elseco INSURTECH IN SPECIALTY INSURANCE Investing in innovation, - - PowerPoint PPT Presentation
o INSURTECH IN SPECIALTY INSURANCE o ALI ASGHAR, CHIEF OPERATING OFFICER, ELSECO elseco INSURTECH IN SPECIALTY INSURANCE Investing in innovation, talent and technology 2 Specialty Insurance: Current Market Insurance Groups Specialty lines of
INSURTECH IN SPECIALTY INSURANCE Investing in innovation, talent and technology
Specialty Insurance: Current Market
3Specialty lines of insurance Insurance Groups
Market challenges
4 Deteriorating performance Increasing power elseco: Insurtech to address the insurance market challenges
5 Technology Pooling capacity Best in class expertise Technologyelseco provides access to superior underwriting results at lower cost
Improving performance with pooled capacity
6Sharing expense Relevance and influence
Access better systems while avoiding fixed cost Access multi- disciplinary teams of experts Flexibility to exit without costs Proximity to the customer Relevance Improving underwriting result with best in class talent
7 Best in class expertise elseco has proven it can attract best in class expertise who are able to maximize performance using technology The ability to create wealth through profit related remuneration attracts expertise that is competent, confident and with stand-out track records Access to tools and technology, far superior than competitors, that allows talent to maximise underwriting margin at a lower cost The entrepreneurial nature of elseco, the strong culture and business model attracts underwriters who are disillusioned within the confines of large companies Expertise Technology – In-house developed platform
8 Technolo gy In-house system developed in partnership with SAP Compliance Financial and underwriting control are imbedded into the solution and reduce the burden Specialty Insurance: elseco Optimized
9elseco
Specialty lines of insurance Insurance Groups
01 02 03 04 05 06
11 years Long term relationships have been developed and fostered over the last 11 years. Underwriting Profit USD 250m of underwriting profit has been generated since elseco’s inception 3 successful lines World wide leader in Space. Rapidly growing presence in Aviation and Energy 60 members Key relationships include Local offices, global footprint Physical offices in Dubai, London, Washington, and Paris, but platform allows for local servicing and access across the globe 23% YoY growth elseco’s growth has been funded solely through reinvestment of prior year profitselseco to date
elseco performance – Net Written Premiums (USD)
11 USD 0 USD 20,000,000 USD 40,000,000 USD 60,000,000 USD 80,000,000 USD 100,000,000 USD 120,000,000 USD 140,000,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Written Premium (to date) End of the Year elseco business model – challenging insurance market dynamics
12 Deteriorating performance Specialty lines Insurers hesitate to enter very specialized lines where technicality and need of expertise creates high barriers of entry Arms Race for Talent Hiring the best talent puts further pressure on expenses and therefore margin Placing Broker Control With no single market controlling the placement, the broker controls the dynamics to the capacity providers detriment Pooling Capacity Expertise Technology Relevance to obtain best terms available elseco business model – challenging insurance market dynamics
13 Increasing power of distribution Broker channels Increased acquisition costs as brokers utilize facilities, wholesale, and retail outlets to bolster hold over business Distance from customer Accessing the direct customer is becoming more difficult, as carriers continually fail to differentiate Globalization of the supply chain Risks are originated all over the globe, making it harder to service at a local level without investment Pooling Capacity Expertise Technology Proximity to the client achieved through relevance of the pooled line, and ability to lead; use of the members’ local presence when available Ability to offer a complete service covering all the elements of the value chain. Market leading knowledge is highly valued and can add to broker’s offering Ability to service directly retail brokers worldwide without significant investment in local offices. Provides brokers with low cost solution to quote and bind less complex business Market Challenges elseco business model – challenging insurance market dynamics
14 Lack of scale / relevance Syndication Capacity is not significant enough to be relevant in pricing and terms High fixed costs High costs of underwriting team, compliance and technology versus income Challenge to increase line size Carriers find it difficult to increase line size and utilize it effectively whilst maintaining portfolio balance Pooling Capacity Expertise Technology Ability to influence placements while sharing the costs associated with being a lead market. Natural spread of the risk reducing the dependence on reinsurance. Ability to be a market lead, working closely with clients attracts the best talent. Scale allows to build larger teams of underwriters with diversified expertise Pooled capacity allows for costs of cutting edge technology to be shared Market Challenges elseco business model – challenging insurance market dynamics
15 Technology investment to harness data Increasing number of data sources Risks are becoming more complex and more accurate pricing requires harnessing of data from multiple sources Expense burden of legacy systems Compounding the pressure on expenses is the heavy investment required to update legacy systems and improve efficiency Big data Many companies struggle with “small data”, so the move towards harnessing big data is a big challenge Pooling Capacity Expertise Technology Access better technology by sharing the cost of the investment. elseco attracts teams with product line expertise and entrepreneurial outlook to understand how to optimise the investment in technology and big data Significant investment on technology infrastructure since day 1. Major upgrade to open the system and be prepared to scale up the platform and the volume of data analysed Market Challenges elseco business model – challenging insurance market dynamics
16 High expense ratios High fixed costs Costs of being a follow market can be disproportionately high Talent High costs of attracting talent to underwrite business Technology Technology to support underwriting and compliance is high and replicated many times over in a syndicated market Pooling Capacity Expertise Technology Costs are maintained to the minimum due to rigorous discipline and shared between the members. Alignment of interest through PC based compensation schemes Access the best talent for a fraction of the cost Automate back office functions to gain in Multi-factorial market over-performance
Sources: Marsh Space Insurance Market Review and Future Outlook, Lloyd’s audit code data at 31/12/2016 and Willis Re projected aviation market result 0% 20% 40% 60% 80% 100% 120% Net Incurred Loss Ratio Net Incurred Results elseco LR Industry LR Member results improvement > 27% 21% elseco’s better informed and disciplined underwriting teams have outperformed the market by 21% through risk selection 6% elseco low cost structure has allowed members to operate at a cost structure which is 6 percentage points better than their internal expense levels 50% To date, elseco members have received a 50% return on accounted premiums Going forward
18driven barriers of entry
Disclaimer
This presentation and the accompanying slides (hereinafter called the “Presentation”) have been prepared by elseco solely for information purposes. References to the “Presentation” include any information which has been or may be supplied in writing or orally in connection with the Presentation or in connection with any further inquiries in respect of the Presentation. It does not constitute any offer