Peering into the insurance crystal ball: Amwins president

One thing we can all agree on is that the world is changing rapidly, with emerging problems like climate change and cybersecurity becoming increasing issues within the insurance industry.

Often, it is hard to get an oversight of everything, but some try. The US insurance provider Amwins has released its latest “ State of the Market” report for Q2 and Q3 2021, and James Drinkwater, president of the company, joined Intelligent Insurer on the Re/insurance Lounge, the on-demand platform for interviews and panel discussions with industry leaders, to talk about its findings.

“The report’s basically an oversight and overview of what we’re seeing in the E&S industry. We think we’re uniquely capable of providing that insight, given that we have over 600 brokers and underwriters, alongside 13 specialty practices.

“We get about 1.1 million submissions each year and do business with 20,000 retail agents in the US.”

A perfect storm

2020 and 2021 have been challenging. Drinkwater said that much of what has happened comes from a ‘perfect storm’ of circumstances.

“The market is in a very unique situation,” he said. “It’s changed dramatically, over the last couple of years. One of the things that I find most fascinating about this marketplace is that with past hard markets, you’ve seen one industry segment harden and the other soften.

“But in this particular situation, there’s the perfect storm of economic turmoil, natural catastrophes, social inflation, years of lost development, and significant losses due to cyber. There’s a lot going on.”

Having touched on cyber, Drinkwater said that he was not personally an expert on the subject. “We have some great people throughout the organisation who can speak much more deeply on that,” he said.

“When it comes to Amwins, I could categorise it that when people initially wanted to write cyber, they wanted to write every single account. But then the market pivoted and said it only wanted to write certain industries.

“So now people are looking at how to protect themselves against cyber attacks. The security position is something that has to be analysed and the underwriters are looking at how people protect themselves.”

The “State of the Market” report says that ransomware has been the biggest claims driver over the past year, in frequency and severity. “It is an issue most often triggered by lenient security controls,” according to the report.

Climate change is also a concerning issue. When Drinkwater spoke with Intelligent Insurer, there was mass flooding within New York and New Orleans due to severe weather events probably related to a shift in weather patterns caused by human industry.

“Watching the terrible events has been tragic. As this evolves, the industry has to find solutions so that we can adapt and evolve to protect our business in these new circumstances,” he said.

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Make the most of data

Another issue that insurers have been called to look at more closely is data, and how with their huge reach and bank of information, that data can be optimised and used. Drinkwater said this has been a focus of Amwins for some time.

“As a company we are spending a lot of time, energy, and money in making sure we can analyse our data. As I said, we have 1.1 million submissions every single year so there’s a very large amount of data there from all over the US. We’re trying to do a better job of analysing it,” he explained.

Amwins has carried out a large project on its property portfolio. Drinkwater found that just looking at that segment brings value to Amwins’ customers.

“What was valuable for some of our clients who are also carriers was the fact that given the scale of our property portfolio, we were able to track all the properties that fit into the cone of uncertainty. It gave us better information about aggregation of risk,” he said.

It is a project that Amwins is likely to roll out across its other product lines. “Transportation is one,” said Drinkwater. “We’re going to take a careful look at that because the excess casualty limits are becoming difficult to come by.

“Healthcare, too—we’ll do that quickly because we want to look at our book of business and make sure we can give carriers more data. We also want the benchmarking information for our cyber business.”

The industry’s future is harder to predict. “We spend a lot of time trying to predict the future in this industry,” he said. “I can tell you that I’ve never been successful at that. Trying to predict natural catastrophes that are going to change the market? But I will say the E&S industry is well prepared.”

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