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Earlier this year, the re/insurance market welcomed a first-of-its-kind innovation in the formation of CyberShock, a cyber catastrophe consortium. Created by Hiscox Re & ILS and Ariel Re, the new entity looks to provide up to $50 million in per-program capacity to support cyber insurers globally, and foster a healthier and more sustainable cyber insurance ecosystem.

Discussing the consortium’s launch, Conor Husbands (pictured), senior underwriter, cyber, at Hiscox Re & ILS, noted that it found its roots in addressing a long-standing challenge facing the cyber marketplace.

“On the one hand, there’s increasing demand from clients, from cedents, to transition their reinsurance purchasing from being on an aggregate basis to being on an occurrence basis,” he said. “On the other hand, there’s really no suitable products available to cater to that. Our belief, and Ariel’s belief, is that the existing product suite and existing attempts at addressing the demand are not yet fit for purpose. We’ve wanted to address that for some time.”

Husbands highlighted how Hiscox and Ariel share a strong cyber pedigree, with the former having written non-proportional cyber products of all kinds for a decade now, as one of the first markets to launch its cyber product suite in 2014. In addition, he said, Hiscox developed the market’s first cyber ILW (Industry Loss Warranty) product and first parametric transaction.

Meanwhile, he said, from early conversations with Ariel, it became apparent that the business was already at a very advanced stage of developing the contract language at the heart of the CyberShock wording so the alignment of ambition between the firms was clear from the offset. Ariel had already started putting pen to paper in terms of developing the product and, like Hiscox, they proved willing to back the product with significant capacity.

“We think that’s going to be crucial in getting traction with clients,” he said. “Our combined capacity offering for this is $50 million per programme which, in the context of cyber insurance, is a really meaningful amount.”

The final piece of the puzzle for Husbands and his team was the calibre of the Ariel team – who bring an extensive background in cybersecurity and a strong grasp of the underlying risk of this peril.

Who does CyberShock target?

On the rollout of CyberShock, Husbands highlighted that it is designed for global writers of affirmative cyber. It offers up to five bespoke heads of coverage, though clients can tailor that to the needs of their portfolio, he said, and it’s designed to protect clients against a wide range of cyber-specific perils.

 “By designing it like that, we hope that we can absorb the main catastrophic risks, which could impact their portfolio,” he said. “So that includes software service or hardware supply chain disruption, malware propagation, the widespread exploitation of a zero-day vulnerability and cloud outages, among a number of other things. We’re really trying to identify the core cyber risks that clients face, and to provide a product which enables them to transfer them.”

For Hiscox and Ariel, the strongest selling point of the product – and a core reason behind its creation – is the certainty of coverage it can offer the market. For some time in the excess of loss cyber marketplace, Hiscox has seen a lot of attempts to shoehorn casualty style language into a cyber product, he said, which it feels introduces very significant ambiguities into the functioning of the product. That, in turn, risks leaving it quite open-ended as to which perils are and are not covered, and also how losses get aggregated into the treaty.

“It’s really important to us that clients, as well as reinsurers, aren’t faced with the threat of a costly dispute over coverage after a loss,” he said. “They have to know exactly when the protection we offer will respond or won’t respond. That’s what we’re trying to achieve with CyberShock. There’s a big difference in our minds between loose language and broad coverage. And we’re trying to avoid the former and provide the latter.”

While that certainty of coverage element is the main selling point of the product, not least because of the question it raises as to how some other occurrence products in the marketplace would respond to a major event, Husbands noted that there is a range of benefits from this consortium for multiple stakeholders.

For example, he said, the excess points the product is capable of supporting are much lower than in traditional aggregate products – which often see retentions significantly greater than 100% of gross income. By contrast, CyberShock ensures that clients could, in principle, recover from the product without being in a net loss-making position because the consortium is willing to entertain somewhat lower retentions – an important selling point for clients concerned about retentions.

The hope is that CyberShock will help grow the market, Husbands said, by attracting more buyers and enabling more clients to transfer some of the risks which could be borne by the reinsurance marketplace.

The 2024 Atlantic hurricane season is projected to be one of the most active on record, according to forecasts from MS Amlin and Acrisure Re.

MS Amlin, a specialist Lloyd’s of London insurer, and Acrisure Re, the reinsurance division of global fintech leader Acrisure, have both released predictions highlighting a significant increase in storm activity.

MS Amlin’s forecast, which aggregates over 20 separate forecasts, predicts a “substantially above average” number of storms between June and November. The consensus suggests an average of 23 named storms, 11 hurricanes, and five major hurricanes.

Accumulated Cyclone Energy (ACE), a measure of overall hurricane activity, is forecast to reach 204, significantly above the long-term average of 123. The heightened activity is attributed to the development of La Niña conditions in the Pacific and unusually warm sea surface temperatures in the North Atlantic and the Gulf of Mexico.

Dr Ed Pope, a geoscientist in MS Amlin’s exposure management team, noted that predictions point to a potentially active hurricane season in 2024, with some agencies forecasting record levels of activity.

“Importantly, there has been general consensus in those forecasts for a number of months now about potential activity, despite the uncertainties associated with making forecasts early in the year. Even if we hit the low end of these forecasts we are likely to see an above-average season,” Pope said.

Simon Morgan, head of property at MS Amlin, also noted that hurricane-related economic losses have soared by $22 billion per decade since 1990 due to population growth and increasing coastal development.

“The insurance industry can help people and businesses to absorb climate blows, but only if pricing adequately reflects the escalating risks of stronger, more destructive hurricanes in a warming world. Investing in sophisticated catastrophe modelling and research will be increasingly important if the industry is to properly understand and prudently price risks,” Morgan said.

Beyond 2024, the firm noted that climate change is worsening hurricane risk in the long term, with hurricanes likely to increase in intensity, produce heavier rainfall, and have storm surges penetrating further inland. Pope added that the frequency of the strongest storms, Category 4 and above, is expected to increase, leading to more cumulative losses for insurers and a need for communities to focus on climate adaptation measures.

The 2023 hurricane season saw 20 named storms, seven hurricanes, and three major hurricanes.

Acrisure Re forecast for 2024 hurricane season

Acrisure Re’s forecast, meanwhile, also indicates a “very active” hurricane season. The company’s annual Pre-Season Hurricane Outlook attributes the increased activity to a rise in sea surface temperatures, a weaker La Niña weather phase, and conditions similar to past active seasons.

Acrisure Re’s analytics team examined variables such as forecasted Atlantic sea surface temperatures, the El Niño Southern Oscillation (ENSO), and the Quasi-Biennial Oscillation (QBO) to create a qualitative overview of the likely conditions.

Simon Hedley, CEO of Acrisure Re, commented on the greater certainty of an active 2024 hurricane season compared to the previous year.

“Our expert analytics and modelling teams are dedicated to staying abreast of developments, ensuring our brokers are fully equipped to offer the best advice to our clients,” Hedley said.

Ming Li, partner and global head of catastrophe modelling at Acrisure Re, also noted that the synchronizing forces in the Atlantic basin, including above-average sea surface temperatures and the predicted development of La Niña conditions, are likely to spur higher activity. However, the exact impact of this increased activity remains to be seen.

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Gallagher Re has announced that Brian Flasinski (pictured) will assume the role of chief executive officer (CEO) for the North American region on June 1, 2024, succeeding Jim Bradshaw. The transition follows the company’s earlier announcement in March, which also detailed Bradshaw’s move to the position of chairman, Gallagher Re North America, effective the same date.

Bradshaw, who became CEO of Gallagher Re North America in 2021 following the acquisition of Willis Re, will take over from Tom Wafer, who is set to retire on May 31, 2024. In a statement, it was noted that Bradshaw has had a distinguished career in the re/insurance industry, with over 40 years of experience. His tenure at Willis Re began in 2005, eventually leading to his promotion to CEO of its North American business in 2010.

Who is Brian Flasinski?

Flasinski joined Gallagher Re in 2015, having previously served as executive vice president and North American sales leader. His prior experience includes a nine-year stint as senior vice president at Guy Carpenter. In a news release, Flasinski’s leadership in sales was described as pivotal in energizing Gallagher Re’s new sales initiatives and delivering substantial value to clients.

Gallagher Re CEO Tom Wakefield expressed confidence in the leadership changes, highlighting the firm’s ongoing success and client-focused approach.

“Gallagher Re North America is a story of continuing success built on an unwavering focus on our clients. I am confident we will quickly build upon our accomplishments and continue to accelerate our growth,” Wakefield said.

Wakefield also acknowledged Bradshaw’s significant contributions during his tenure, particularly in navigating the Willis Re acquisition and driving substantial growth.

“Jim’s leadership helped us navigate through the Willis Re acquisition and achieve remarkable growth during his tenure. I am grateful for his continued support, guidance, and counsel during the transition and beyond,” he added.

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Howden Re has reported a moderation in pricing within the property-catastrophe reinsurance market, following rate increases in 2022 and 2023.

The average risk-adjusted property-catastrophe reinsurance rates-on-line was 5% lower than usual – typically ranging from -7.5% to -2.5%, it stated.

According to its report, the reinsurance market has been facing a period of adjustment, partly caused by resurging dedicated sector capital that exceeded the levels seen in 2021 along with strong ILS inflows. This led to an increase in capacity at the top of programmes, leading to risk-adjusted rate reductions in the higher layers.

“It is crucial that our clients secure optimal coverage in this rapidly evolving landscape. This means not only finding capacity, but also ensuring it aligns with their risk profiles and financial objectives,” said Howden Re head of North America Wade Gulbransen.

“Our focus remains on providing innovative thinking alongside dynamic placement strategies to meet these challenges head-on,” he added.

The report noted an increase in activity and competition in the ILS market. As larger carriers in Florida were more active in the issuance of catastrophe bonds, the supply in higher layers increased and led to the significant growth of the assets under management of capital providers.

A shift in focus on property risks by some reinsurers followed the strong performance seen in 2023 as there were several reinsurers that reported some of the best financial results that they had experienced in decades, with regards to combined ratio, return on equity, and economic value added.

This increase in ILS interest reflected a trend in the broader market when it comes to diversified alternative risk transfer mechanisms, which offered reinsurers and cedents more options in managing their exposures.

However, factors such as the 2024 hurricane season can exert short-term rating pressure on the market as the weakening El Niño and the heightened chance of La Niña occurring may entail stronger storms, thereby underscoring the inherent market volatility as well as the need for more strategic resilience.

“The reinsurance market is at a critical juncture. While the recovery of dedicated capital and increased capacity signal a potential softening of rates, the forecasted active hurricane season and other market pressures could counteract these trends. Strategic adaptability and expert guidance are essential in navigating these dynamics,” said Howden Re head of industry and strategic advisory David Flandro.

Howden Re is the reinsurance and strategic advisory arm of Howden.

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Specialist reinsurance broker Miller has announced its acquisition of Bruzon Correduría de Seguros y Reaseguros S.A. and Bruzon Services S.A. (Bruzon), a commercial insurance and reinsurance broker based in Madrid.

The transaction is part of the Miller’s continued expansion of its specialty boutique model. Miller CEO James Hands expressed his enthusiasm for the deal.

“This is an exciting time for Miller as we continue to expand our presence across the UK, Europe and Asia. Bruzon has an outstanding reputation in Spain and shares our vision to create the broker of choice for clients with complex risk-transfer needs and for talented brokers to pursue their passion,” said Hands.

“Together we can broaden the spectrum of solutions and services available to our global clients,” he added.

With the acquisition, Bruzon will rebrand to “Bruzon Miller”, which acknowledges the partnership between the two firms as Miller has been a minority shareholder since before 2015. Bruzon’s staff will still be led by Bruzon founder, chairman, and CEO John Bruzon. They will be collaborating with Miller’s staff from the UK, Asia, and Bermuda as well as the broker’s European insurance markets which include France, Belgium, and Switzerland. 

“We are delighted to join Miller as the next step of Bruzon’s journey. This transaction will advance our own presence in the Spanish market, continuing to provide our clients excellent advice, solutions and service,” said Bruzon.

“With Miller’s ownership and increased resources, we preserve the legacy and strengthen the special character of our company,” he added.

Bruzon is one of the leading insurance and reinsurance brokers in Spain. With its clients being large banks, insurance firms, large corporates and IBEX 35 members, the broker offers solutions in facultative reinsurance, accident & health, sports, financial lines, and credit and surety insurance. Meanwhile, boutique consultancy firm Bruzon Services is focused on financial advisory and structuring. 

With its completion expected to occur sometime this year while being subject to regulatory approvals, Miller’s transaction with Bruzon serves as the broker’s second acquisition in Europe. 

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In his role as partner and global insurance leader at PwC, Jim Bichard (pictured) oversees a team of some 15,000 professionals serving insurance clients across 100-plus countries on a daily basis. It’s a role that has helped him develop a unique point of view of how the sector has evolved, where it stands today – and what the future holds for the insurance market.

Digging into some of the key pain points he sees facing insurance businesses, Bichard looked to PwC’s most recent ‘Insurance Banana Skins’ report and its finding that insurance companies are being exposed to a plethora of macro-economic and geopolitical risks.

What’s pressing on insurance companies today?

Interest rates, inflation and geopolitical conflict are just some of the risks having either first or second order impacts on insurance companies today, he said. Meanwhile, as part of a regulated sector, insurance companies are grappling with increasing complexity.

“Technological disruption and climate change are risks that continue to move up the register,” he said. “Scenarios such as cyber are creating risks; and given the amount of reliance on data across the whole of the insurance market, it’s no surprise that data protection and cyber is high on the agenda.

“Climate is a risk that continues to grow and grow in terms of its impact on the operations of an insurer, its balance sheet, the products it creates and distributes, and the investments that it holds. It’s very pervasive.”

The other challenge that PwC is championing greater understanding of across the market, is the trust gap that exists in today’s insurance ecosystem. A core part of the insurance offering is the need for insurance companies to be trusted and resilient, he said, and crucially, to make good on the implicit promise of insurance – that it will be there for customers in their hour of need.

“Generally speaking, trust in financial services hit a really low level during the pandemic. So, the insurance industry has a lot of work to do to improve trust among the public and its customers,” he said. “It’s hard to assess this risk without looking at the impact of digital and AI which is impacting all parts of the operations of insurance companies.

“Part of that is around customer preferences and the fact that these are changing really rapidly. Individuals and corporate customers are used to being able to access other areas of financial services digitally. They are also now raising questions about why insurance is a one-year product, about the potential for usage rather than loss-based products, and about why insurance hasn’t moved to be more preventative and protective.”

Balancing performance with navigating external market conditions

Bichard highlighted that, overlaid across all these factors is an emphasis on performance.

Insurers have got to remain profitable, and ensure that premiums exceed their claims, he said, which is no mean feat in today’s environment. Performance across the global sector has been quite tough, certainly up until last year, so these companies are facing juggling those performance demands and meeting their investors’ requirements while dealing with macro factors, some of which are manifesting now and some of which are poised to be even greater challenges down the line.

“We do a CEO survey every year, and one of the most interesting questions posed is whether they think their business will be viable or sustainable in five-to-10-years time,” he said. “This year, we had a record response of 45% of CEOs saying they do not think their business will still be viable in five to 10 years. And that’s just as high for insurance as for any other sector. So, what does that look like? Because five years is not a long time in which to reinvent your business.”

How have the challenges facing insurers evolved?

Having started in insurance in the mid-90s, Bichard has seen for himself how the challenges facing the market have – and haven’t – evolved over the years. What is clear, he said, is that the surrounding risk landscape has never been quite as complex as it is today. Whether that’s translating into increased riskiness is hard to say for certain, but there is certainly more complexity.

A large part of this is due to the new risks which have emerged over the last decade, he said – the increasing complexity of the market is making accurately pricing risk harder than ever.

“That pace of change is only accelerating,” he said. “It calls to mind that quote about how digital technology has never been as fast, and will never be this slow again! We’re really only just wrapping our heads around the fact that we’re in a surge right now and, until that calms down, the industry is going to get more and more disrupted.”

Insurance, in theory, has always been a data-driven industry, he said, as it involves looking at historical performance or loss experiences and using that to price risks, and effectively predict the future. The computing power and the availability of data and, as a result, insurers’ ability to model and run simulations is now in a completely different space, with things that would otherwise have taken months or years to do, now happening almost instantly.

“Interestingly, it hasn’t made us significantly more profitable,” he said. “The industry is not, as a result, in a position where it never has a loss-making year because competition is still there. But data and the ability to use analytics and modelling and computing power – and particularly how Cloud is really just starting to have an impact on that – is an important consideration.”

Jobs will be optional for humans in a “benign” AI future imagined by Elon Musk.

The Tesla CEO, who spoke at the Viva Technology 2024, told the audience that that future is the most likely scenario with artificial intelligence.

“In a benign scenario… probably none of us will have a job,” Musk said, who spoke to the audience remotely via webcam. “Any job that somebody does will be optional.”

In this scenario, he said there will be universal high income, while AI and robots will provide any goods and services for the public.

“If you want to do a job as kind of like a hobby, you can do a job,” Musk stated. “But otherwise, the AI and the robots will provide any goods and services that you want.”

According to Musk, the question in the benign future will be the role of humans given that computers and robots will be able to everything that they can.

“I do think there is perhaps still a role for humans in this in that we may give AI meaning,” he said.

Having played a pivotal role in coordinating the operational side of acquisitions development, as well as dealing with information systems for strategic analysis, Ritesh Behl (pictured), chief operating officer for North America at Acrisure Re, believes success lies in collaboration. Despite initially struggling due to his self-proclaimed perfectionist nature, Behl has come to recognize the importance of collaboration as the cornerstone of success in his role.

“[It all comes down to] a team-based approach,” he told Re-Insurance Business. “I’ve been fortunate enough to work in an organization that has a culture and structure that’s very conducive to people working together. That’s what we pride ourselves on. However, it took some time for me to understand how to be effective in that environment – because I tend to be a perfectionist.”

Behl was quick to point out that he used to be very particular about the way he’d liked things done – in order to be fully confident that they were being done “correctly” from his point-of-view.

“But you start to realize that that when you delegate you learn how to trust people – how to empower those around you – and you quickly realize the greater potential that can come from that,” he said.

Getting communication right

Effective communication stands out as another cornerstone of Behl’s strategy for ensuring operational efficiency. The belief that open and frequent communication can alleviate most problems is central to his philosophy.

“Even though there are competing priorities in a lot of different areas, once you have open communication across teams and the organization at large, it fosters that environment of people working together. Issues being worked out rather than just being delayed – or [things] slipping through the cracks.”

From the moment Behl stepped into his role, he embraced Acrisure Re’s ethos of approachable leadership. This foundational element has played a pivotal role in his journey from being a newcomer to becoming a leader himself.

“From the day I joined this company, I’ve been fortunate enough to have strong supportive managers who have lifted me up throughout my tenure here,” he told Re-IB. “They’ve given me the opportunity to grow. I now try to instill those same values in my leadership style to empower people and teams around me.”

Broking workshops

This philosophy extends beyond internal operations to how Acrisure Re interacts with its clients, always emphasizing transparency and honesty. It was Behl’s innovative spirit that ultimately led to the inception of workshops aimed at bridging the gap between the company’s broking and operations bands.

“We held these workshops [involving] team building exercises, strategy sessions and roundtable discussions,” he said. “It was a way to promote collaboration and communication [as well as] build a rapport between the global teams.”

The success of these workshops has been evident, not just in smoother internal processes but also in the enhanced service offering to clients. The idea that fostering a closer connection between teams leads to better client outcomes is a testament to the company’s forward-thinking approach.

“There’s a tendency in our industry for broking teams to toss deals over this imaginary fence,” said Behl. “It goes from the broking table to the back office for processing. But they don’t really talk to each other as much as they should. So, what we wanted to do was create a greater connection, because when we develop this relationship, it leads to not only better processes internally but ultimately benefits our clients.

“We’re in the service industry – we’re trying to make sure that the product and the service we’re offering to our clients is exceptional. The interesting thing we found when we held our first workshop was that new ideas and efficiencies emerged. In fact, this was so effective that many of our global teams are now holding similar workshops every year.”

Despite the investment these workshops require, Behl and his team view them as essential to the company’s ongoing success. The initiative has proven so valuable that it’s seen as an investment in the team’s development and the quality of service they provide.

In a notable victory against organised fraud, car insurance broker 1st Central and insurance law firm Keoghs have won five tort of deceit claims against a fraud ring, resulting in over £140,000 in damages awarded.

The policy hijack scam involved alleged at-fault accidents occurring far from the policyholder’s address, claimants (the supposed driver and passengers of the third-party vehicle) also residing long distances from the collision site, and a single individual reporting multiple incidents.

Partnering with Keoghs, 1st Central initiated proceedings in the tort of deceit to recover the funds paid out on the false claims. The claims advanced to trials at Manchester County Court, where the judgments favoured 1st Central and awarded both compensatory and exemplary damages.

Meanwhile, the credit scores and insurance premiums of those customers whose policy information was used in the scam will not be impacted.

“1st Central is committed to rooting out fraud and protecting our customers,” counter fraud director Paul Priestley stated. “False claims like this ultimately push up costs for everybody, with genuine, paying customers often suffering as a result.

“To keep our prices competitive and ensure that customers feel safe and valued with us, we invest heavily in anti-fraud capabilities and always take decisive action against potential scammers.

“The recent judgments in our favour vindicate this approach and represent big wins for 1st Central, the wider industry, and our customers against potentially fraudulent actors.”

Sarah Moat (pictured) from Keoghs added: “This is a fantastic achievement and resulted from excellent teamwork between Keoghs and 1st Central.

“We will continue to ensure that policyholders are protected from insurance fraud by working diligently to spot incidences of fraud and then use the full power of the courts to ensure fraudsters are brought to justice.”

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Investment bank Moelis & Co. has been appointed to review reinsurance backer 777 Partners LLC’s portfolio of football teams, raising new questions on the future of the multi-club owner.

New York insurance company Advantage Capital Holdings LLC, a major lender to 777, has appointed Moelis, which will evaluate potential options for 777’s football holdings including possible asset sales, according to people with knowledge of the matter, as reported by Bloomberg.

A-Cap’s loans to 777 are secured against some Miami-based investment firm’s assets.

The investment company’s football assets include Brazil’s Vasco da Gama, Italy’s Genoa Cricket and Football Club, Germany’s Hertha BSC, and France’s Red Star FC.

777 is trying to acquire football club Everton FC, but the deal has been dogged because of financing problems and scrutiny of 777’s management of its businesses.

Earlier this month, 777 dealt with accusations from lenders such as Leadenhall Capital Partners that Josh Wander, the investment firm’s co-founder, double-pledged assets as collateral.

In a lawsuit, Leadenhall said A-Cap had been so entangled with 777 that the lender was able to block 777’s efforts to restructure loans to other lenders.

A-Cap was owed over $2.2 billion by entities affiliated with 777 at the end of 2023, Bloomberg said citing the lawsuit filed in New York.

So far, A-Cap has rejected any ownership ties to the Miami-based investment firm.

The lending company’s appointment of Moelis is expected to highlight 777’s finances and could cast doubt not only over the Everton deal but also its status as a leading football club owner.

Currently, deliberations are at an early stage, and it is uncertain if they will result in the sale of any 777 football asset, the people with knowledge on the matter said.

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