Ex-MS Amlin duo launch InsurX with aim of being ‘Ki for the market’

The business will be led by Gilbert Harrap, who recently left his role as head of strategy at MS Amlin, and William Iles, formerly head of analytics at the insurer.

The co-founders argue that there has been a “paradigm shift” in attitudes towards digital placement and programmatic (automated) underwriting within the market over the past year, amidst the pandemic-driven shift to work from home and with the success of Brit’s Ki syndicate.

Harrap argued that greater use of digital placement and follow capacity could trim significant cost from the insurance sector’s high expense base, with benefits to both brokers and carriers.

“We need to leverage well-structured data and modern digital technologies to match capital more effectively with risk,” he said.

Iles said digital placements represented a “big bang opportunity” for the London market, but warned that there was a risk of building many “corner stores” if all market participants attempted to set up in-house solutions.

He compared such platforms to “private roads” linking buyers and capacity but said industry-wide infrastructure would be more efficient.

“Our intention is to provide the public motorways for market players to use,” he said.

Harrap added: “We’re selling it as a marketplace that facilitates greater access to capital for brokers and greater access to business for carriers.”

On the company’s website, InsurX is described as “fiercely independent and freely available to all market participants”.

We’re selling it as a marketplace that facilitates greater access to capital for brokers and greater access to business for carriers

Gilbert Harrap

Harrap and Iles described InsurX as a “capacity exchange” connecting brokers and carriers to match appetite for risks, with carriers able to select various options for the types of business they are willing to follow.

For example, in marine hull this might include vessel type or length, as well as specifying basics such as line size percentage, the leader share that should be retained, and a minimum benchmark for the contract’s three-year loss ratio.

The platform is set to enter a six-month “early adopter” phase working with several brokers and carriers across certain lines of business, which are likely to include marine hull, cargo, US D&F, terrorism, contingency, excess casualty and cyber.

InsurX emphasised that the firm did not want to try to disintermediate brokers and that it was pitching its platform to providers across the market as a means of developing a new “weapon in their armoury” without having to invest in upfront tech development. For the top three players, the attraction could be bringing additional capacity to supplement facilities, for example.

Indeed, the firm said the role of smaller intermediaries was one of the drivers for it to launch in insurance lines, as the reinsurance market is already host to digital placement providers such as Tremor, Akinova or Supercede.

In the more heavily consolidated reinsurance market, “you have to be adopted by one of the big three to get traction”, Harrap noted.

If we’re doing 5% of a placement, we’re not solving a broker’s problem

Gilbert Harrap

The firm also said it does not see InsurX as looking to compete against Brit’s Ki – which will write $400mn of premium this year – but rather trying to “accelerate” the development of carriers wanting to offer algorithmic follow capacity.

The pair see the future determinant of InsurX’s success resting in its ability to deliver a volume play. They want InsurX to be able to offer capacity for 10% to 25%+ of a syndicated risk placement once their solution has reached scale.

“If we’re doing 5% of a placement, we’re not solving a broker’s problem,” Harrap said.

Harrap, a former property catastrophe underwriter, emphasised that portfolio underwriting does not mean blind follow with no underwriting, as some senior industry leaders have claimed. He said that follow-form underwriting was amongst the most data-driven underwriting in the market.

Ultimately, the InsurX founders predict that the market will bifurcate into fewer stronger lead markets that employ advanced underwriting techniques, and portfolio-underwritten follow capacity deployed with an ultra-low expense base.

Lloyd’s sought to make greater distinction between lead and follow underwriting as one of its strategic aims under Blueprint One modernisation plans. The plans deeply divided the Lloyd’s market, with the widespread adoption of such a model spelling an uncertain future for smaller syndicates with little leading expertise. Under Blueprint Two, the lead-follow work was deprioritised.

As this publication has previously argued, success in terms of efficiency gains in the overhauled lead-follow model will ultimately rest on the willingness of syndicates to cut back their personnel and expense base connected to following capacity.