This article was produced in partnership with Frontier Global Underwriting
Large insurers are hard to find in the jungle of the investment managers insurance (IMI) market – think retail mortgage funds, agricultural funds and digital asset or crypto funds.
“The majority of carriers in the IMI market are targeting your more established vanilla wholesale investor funds, such as property, equities, fixed interest, venture capital and private equity,” Simon Spencer (pictured above left), financial lines and cyber underwriting manager for Australia & New Zealand at Frontier Global Underwriting, recently told Insurance Business Australia.
Areas perceived as highly volatile, reliant on untried or untested technology, or overly impacted by external and highly localised factors such as climate are often no-go zones for establishment firms.
“Insurers are cautious and conservative in [these] areas,” said Spencer.
These are the very areas that Frontier targets and has built up a level of expertise that punches seriously above its weight for a boutique underwriter based in Australia.
“We like to differentiate in our specialisation by focussing on venture capital (VC) and property funds that have an emerging ‘edge’ such sustainable or impact building practices in the REIT space or emerging tech in the VC space,” said Spencer.
“We like these strategies and sectors because we take the time to understand them, talk to clients and as such have a level of experience our competitors just don’t have.”
The IMI market is a dynamic environment which demands specialist underwriting across the three disciplines of Professional Indemnity (PI), Directors & Officers Liability (D&O) and Crime.
Frontier focuses on building lasting relationships and strategizes for the long game.
“We try to avoid writing a risk one year and then substantially re-underwriting it 12-24 months later. We don’t play the best price wins game that the platform or inexperienced operators push – it just isn’t our business model,” said Spencer.
IMI is an area that continues to offer opportunities for carriers interested in insuring the financial institutions and investment sector.
“On the whole rates are holding up, particularly in the mid-market space and we haven’t seen the large increases that impacted the public company D&O market in the 2020 to 2021 renewal cycle,” said Spencer.
Since commencing trading four years ago, Frontier has seen the market go through a range of difficulties, including COVID-19. But the plucky firm seems to relish a challenge.
“Things can go wrong in in this space, it is the nature of the sector but also life, this is why we partner with clients that buy into our model because when the time comes and we need to pay claims, we want those clients that are deserving of our protection to be protected. We want their businesses to survive a catastrophe, this is what we are here for,” said Spencer.
Frontier partners with brokers who treat advice rather than sales as the core tenet of their business model and investment managers who have their investors and stakeholders’ best interests at heart. Reflecting this approach, education and explaining every step of the underwriting process is a central part of Frontier’s approach.
It knows that a cookie-cutter approach doesn’t work for quickly evolving sectors it specialises in and that bespoke solutions are important.
“These types of risks cannot be underwritten fast-flow or via conventional submission practices,” said Spencer. It takes close collaboration between the insured, the broker and Frontier.
“It is important that brokers and clients understand we don’t write sectors, we write individual clients,” said Frontier managing director Joel Pridmore (pictured above right).
“That is the difference between Frontier and our competitors.”
Frontier is optimistic for the future and ready to assist clients in related areas that other underwriters shy away from.
“We see opportunities to further expand our presence in investment management insurance sector,” says Spencer.
“We have what we believe to be the broadest appetite in the broader funds management sector generally and can deploy $10m limits for the right clients.”
It also offers primary cyber insurance as a companion product.
And importantly, Frontier is an Aussie firm holding its own against global players. There is often a perception that for these types of risks, brokers and clients need to tap into London-based expertise.
Locally staffed, licenced and up to speed with Australian rules and regulations, Frontier solutions are increasingly getting real and genuine traction across a range of funds management sectors, particularly mortgage funds and agricultural schemes as clients seek a risk-transfer solution.
“Frontier provides everything [clients] require right here locally on the ground in Australia,” says Spencer.
Frontier Global Underwriting provides world class risk transfer and insurance solutions to clients around the globe. The founders and senior management have over sixty years’ combined industry experience, having worked intimately in the markets in which they serve. With offices in London and Sydney, Frontier provides 24/7, 365 days a year service to its client base. Frontier is a full service Financial Lines coverholder with specific expertise in the Financial Institutions sector.
