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Marsh has unveiled a new insurance solution designed for custodians of digital assets, including financial institutions.

This new facility offers up to $825 million in insurance coverage to Marsh’s global clientele and is crafted to cater to organizations holding digital assets in cold storage — offline storage — as well as those seeking insurance for risks associated with assets safeguarded through Multi-Party Computation (MPC) or other custody technologies not solely reliant on offline methods.

Supported by Lloyd’s syndicates and London-based international insurers, the facility aims to safeguard organizations’ digital assets from a variety of risks, including natural disasters, physical theft by external parties, and insider threats involving employee collusion. The launch comes at a time when various sectors are keen on establishing their presence in the digital asset custody space, riding the wave of a decade’s growth and maturation within the digital asset market.

Marsh’s 2023 global technology industry risk study indicates that half of the technology industry’s global respondents are either currently involved with or exploring digital asset opportunities. Additionally, 136 banks insured by the Federal Deposit Insurance Corporation in the United States are embarking on or are already engaged in digital currency-related projects.

The new insurance facility is the brainchild of Marsh Specialty’s Digital Asset team, based in New York and London, specializing in offering risk transfer solutions for businesses involved with blockchain, cryptocurrency, and other digital assets.

“With the digital assets space continuing to evolve rapidly, organizations are navigating a complex risk landscape amid an expanding ecosystem of stakeholders,” global digital asset leader at Marsh Specialty Jacqueline Quintal said.

“Our new facility equips custodians with critical protection against the foremost operational risks encountered in digital asset management. We are eager to assist our clients worldwide in matching their risk financing with their commercial strategies, enhancing operational resilience, and solidifying their market position in this burgeoning sector.”

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What impact have the COVID-19 pandemic and the ongoing geopolitical tensions worldwide had on mergers and acquisitions? A new insurance brokerage report suggests the market has been soft but might be about to make a comeback.

BMS, an independent specialist insurance broker, has released the fourth edition of its global Private Equity, M&A, and Tax (PEMAT) report.

“The market in 2023 was suppressed by challenging socio-economic and geopolitical developments and with those circumstances going nowhere fast and several upcoming elections, they will continue to influence deal flow. However, 2024 promises to be dynamic,” said Tan Pawar, managing director and head of private equity, M&A and tax at BMS.

Private equity funds were found to have increased their committed but unallocated funds and there has been a 21% increase in overall enquiries, which suggests a strong transaction appetite in the market.

“Reduced interest rates and substantial dry powder within PE houses are likely to stimulate investment activity. At the same time, the appeal of emerging markets, as well as the resilience of sectors like renewables and infrastructure, will keep market conditions evolving,” said Pawar.

The report found that the soft market had showed the disparities in valuations between buyers and sellers, which had served as a challenge when it comes to completing deals. The secondaries market got off to a slow start in 2023 but it eventually increased activity when Q4 rolled around as LP-to-LP transfers began to dominate transaction volumes.

Warranty and indemnity claims saw a surge in activity in 2023, influenced by the boom of M&A activity in 2021 and 2022. The most resilient sectors were renewables & energy, financial services, and retail & consumer as they saw increases in deal volume even with the downturn of M&A.

The PEMAT report analyses the trends of the 2023 market and provides an outlook for the M&A markets of the UK, Europe, North America, Asia, Middle East, and India.

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Insurtech MGA Coterie has secured $27 million in its latest round of growth capital funding.

The funding round, which was oversubscribed, included new investment from Hiscox, alongside existing investors Intact Ventures, Weatherford Capital, and RPM Ventures.

“We’re incredibly grateful for the recognition and belief in how we’re reimagining the small commercial insurance space through continued innovation and dedication to independent agents and brokers,” said CEO David McFarland. “This is an incredibly exciting time in Coterie’s growth as we focus on bringing enhanced value for our partners by pushing boundaries to shape the future of insurance.”

Coterie has reported a developed ultimate loss ratio below 60% for eight consecutive quarters. In 2023, the company achieved a revenue increase of over 200% and expanded its reinsurance panel by adding two top-tier reinsurance markets, both rated A or better by S&P Global.

The funds from this latest investment round will be channeled towards developing new insurance products, enhancing underwriting processes, and further automating services for policyholders, according to a company release.

“Coterie continues to impress us with their innovative use of technology, data and automation to simplify the quoting and binding process,” said Drew Weatherford, founding partner of Weatherford Capital. “We’re confident in this team’s ability to truly transform small business insurance.”

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The re/insurance broking giant Aon has announced the launch of a tool that will help clients better visualize and understand their exposure to physical climate risk.

Aon’s new Climate Risk Monitor can assess the current and future exposures of an organization to key chronic risks such as drought, extreme rainfall, extreme heat, freeze, and wildfire. It uses different climate change scenarios and provides diagnostic reports on the impact on individual assets and portfolios as well as geographical visualizations.

“In developing Climate Risk Monitor, we utilized our wide-ranging scientific and business expertise to transform a wealth of well-validated climate data into useful information for clients,” said Liz Henderson, global head of climate risk advisory for Aon.

“The importance of this output extends beyond physical risk management – having a better understanding of climate exposures can also assist with human capital decisions around health and talent.”

With the tool, risk managers will be able to further understand the climate risk and inform property insurance placements for their organizations through collaborations with brokers from Aon in helping obtain optimal limits as well as renewals pricing.

The climate risk monitor can also help clients in assessing the changing risk profiles as well as managing risk in locations where conditions may be changing. The tool also assists in demonstrating climate understanding and planning to their stakeholders as well as supporting their climate disclosures. It will also aim to provide better information to insurers when it comes to risk selection as well as pricing and reinsurance renewals.

The tool uses standard IPCC (SSP-RCP) emissions scenarios through various time horizons to align with the regulatory requirements. The firm leverages several global climate model outputs that came from global academic and government institutions to produce relevant peril metrics.

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SOCAR Sigorta ve Reasürans Brokerliği (SOCAR Broker), a subsidiary of SOCAR Türkiye, has been authorized to operate as an accredited broker at the insurance and reinsurance marketplace Lloyd’s.

SOCAR Broker is the fourth insurance institution in Turkey – which includes 195 brokers – to secure a Lloyd’s license. Through being a broker at Lloyd’s, it will have access to a network of insurers and reinsurers, boosting its capacity to comprehensively serve clients.

In a press release, the broker said that it has extended its insurance and reinsurance brokerage solutions and will be putting focus on serving subsidiaries and stakeholders from SOCAR Türkiye. It will collaborate with domestic and global insurance firms as it looks to provide options to corporations and individuals.

SOCAR Türkiye is the country’s largest integral industrial conglomerate.

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As sustainability moves further into the spotlight for insurance stakeholders and customers alike, the industry must establish data standards to improve the quality of environmental, social, and governance (ESG) disclosures by insureds.

That was the rallying call at a forum organised by global re/insurance group Chaucer in late January. Chaucer’s sustainability experts have emphasised that uniform measurement and reporting methods would enhance progress tracking and foster greater trust among stakeholders.

“Our key message was to corral the industry towards thinking about data standardisation, making insurance an easier product to sell,” said James Wright (pictured), chief risk officer at Chaucer.

The call for standardised ESG metrics also resonates with concerns about the burden placed on brokers, who face a barrage of disparate questionnaires from various insurers.

Wright emphasised the need for collaboration to address the challenges of data standardisation and to streamline processes to alleviate inefficiencies and client frustrations.

“Standardising sustainability-related information would benefit clients, brokers, and carriers alike,” he told Insurance Business.

Sustainability– the challenges and opportunities

Aside from data standardisation, Chaucer’s Sustainability Forum tackled a spectrum of other pertinent industry issues related to sustainability.

The discussions encompassed the evolving landscape of ESG regulations, their impact on performance metrics, and the complexities surrounding carbon offsetting and decarbonisation efforts.

One point highlighted during the forum was the significant hurdles to achieving industry-wide standardisation. For instance, sustainability metrics are subjective, and quantifying certain data points, such as social impact or an entity’s carbon footprint, can be challenging.

“There is no definitive definition of what is ‘good’ in sustainability or ESG. Different stakeholders prioritise different aspects,” Wright explained. “Some firms are heavily interested in the environment and its importance. Others are more focused on social causes. How do you turn that into data? It’s incredibly difficult. So, we think there will be a core set of information and data that we fully expect the vast majority of stakeholders to be interested in.”

The role of data quality in ESG disclosures

As for the role of technology in sustainability efforts, Wright acknowledged its potential but emphasised the importance of data quality and reliability.

“While technology can aid data collection, ensuring robust and reliable data remains a challenge. Stakeholders must prioritise data accuracy to avoid pitfalls like greenwashing and regulatory challenges,” he said.

“When we talk about the data that we want to collect, it isn’t just about standardising the data; it’s also about improving the quality and robustness of that data to help us make informed decisions.”

Navigating regulatory challenges is another critical aspect of sustainability initiatives. Industry players must stay abreast of regulatory developments to ensure compliance and strategic alignment.

“Regulatory demands are evolving, albeit fragmented. Expectations for harmonisation and expanded regulatory scope are on the horizon,” said Wright.

Finally, Wright addressed the growing focus on decarbonisation.

While reducing carbon usage and using carbon offsets to achieve net-zero targets is critical for organisations, he cautioned against overlooking the risks associated with carbon offsetting projects and advocated for robust risk management strategies.

“Offsetting (carbon emissions) is crucial, but understanding the associated risks is equally important. We are exploring insurance solutions to mitigate risks associated with offsetting projects,” said Wright.

What’s next for Chaucer after its sustainability forum?

Reflecting on the next steps, Wright outlined ongoing efforts to standardise data and foster more collaboration and engagement within the industry. Alignment between brokers and carriers will be crucial because brokers can provide a realistic perspective on achievable goals and “bring a sense of pragmatism” to the debate.

“We’ve seen significant improvement in this regard, with engagement from major brokers in standardising approaches,” Wright commented.

Moving forward, Chaucer will continue to engage with market groups and stakeholders, advocating for standardised approaches and transparency. Wright also highlighted Chaucer’s partnership with Moody’s for the ESG Balanced Scorecard, which provides a standardised framework for evaluating sustainability performance, as a significant part of its efforts.

The scorecard uses up to 158 unique data points to assign scores across various ESG factors – including on the disclosure of greenhouse gas emissions, health and safety of workers and boardroom diversity – to give underwriters better visibility of a client’s current ESG performance. It is also adaptable to evolving sustainability priorities over time.

“The Balanced Scorecard allows us to align our sustainability objectives with the UN Sustainable Development Goals, providing a unique framework for assessing ESG performance,” he said.

Ultimately, better data quality and data standardisation is a journey that the entire industry must undertake together.

“Several peers I spoke to are wrestling with the same problems Chaucer has in getting good data,” Wright reflected. “There’s no-one out there who’s knocking it out of the park when it comes to this. We’re only really going to be able to get better as a marketplace.”

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Specialist insurer CFC has announced its foray into the carbon insurance market with a brand-new offering.

The newly introduced Carbon Delivery Insurance by CFC is also notably the industry’s first product designed to safeguard businesses against both physical and political risks that could impede the delivery of voluntary carbon credits, the MGA states.

The new policy guarantees coverage for the full value of the buyer’s investment in the event of non-delivery of carbon credits, providing a significant layer of financial protection.

With the new proposition, CFC explains that it aims to further associate with the voluntary carbon credits market, a sector experiencing rapid growth and increasing demand for risk mitigation solutions.

Utilizing a new underwriting approach, CFC evaluates the carbon project itself rather than the policyholder to eliminate the need for extensive application procedures, allowing for same-day quote and policy issuance. This product is available for over 300 carbon projects, with the list expanding.

CFC’s entry into the market was also driven by a recent survey of over 500 companies actively participating in the voluntary carbon market (VCM), with results revealing significant concern among buyers about potential delivery shortfalls. Three quarters (75%) were revealed to be “very concerned” and 65% have already faced losses due to non-delivery.

George Beattie, head of innovation at CFC, emphasized the role of insurance in promoting positive change within the voluntary carbon market.

“By facilitating risk transfer, we believe that insurers can drive positive change while getting ahead in a market whose value could exceed $1 trillion by 2050,” Beattie said.

To further its objectives, CFC has also partnered with IncubEx, a carbon innovation platform, to integrate its carbon insurance products within carbon trading venues and facilitate connections with specialized insurance brokers. Neil Eckert, chairman at IncubEx, praised CFC’s initiative and innovation, recognizing the critical role of insurance in scaling the carbon markets.

“To facilitate investment and encourage liquidity across the voluntary carbon market, we already have a number of other products in development to meet the needs of different parts of the carbon value chain,” Eckert said.

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Lockton Re Capital Markets (LRCM) has announced the appointment of Brendan Roche as its new head of distribution.

Roche’s career includes tenures as an SVP at GC Securities and nearly 14 years at Marsh, where he held the position of global leader of ILS and SPV Centre of Excellence. His experience also spans various roles within hedge funds, investor, and financial sectors.

Roche, who has over 25 years of experience in the sector, will be reporting to Zach Breslin, the head of LRCM, and will be stationed in Europe.

Breslin shared his enthusiasm about the new addition to the team welcoming Roche as the firm seeks to enhance client services and offer solutions complementary to Lockton Re’s current portfolio.

“His depth of experience and excellent reputation are a great fit for our growth and expansion, as we are strategically focused on investing in the right people to support our clients in accessing the most efficient forms of capital to fund their businesses,” Breslin said.

Robert Bisset, chairman Global Retrocession & Property Specialty, Bermuda & Market Capital, Lockton Re, highlighted Roche’s alignment with the company’s dynamic culture and client-focused approach.

“Brendan is a great fit for the dynamic culture of Lockton Re and our continued focus on clients and colleagues. It’s been an exciting journey since we launched LRCM; we have added colleagues, built infrastructure, and are now providing solutions across a broad spectrum of capital providers and product categories. I look forward to working with Brendan, as do the wider team,” Bisset said.

Roche’s appointment follows another recent hire for Lockton Re, with the broker unveiling an expansion to its cyber practice by naming Brian Lewis as senior broking leader for cyber in North America.

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