Speciality division risk partnership philosophy

Bernie de Haldevang, head of specialty at Canopius, talks about his division’s risk partnership philosophy.

(This article originally appeared in The Canopius Herald in March 2018)

How will the management buyout affect Speciality underwriting at Canopius?
Canopius is moving towards a flat, inherently more flexible management structure, which will allow us to make faster and better underwriting decisions. Faster is easily explained: referral will be reduced or eliminated, and will be quicker when necessary. Better is more complex: we believe that greater engagement of everyone in the business leads to a broader sense of ownership. With that comes greater authority, but also increased responsibility. Canopius underwriters know that any piece of business they write will have an impact on their own pockets – they must take commercially minded decisions.

These are always set in context of course. Along with our independence, our size allows us to make decisions in the context of the whole firm, and in the bigger picture of broker and client relationships driven by a risk-partnership philosophy. An underwriter may choose to write everything presented for a client whose risk philosophy matches theirs, even when a specific risk wouldn’t fit otherwise. Equally, a broker may present a particularly attractive risk, but the underwriter may refuse it based on an earlier disconnect with the client. Our enthusiasm for enlightened opportunism must be tempered by the danger of picking the wrong partners.

In all this, as a relatively small entity we are able to achieve cohesion at the underwriting committee level. Our collegiate approach allows everyone to understand the impact of their decisions on colleagues’ opportunities. It makes decision-making a holistic and totally Canopius owned process. It is about conferral, not referral.

How does the underwriting process work within Specialty?
When looking at a risk, underwriters must try to unearth as many of the ‘unknown unknowns’ as possible, converting them into known unknowns, and make decisions based on the comprehendible uncertainty that remains. To do that demands experience in the relevant sector, and the wider knowledge of how that sector fits within global economics and politics. We believe we have such people at Canopius. We have changed our personnel profile dramatically over the past two years by hiring people with frontline industry experience, specialists from banking, for example. We put them on the other side of the desk as underwriters.

When a former banker makes the transition from looking at loans as assets to looking at the same risks as contingent liabilities, he changes his focus, but still understands the client process. These industry experts’ knowledge has already paid dividends and sparked interest from clients: I believe it will continue to do so.

In this way, we can better understand our clients’ motivations and their perceptions of risk and risk management, which alongside solid communication and transparency are key to building enduring client partnerships. That understanding is the basis of an alignment of interests, which is critical to building a risk partnership philosophy. We want clients who have gone through the exercise of uncovering the unknown unknowns themselves. When there is too little alignment of interest, or too much moral hazard, we walk away.

How do you view the role of the broker in the changing landscape of distribution?
Brokers are in a very strong position. They and insurers share a useful co-dependence, and an alignment of interests. We need and want to work through them. But we need to be attractive to their clients. We concentrate on a handful of specific areas that work for us, but the only way to retain business and remain relevant is to get in front of the client, in cooperation with our brokers, so that they can appreciate what we do, especially in certain speciality lines. We are not the first syndicate to work with security consultants for example, but we are the first to have them at the box and in our meetings, meaning that we can differentiate our offer, by sharing our country knowledge and intelligence. So we rely on our brokers, but the client relationship is key too. Very simply, nothing beats face-to-face business discussion.

We become attractive to brokers when their clients think we are a good risk partner. They like to be approached in an informed way appropriate to their business. They want insurers that understand their sector, and will tell them where the problems could emerge – to help identify the unknown unknowns. That is what we do best.

Bernie de Haldevang joined Canopius in May 2016 to run the Specialty division. It comprises Credit and Political Risk, Trade Credit, Crisis Management, Accident and Health, Crisis Management, Medical Expenses and Casualty.

 

Posted on 13th March 2018.