New Hiscox-backed MGA plans to transform personal lines business

In a 17-year career with Hiscox, Justin Gott ended up managing its personal lines insurance across its mid- and high-net-worth customer base. According to him, the industry faces significant challenges.

“It’s facing challenges in terms of the relatively low margins the business makes and in terms of commoditisation of the products that it sells—challenges in what seems to be a constant race to the bottom in the pricing war,” he told Intelligent Insurer’s digital hub, the Re/insurance Lounge.

In most cases, however, there’s yet to be a real response, he argued.

“There’s some contraction of capacity, some insurers pulling back from this arena. There’s a slight hardening of rates, but there’s nothing that making anyone say that the rates are hard, so they’re going in,” he said. “It seems people are sitting on their hands and looking to see what’s happening next.”

Gott, though, is not among them.

In August, a new managing general agent (MGA) was launched: Hoxton Insurance Services, of which he is managing director. With capacity from Hiscox as the primary insurer, it will trade exclusively through brokers and aims to focus on mid- and high-net-worth personal lines insurance in the UK: protection for homes, possessions, fine art, valuables, cars, travel and investment properties.

“We’re trying to create a one-stop shop for all personal lines insurances that brokers customers might want to buy,” Gott explained. Backing from Hiscox as the primary insurer gives it access not just to the Hiscox name—“a bit of a door-opener”, according to Gott—but also to its claims service.

“I believe the claims service is second to none,” he said.

Removing costs with technology

The launch of Hoxton Insurance Services was supported by NuVenture—the MGA incubator launched in April by former Aon managing director Andy Colbran. Hoxton is its first launch.

“It’s a turnkey solution for underwriters like me who want to retain a significant stake in the business while launching into a market that might be challenging in terms of the services that go around it,” Gott explained.

It offers a range of back-office services, as well as funding, which were instrumental in getting the new venture off the ground, according to Gott. It helped to put in place the operational, financial and HR services the firm needed. It also, crucially, gave it the support needed to develop the businesses technology platform.

The company has built a web-based trading platform that enables brokers to quote and bind business, access documentation, create mid-term adjustments, and facilitate payments, and it has a light touch annual review process.

“It draws in huge amounts of data to enable the underwriting process to be automated, and it is fully optimised for mobile trading,” he explained. “It’s a one-stop shop that brings the technology, the insurer and the broker into one hub.”

This digital experience is central to the company’s plans.

On the one hand, technology will be vital to meeting the problems with pricing, costs and margins that Gott reviewed at the outset.

“A lot of those challenges can be addressed by looking at automation and digitisation of processes—by removing frictional costs and finding ways intermediaries can transact their business better with their customers and trade more efficiently and effectively with their insurers,” he explained.

There’s another aspect, according to Gott. The technology represents a way of not just overcoming the industry’s challenges but also capitalising on an opportunity.

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Time to move

For Gott, the COVID-19 pandemic and lockdowns have fundamentally changed the market as people have become more comfortable with automated transactions and digital, online interactions.

“In the future, life is going to be different: it’s never going back to five days a week getting on the train to the office. We’re going to have to find ways to support our brokers and insurance partners to conduct their business in this new way,” he said.

In this respect, the pandemic has provided the incentive the insurance industry needs to start matching the efforts elsewhere in financial services.

“The industry has got some catching up to do. Look at the banking industry’s efforts over the last five years—it’s been very good at giving customers more self-service through mobile applications. It’s much better with mortgages that are automatically validated; much better at giving customers back control,” he said.

For Gott, as people emerge from lockdown, the market is at “a tipping point” and the time is right for insurers to follow that example.

“At the moment people are waiting to see what happens next, but I think consumer behaviour and the behaviour of businesses have changed absolutely.

“Hoxton is launching at a great time because we’re taking advantage of this opportunity to introduce a much more digitised and automated proposition into what is a very traditional marketplace.”

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