Observations

As we moved through the first half of 2022, we saw a continuation of rate moderation and stabilization of capacity being offered by carriers. Though increases were still at hand, there was moderation in what underwriters sought for additional rate.

Underwriters have continued to take a very disciplined approach relative to terms and conditions and held, or looked to increase, deductibles. There was continued scrutiny and trimming of some coverages – notably Contingent Time Element, Non-Physical Damage BI cover, Service Interruption and Cyber related coverages.

The major issue with every renewal has been, and continues to be, valuations. A historic area of concern for insurers, reported values have drawn extra scrutiny as macro inflation, supply chain challenges and labor shortages have all come together as the perfect storm for values. The various trend factors published by varying valuation sources are up four to five times over historical averages. In some cases, underwriters have added endorsements to policies that limit recovery to the location specific value reported.

Hurricane Ian

Just as we were seeing a slowdown in rate increases and a loosening of capacity, Hurricane Ian struck Florida and then moved up the coast through Georgia and the Carolinas. As of this writing the modeling firms are producing estimated insured losses of anywhere between $50B and $75B. Most seem to be settling in around $67B. Inflation and demand surge will factor heavily into the ultimate aggregate losses coming from the high-end Category 4 storm (with wind speed only 4 mph shy of being a Cat 5 event).

While Ian, in and of itself, has not reversed the market, it is seeming to prove itself as the “final straw” to a market that was on edge from a profitability and a foundational exposure (valuations) perspective.

Forecast & Recommendations

As inflation is hitting a multi-decade high, we anticipate insurers will continue to put heavy emphasis on the accuracy of reported values and may push for appraisals at key locations.

The January 2023 Treaty renewals, which are being negotiated now, were already clouded coming out of the Monte Carlo reinsurance meetings in September. Reinsurers were talking CAT coverage rate increases of 20%-30% on clean business, pull backs in capacity and even the possibility of offering only named perils coverage. With Ian’s landing, which will hit these same reinsurers, we anticipate much more draconian pricing and coverage terms – perhaps 80%-100% windstorm rate increases in 2023. Insurers will pass these reinsurance cost increases on to insureds, while possibly offering less capacity at the same time.

Convective windstorm, including tornados and hail losses, will continue to be underwritten closely and will see pressure for increases in applicable deductibles.

Outside of the CAT perils (windstorm, earthquake, flood, tornado, hail and wildfire) flat to low single-digit rate increases are expected for loss free accounts in most industries, with some rate reductions possible on select accounts through competition.

Underwriters will seek increased premiums as they deal with inflationary increases by insisting on reported renewal values that are reflective of such factors.

We also anticipate a flight of capital away from catastrophe coverage, not only in the traditional insurance/reinsurance market, but in the alternative market as well, as investors shy away from increasingly volatile catastrophe exposures.

It is imperative to present thorough, quality underwriting information. In addition:

• Be early in the process, as underwriters are buried with new business opportunities as everyone goes to market looking for a better deal. But be aware that many underwriters will not look at an account until 30 days prior to renewal.
• Differentiate your risk from the others so that yours goes to the top of the pile.
• Be model-friendly so underwriters can upload data into the models quickly.
• Be able to back-up the validity of your reported property and business interruption values, with appraisals where possible.
• Consider alternative retentions and limits.
• Challenge existing program structures.

1) One of our members has landed a 15 country account from he alphabet brokers by creating a support team consisting of one of our board members. A new approach which brought profitable business to our network.

2) Another partner assisted a producer who landed another new account from an alphabet house broker by offering a free of charge compliance account on their international placements. Had the BORL not been issued to the partner, they would have charged a fee for services rendered. As we received the account, no fees were charged and the partners landed the account.

3) A North American partner had an International account where Central America played an important role in landing the account. We Intervened as a conduit in assisting the partners in working together, And in the end , it was a win for AESIS.

These episodes indicate how our partners are creating synergies amongst we in trying to acquire new business. This would be excellent way to plan a new approach between partners in competing in the International arena. The AESIS board would hope that many other partners can embrace this new approach in acquiring new business, and we look forward to receiving the input from our members in this respect.

Irish HR-tech start-up raises €2.5m to provide tailored employee benefits

Since its founding in 2016, Eppione has supported more than 1,000 businesses across the world. It has teams in Ireland, the UK, Australia and New York.

Eppione, a Dublin-headquartered HR-tech start-up, has secured €2.5m funding to bring its platform to more markets.

The fresh investment, led by Dublin VC Delta Partners, brings the company’s total funding to date to €3.75m.

Eppione was founded in 2016 by David Kindlon, Neil Fallon and Ernest Legrand. It has grown since then to support more than 1,000 businesses around the world and has staff in Ireland, the UK, Australia and New York.

Its platform helps companies manage their employee benefits, with personalised and localised offerings. The start-up employs a team of experts in benefits, insurance and financial advice, and it is a regulated insurance brokerage.

Its tech also gives employers an insight into how their benefits offerings are performing, with an analytics module that creates automated reports into areas such as gender pay gaps and workforce diversity.

David Kindlon, co-founder and CEO of Eppione, said that this funding announcement is “just the beginning”.

“We have always sought to be a world leader in the employee benefits market, and this injection of capital will progress that vision. Employee benefits have long been overlooked by many employers as well as employees who are often unaware of what is available to them.”

Kindlon added that while the pandemic changed attitudes around employee benefits, the processes for accessing those benefits have not.

“We are here to change that, making employee benefits personal, simple and valuable for both employers and employees.”

Richard Barnwell, general partner at Delta Partners, added that with today’s globally distributed workforce, a new way of delivering localised employee benefits is “crucial for all businesses”.

“Eppione’s platform delivers a customised benefit experience for each employee, no matter their location, and gives the company a painless way to sign-up and manage their entire benefit offering, while unlocking huge cost savings and expert advisory services through the integrated insurance brokerage.”

Delta Partners funds early-stage start-ups in Ireland. Earlier this year, it announced its intention to back 30 emerging Irish tech players over the next few years from a €70m fund. In September, general partner Amy Neale gave SiliconRepublic.com her advice for founders.

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