US cyber insurance market tempts start-up to monoline run at $1bn GWP

Cyber insurance may have matured sufficiently in the US market to support a  start-up monoline carrier run at $1 billion in gross written premium from a Lloyd’s-backed specialist that may start with some niche targeting, but ultimately aims at a full swathe of US business.

That’s the business plan of Trium Cyber, a Jim Stanard / Pelican Ventures entity writing on a Lloyd’s ticket and launching exclusively in the US as 2023 opens for business. At the helm: CEO Josh Ladeau (pictured), the former head of cyber for Aspen and CFO Jeff Bores, also of Aspen pedigree.

“Cyber as a line of business is the most appealing or compelling line for perhaps decades to come,” Ladeau told Intelligent Insurer following the launch of operations in the US. “In the not-too-distant future, cyber will be the largest single professional line of business” and could eclipse property over the long-term.

Trium will launch into the large cap segment to clients with annual revenues in excess of $1 billion, move into mid-market over the course of the next 1-2 years and then apply some litmus tests to the market and to clients as they look into smaller and smaller segments.

“We have a robust growth plan: $500 million over five years,” Ladeau said. The plan is “start large and grow down” and launch from excess and surplus only, then move into the primary segment “as soon as we can.”

“I could absolutely see us at a billion before we get to the ten-year mark,” Ladeau said.

The large-cap launch is Ladeau’s answer to the industry’s chicken-and-egg question if cyber should be chiefly insurance aided by a risk mitigation add-on or chiefly cyber security and risk services with an insurance back-up. Start by selling cover to the tech-savvy and let risk mitigation and cyber management rise in the scales as you move down the corporate rankings.

“Whether you say insurance is the sidecar or insurance comes first and risk management is the sidecar, that chiefly speaks to who you are insuring in what segment of the business,” Ladeau said. “For larger entities the focus is on insurance; for smaller entities, I think the emphasis needs to be risk management.”

Trium’s likely early large-cap clients “have already made investments; they’ve contemplated cyber risk very deeply and are adding insurance as a component.” Risk management is a “supplemental service.”

For small-caps to fully hit Trium radar, improvements will be needed in both rate sustainability and the tool chest that insurers wield to sufficiently influence insured behaviour, including real-time policy adjustments. “The market is not ready for our entry for a few years,” Ladeau said, suggesting a three to five year ramp-up period.

But you can hear Ladeau’s broader faith in risk mitigation as something more than just a key to small-cap market penetration.

“The overarching goal of mine is to raise the bar for cyber security in the US,” he said of “one of the biggest challenges we have as a nation.”

“Over the past decade, the story has been top line growth. Now that cyber insurance has established itself, it’s time to work on and focus on cyber security.”

Pelican Ventures and Trium clearly suspect the market is sufficiently mature for the monoline approach, not buffered by multi-line diversification.

Ladeau, at the peak of a mono-focused cyber career, counters diversification with specialisation. He argues that building a monoline cyber carrier from the ground up will achieve a level of focus not matched by underwriters working on the cyber desk of the professional lines department of the specialty division of the commercial side of any major universal carrier.

“The idea of specialisation is really important: cyber underwriters are focused on cyber, but we are focused on cyber at every level: the systems, how they are set up, the data we collect, not having to re-purpose a policy admin system to address the cyber line,” Ladeau said.

“That kind of focus can be an advantage,” the fresh-baked CEO claimed. “And couple it with the experience we have in technical acumen across the group, those things come together for a really compelling proposition, despite the monoline nature.”

Timing looks auspicious to Trium, a fit to current market maturity, to Trium’s top-down approach pattern and to the latest market developments.

Trium jumps in after “a few years of market correction” with “some contraction” in supply over the period. “There is a need for capacity.”

Jim Stanard’s Pelican Ventures announced the launch in September. Since then, Trium tied down formal approval to write business, hired the full staff needed for launch, laid down the system’s capabilities, which continue to be built out, and set up all operational aspects.

Now, a difficult reinsurance renewals season could give Trium a boost at launch. “It creates a tighter environment and more need for capacity in the market,” Ladeau argued for Intelligent Insurer. Trium claims to have come through its kick-off reinsurance purchases successfully, creating a “relative benefit” to some rivals.

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