Foreign markets an option for hard-to-place risks

Foreign markets an option for hard-to-place risks | Insurance Business Australia

Foreign markets an option for hard-to-place risks

An expert in finding capacity for hard to place risks has encouraged brokers not to give up when they first hit a brick wall, as there are often viable alternatives further afield.

Ingrid Anderson, executive director of Steadfast Placement Solutions (SPS), told brokers at the recent NIBA Convention that there are several international markets worth exploring.

“The Singapore insurance market offers different options for capacity in various classes,” she told attendees. “The London company market, the Asia company market, and the Middle Eastern company market will also all write Australian business.”

However, Anderson did urge caution when turning to international markets, and suggested brokers communicate very clearly with their clients.

‘One thing that we do always speak to our brokers about, is identifying whether these offshore insurers are non-admitted, non-APRA approved insurers,” she said.

“If they are non-admitted, we make sure that the Unauthorised Foreign Insurer (UFI) exemptions are all satisfied and we tell the broker to make sure they’ve advised their client, in writing, that it is a UFI and that they’ve obtained the insured’s agreement to using a UFI – but we do feel they are options.”

Anderson, who revealed SPS managed to place 80% of the 2,500 quote request submissions it received last year, also said excess layers can help secure capacity for high risk clients.

“Some markets specifically like excess layers, which can assist when the local markets don’t want to write the full limit or don’t want to write an excess layer,” she said. “So, if there’s a primary layer available in Australia or in Lloyd’s, they can be utilised there.”

Anderson also suggested brokers approach the Lloyd’s marketplace from a different angle, if they’re finding trouble securing capacity from a single syndicate.

“The Lloyd’s market, while on one hand is limiting capacity and insisting on some syndicates ceasing writing altogether in certain classes, can still be utilised to obtain terms on most classes of business,” she said.

“Lloyd’s traditionally writes smaller lines and likes primary layers or small limits, so if you’re trying to obtain a $10 million limit on a difficult property risk in London, multiple syndicates need to be approached as most markets will only offer very small lines, usually around $1 million – maybe a little bit more, maybe a little bit less, depending on the risk.

“This means you’d need 10 insurers to fill a $10 million limit, obviously this is time consuming but on those kinds of risks, most risks can be placed at a price.”