Having served the insurance sector for some 35 years to date, Roberto Murru (pictured), head of financial lines at OneAdvent, knows better than most what it means to navigate the twists and turns of an ever-changing insurance marketplace. For, as dictated by Newton’s third law of motion, “what goes up must come down”, a fact that the insurance sector is only too aware of right now in the grips of a hard market.
For Murru and his team, the current state of the market holds a host of opportunities for those insurance businesses primed to take advantage of them. The financial lines MGA is particularly well placed to do so following its recent successful negotiations with the reinsurer, Active Re, which resulted in the provision of a DUA to OneAdvent to write financial institutes and commercial D&O on a facultative reinsurance basis.
The new facility will complement the MGA’s existing facilities and will primarily be used to write SME and mid-market sized companies in emerging markets, he noted. It has also opened up new possibilities for the MGA by removing the restrictions that previously limited its ability to write business that clashed with its other carriers.
Overall, he said, it’s onwards and upwards for the business and he is delighted by the opportunity to work with this new capacity, which is giving him and the team the opportunity and freedom to do what they’re best at.
“[Looking more generally] at the state of the market, it has been a difficult time for clients lately,” he said. “But the reality is that even if you doubled the premium, you’re only going back to five years ago. It is a massive jump on a year-to-year basis - but even if you go back just five or six years, that premium wasn’t sufficient anyway. But then that’s market conditions.”
There’s no denying that the market conditions have been very challenging for syndicates and companies during recent years, he said, with some syndicates shutting down, while others closed off certain classes of business. There have been cases where syndicates have had to close up either because they weren’t making money or because they couldn’t get the return they wanted, or due to an inability to increase how much business they could write.
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Before the changing circumstances of the market, it appeared that quite a few syndicates and companies were too focused on top-line underwriting rather than bottom-line profit, he said. He cited an example of this in a syndicate company whose financial institutions team went from zero sales to significant, and unprecedented, sales in just 18 months. The problem is that they wrote all the primary business at discount rates and have since closed down. You can grow fast, he said, but it doesn’t tend to last very long. The long and short of the matter is that the prices should reflect the exposure, and when you start cutting that down to the quick, there’s only one way for the market to go.
“So, it has been a very tough few years,” he said, “but if you’re still in the market then you can see the price increases. I’ve heard some brokers say we’ve reached the end of the price increase, but I’ve not seen one price decrease, and our average premium increase is 20% on last year, and last year was a big increase. It’s still a strong time. And there have been… some new entrants in the market but there hasn’t been a big flood of [these] coming in. So that has helped stabilise the market to a certain extent.”
For Murru and the OneAdvent team, the focus now is on a solid upwards trajectory, which will be supported by the strong broking relationships he has formed over his time in the insurance profession. Brokers understand implicitly the appetite of this MGA, he said, as well as where it operates and where it chooses not to operate, and he is proud that the business has a very good relationship with its broker partners.
“They’ve supported me, and I’ve supported them,” he said, “and it’s a two-way relationship. So, we do try to be as flexible as possible, even though the market is quite hard and probably more in our favour than in their favour. But the times will change, so you have to respect the point in the cycle that you’re in and maintain those relationships that are vital to any syndicate company’s success. Because as a London market player, although we get approached by brokers all over the world to write directly to them, the London market is our bread and butter.”
