{"id":6473,"date":"2024-01-31T08:35:00","date_gmt":"2024-01-31T08:35:00","guid":{"rendered":"httpss:\/\/www.advantagego.com\/?p=6473"},"modified":"2025-03-25T09:17:52","modified_gmt":"2025-03-25T09:17:52","slug":"new-podcast-with-adrian-cox-ceo-of-beazley","status":"publish","type":"post","link":"https:\/\/www.advantagego.com\/en-us\/content\/new-podcast-with-adrian-cox-ceo-of-beazley\/","title":{"rendered":"Complex risks and the E&amp;S boom"},"content":{"rendered":"\n<p><iframe title=\"Ep195 Adrian Cox: Beating Inertia\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);height:150px;\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?from=embed&amp;i=wb3cj-155a0a4-pb&amp;share=0&amp;download=1&amp;fonts=Tahoma&amp;skin=3267a3&amp;font-color=&amp;rtl=0&amp;logo_link=&amp;btn-skin=1b1b1b&amp;size=150\" loading=\"lazy\"><\/iframe><\/p>\n\n\n\n<p><strong>Adrian Cox, CEO of Beazley, featured on a recent episode of the Voice of Insurance podcast, and discussed the re\/insurer\u2019s new US E&amp;S carrier, amid a risk in complex risks.<\/strong><\/p>\n\n\n\n<p>London market re\/insurer Beazley has undergone a major restructure in the past year, with the formation of a new US excess and surplus lines (E&amp;S) insurance company, and Adrian Cox, the chief executive of Beazley, was a recent guest of the Voice of Insurance podcast.<\/p>\n\n\n\n<p>US E&amp;S business has enjoyed a \u201cmagnificent boom\u201d in recent years, primarily due to the market hardening, Mark Geoghegan noted to Cox, who said he expects the boom to continue for years to come.<\/p>\n\n\n\n<p>\u201cI think there are two reasons for that fundamentally,\u201d he said. One is the traditional reason, and then the other I think is a little bit more structural. When underwriting needs to change quickly for products, it&#8217;s very difficult to do that in the admitted market.\u201d<\/p>\n\n\n\n<p>The US system requires changes to gain regulatory approvals, which is a problem for risks that can be far from simple \u2013 and this is where Cox spies a trend.<\/p>\n\n\n\n<p>\u201cFundamentally, I think what&#8217;s happening is that certain sorts of risks are getting more complex, and they&#8217;re better dealt with in the E&amp;S market than they are in the [US] domestic market, because you have more freedom to adjust to that complexity as it emerges,\u201d he said.<\/p>\n\n\n\n<p>A buyer and seller of reinsurance, Beazley\u2019s balance sheet has grown steadily in recent years, creating efficiency gains from setting up a new E&amp;S carrier, according to Cox. This will entail a shifting of US risks previously underwritten on Lloyd\u2019s paper to its new Connecticut-based entity. If clients still want to go through Lloyd\u2019s, Beazley keeps its existing channels to do this through London, Miami and Singapore.<\/p>\n\n\n\n<p>\u201cWhat we will be doing over the next three to five years is shifting the business that was on the MGA onto our own E&amp;S paper,\u201d he said. \u201cIt has no impact at all on the way that we&#8217;re doing business or on where we&#8217;ll be doing business, on our distribution strategy, All that&#8217;s happening is we&#8217;re shifting business from an MGA to our own paper.<\/p>\n\n\n\n<p>\u201cOur commitment to the London market and wholesale markets here is completely unchanged. In fact, in many ways, it simplifies the story. Because if you want Beazley on Lloyd&#8217;s paper, you come to the wholesale markets, if you want Beasley on Beazley\u2019s paper, you access us in the US. It actually clarifies an ambiguity that we&#8217;ve had for a while,\u201d he said.<\/p>\n\n\n\n<p>Complexity of risks driving business from the US domestic market into E&amp;S is across the property and casualty spectrum, Cox suggested. \u201cProperty\u2026is more complicated; if it&#8217;s cat exposed, it&#8217;s not a static risk anymore. It&#8217;s more complicated. Casualty is also more complicated; social inflation has driven a variety of things that you need to think about.\u201d<\/p>\n\n\n\n<p>E&amp;S is better placed to respond to these risks in flux, he emphasised.<\/p>\n\n\n\n<p>\u201cThose are better dealt with in an E&amp;S market where carriers can react more quickly, and be more innovative and entrepreneurial in how they structure and sell insurance,\u201d he said. \u201cWhile that complexity continues to manifest and to increase, I think the E&amp;S market will continue to grow. I don&#8217;t see that slowing down in 2024.\u201d<\/p>\n\n\n\n<p><strong>Dynamic underwriting<\/strong><\/p>\n\n\n\n<p>Uncertainty over directors\u2019 and officers\u2019 liability (D&amp;O) pricing was a \u201cbig talking point\u201d at Monte Carlo, Mark noted. Although casualty pricing has not moved to the degree some reinsurers sought at 1\/1, reinsurers have fears about long-tail D&amp;O exposures relative to reserving adequacy for previous years of business that are already deteriorating.<\/p>\n\n\n\n<p>Mark also questioned the dynamism of the re\/insurance market, with carriers <a href=\"https:\/\/www.advantagego.com\/en-us\/products\/underwriting\/\" target=\"_blank\" rel=\"noreferrer noopener\">underwriting<\/a> set budgeted amounts to underwrite, running into hundreds of millions of dollars, without much change in their allocations despite shifts in prices.<\/p>\n\n\n\n<p>Cox agreed, but suggested the market had evolved since the casualty\/liability scandal of the 1990s, when underwriters were complacently underwriting for cashflow, risks which caught up with them.<\/p>\n\n\n\n<p>\u201cInsurance is an industry where the cost of what you&#8217;re selling is unknown when you sell it\u2026We estimate it, we use our judgment to assess it, and then we find out how right or wrong we are, depending on the class of business, 10 or 20 years later,\u201d he said.<\/p>\n\n\n\n<p>\u201cThe other feature of insurance is that is riddled with inertia. Things don&#8217;t change until the proof is in. And because of the lag between when you&#8217;ve priced you&#8217;re good and you know what the exact cost is, that&#8217;s why the prices go up and down. That&#8217;s exactly what you&#8217;re seeing here,\u201d he added.<\/p>\n\n\n\n<p>Underwriters today do have much better <a href=\"https:\/\/www.advantagego.com\/en-us\/products\/\" target=\"_blank\" rel=\"noreferrer noopener\">data and analytical tools<\/a> to take better decisions, such as for selecting and pricing risks, Cox emphasised, making debacles such as the 1990s liability crisis less likely and less severe.<\/p>\n\n\n\n<p>\u201cWhat is better than 20-30 years ago is the quality of analytics and data that lies behind that judgment,\u201d he said. \u201cWhich is why I don&#8217;t think it&#8217;ll get anywhere near as bad as it did last time, because people learn more quickly. You&#8217;ve still got that lag between when you&#8217;ve priced you&#8217;re good and when you know what it ultimately costs. And that&#8217;s the ultimate reason why there is that cyclicality.\u201d<\/p>\n\n\n\n<p>For casualty business, much data is still lacking, such as Covid shutting down US courts for a year, just before social inflation has increased compensation values, adding to uncertainty. \u201cThere\u2019s a lot of noise in the data, and there are lots of people who write it \u2013 that&#8217;s what makes a market,\u201d Cox added.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Adrian Cox, CEO of Beazley, featured on a recent episode of the Voice of Insurance podcast, and discussed the re\/insurer\u2019s new US E&amp;S carrier, amid a risk in complex risks. London market re\/insurer Beazley has undergone a major restructure in the past year, with the formation of a new US excess and surplus lines (E&amp;S) [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":6475,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[19],"tags":[10,14,39],"line-of-business":[20,28],"class_list":["post-6473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcasts","tag-exposure","tag-underwriting-workbench","tag-reinsurance","line-of-business-property","line-of-business-general-liability"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/posts\/6473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/comments?post=6473"}],"version-history":[{"count":0,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/posts\/6473\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/media\/6475"}],"wp:attachment":[{"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/media?parent=6473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/categories?post=6473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/tags?post=6473"},{"taxonomy":"line-of-business","embeddable":true,"href":"https:\/\/www.advantagego.com\/en-us\/wp-json\/wp\/v2\/line-of-business?post=6473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}