3 Things – Insurtech Momentum, Wholesale Opportunity & 2023 Ups / Downs

Hi Friends, it has been another week of lots of industry news. We, as always, read as much content as we could and have brought everything together to bring you the latest 3 Things We Learned, our weekly post using the weekly headlines to tell the story of our insurance industry, tying everything to significant themes.  This week, there were plenty of upward movements but balanced by a few troubles spotted.  Investments continue and value-plays with new offerings.  Insurers are continuing to see the secondary perils hit unexpected geographies creating an uncertain risk environment for some companies. Let’s dive in and discover what we learned this week.

Momentum for Insurtechs Vouch, Nirvana, Aon/CoverWallet, and AXA/Reask

There were signs of momentum for insurtechs as we saw funding and capital flowing to unique risk and underwriting operations.  Vouch has successfully navigated the trouble from last year when Silicon Valley Bank collapsed and had a positive 2023 with 66% growth and improved margins.  These results led to $25 million of insider-led new funding, and their CEO Sam Hodges commented that this new capital would help fuel expanded products and distribution channels.

Commercial auto-focused insurtech Nirvana was able to attract capacity by adding to its reinsurance panel with A+ rated reinsurer partnerships. This follows a successful Series B funding event and the launch of a non-fleet program. Justin Ward, head of production for North America programs at Gallagher Re (Nirvana’s reinsurance broker), emphasized the stringent current market conditions for commercial auto insurance and praised Nirvana’s disciplined underwriting and innovative use of technology.

Aon, leveraging their acquired insurtech asset CoverWallet, announced the launch of a Partner Risk Insights digital platform that will help U.S. organizations simplify the way they manage insurance-related third-party risk.  The digital platform will serve as a command center for risk managers, procurement officers, and general counsels to manage their businesses’ third-party networks, including suppliers, vendors, and commercial tenants.  The platform’s real-time dashboard and advanced analytics will provide insights into third parties’ insurance compliance status and enable more informed decision-making.

In a move focused on the property market and leveraging parametric insurance, AXA Climate forms a partnership with insurtech Reask.  The partnership aims to enhance parametric risk transfer solutions for cyclones, making them faster and more accurate through the use of machine learning and artificial intelligence.  Reask’s expertise will provide AXA Climate with advanced visibility into risks and data for constructing and calibrating parametric triggers for windstorms.  We will continue to see others leverage the opportunity in property as Chubb’s Evan Greenberg comments this week that it is the ‘best priced business in the world’ and the changes in weather patterns.

New Ventures and Opportunities in Wholesale and Executive Lines

There continue to be opportunities and new entrants looking to take advantage of specialty distribution.  Starr is the latest to target the wholesale channel with the unique launch of Twin Maples Specialty, which will focus on the whole brokerage community.  The new division will focus solely on the unique needs of the wholesale distribution channel and provide client-focused solutions for middle market and small business segments with a dedicated underwriting team.

Separately but related, Acrisure has launched a new division integrating its wholesale P&C businesses under a new brand “Wholesure.”  The division will include MGAs, Program Administrators, and various specialty businesses.  Similarly, this move recognizes the growing importance of the wholesale distribution channel.

Distinguished Programs introduced their newest team addition to establish an Executive Lines business.  This acquisition is an entirely new venture that brings in industry veterans to focus in the wholesale broker channel.  Executive Lines are another area of opportunity for new ventures with the changing landscape of risk profiles and larger players pulling back.

More 2023 Results Review Positives and Signs of Trouble

There were some signs of trouble for two companies as 2023 results continued to come in. A.M. Best rolled out a number of rating decisions. Pie Insurance Group’s A- rating has been put ‘under review with negative implications.’  Their 2023 results included an ‘adverse reserve development in its New York book of business,’ which will force them to consider ‘strategic initiatives, ’ which could include various options like raising more capital or a potential exit.

Church Mutual was also placed ‘under review’ following a year in which their combined ratio reached 127.9 and significant surplus loss created a difficult environment caused by weather and liability losses along with significant defense costs.  It looks like they will be facing a downgrade, which could mean they will have to make strategic decisions like shedding assets, de-risking their portfolio, and joining balance sheets with other carriers.

Others reported results that fared better. Canopius achieved a record 2023 with significant growth and an improved combined ratio. Despite a decrease in large catastrophe losses, the company experienced an increase in small catastrophe claims, including severe convective storms, wildfires, floods, and earthquakes, surpassing the previous year’s levels.

Hagerty experienced a strong performance driven by successfully executing their strategic priorities and they expect to continue growth into 2024.  Their plans include building their collectible car Marketplace and continuing to invest in technology that caters to their unique audience of auto lovers.

Join us as we continue to explore the headlines and news shaping the insurance sector, and stay tuned for more insights on the unfolding narrative of our industry!  Stay productive, stay safe and stay in touch!