a market level, did claims events materialise, or if not for SRCC, where did claims come from?

Despite 2024 being a huge election year, we have not seen significant losses to date, but attritional losses are becoming more prevalent. There are losses arising from pretty much every corner of the globe, however loss levels have not been at a level that have impacted the entire market, keeping pressure on pricing.

What is the approach to exposure/portfolio management in particular; how are you slicing and dicing the book to avoid concentrations?

Exposure and portfolio management is at the heart of what we do: we use daily reporting to ensure we understand our exposures. From a portfolio perspective we regularly review accumulations to ensure we are not over-exposed in any one country, city, or blast zone, and consider this by our range of perils we offer. We use RDS and internal modelling to assist us in our view of these risks. We engage with security consultants to inform our view of risk, not just focusing on the here and now but are forward looking in our approach to a changing risk environment in territory.  Appetite, line-size and structure are regularly discussed and it’s vital that the team discuss risks at peer review daily to ensure consistency with the overlay of the risk environment.

This business line prizes expertise and judgment relative to data and analytics. Where do you think the balance/emphasis ought to lie; and is it changing?

Balance is the operative word. Many of our underwriting team have partnered with our clients for many years and understand their businesses and the risks they are facing – the importance of this expertise cannot be understated. However, data is also key, Liberty being an established leader in this class means we have a wealth of historical data that we tap into. We also use the wider Liberty Mutual Group to inform us of our risks and enable us to make better data driven decisions which include modelling loss scenarios and intel sharing from our very large property and casualty portfolios. Our mutuality is a unique advantage in that we can take a longer-term view on risks.  I think data is king and Liberty is fortunate to have a wealth of data that we use to our advantage. In a competitive marketplace, this does give us an edge.

Read our insight report for a deeper look at the trends, challenges, and data shaping today’s PVT underwriting landscape – Political Violence and Terrorism Report