Beazley begins plotting path back into property and nat cat insurance

London specialist insurer  Beazley is plotting a potential path back into the property and nat cat market, building fresh models to better price for climate change as the failure of mainstream models has begun to scare off more naïve capital, top company officials have indicated.

“This is the business we want to get more encouraged about,” CEO Adrian Cox (pictured) told his company’s second quarter earnings call.

Beazley had been steering away from property and nat cat, in part to smooth out a volatile earnings impact, but also to avoid a market where a unified approach, based on relatively unified risk models, had ‘commoditised’ the offer and drawn in capital by the bucketloads.

The recent pullback by a larger number of players from the property cat market shows the approach and its handful of mainstream models “weren’t fit for purpose,” Cox said. “Capital is leaving,” opening opportunities for specialist insurers.

“If property has become more complicated again and you can’t just rely on one of [several] main models, as a specialty insurer, this is what we are good at,” Cox said.

“People are backing away from it and that suits a more specialist world.”

Beazley has begun the process of crafting new models for forward looking and perhaps contrarian views to the impact of climate change on property risk.  “It will be very good for us,” Cox said. “It is exactly what we have done in cyber.”

No increase in property exposure is yet in the plans.

“Have we baked that into our business plans yet? No, we have not,” Cox said. “But we see the potential.”

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