QBE North America will continue to manage down its property book and scale up in financial lines and accident & health following a 2023 result that left a lot to be desired.
The insurer will also look to up its game on broker service, having struggled to communicate its appetite and growth areas in the past.
That is according to QBE North America CEO Julie Wood (pictured), who stepped into the US top role at the insurance group on a permanent basis last fall.
Wood’s ascendancy came months before the insurance carrier reported an operating loss for last year, with what the CEO labeled a “very disappointing” combined ratio (CR) of 103.7% that dragged behind the rest of Australian parent QBE’s global portfolio.
QBE North America was hit by a need to bulk up reserves to counter the impact of December 2022’s Winter Storm Elliot and crop developments, to the tune of $200 million. Inflationary pressures and non-core and run-off business performance also put a dent in its results.
In a bid to turn things around and get ahead of the secondary peril storm impact, the insurer has been managing down some areas of its “overweight” catastrophe exposed property book. It has terminated some programs as it looks to manage its wind exposure across its commercial markets business.
“The market has faced, I’d say, a capacity crisis in general around areas that are wind exposed,” Wood said. “We’re seeing this come out with new modeling, in 2024 … what everyone thought was exposed, that’s going to increase.
“We have been ahead of that in the past year around: how are we going to make sure that we’re managing less limit exposure, as well as price adequacy? Ultimately, that also gets to risk selection.”
The bulk of QBE North America’s legacy exposure from non-core run-off lines should cease to have an impact moving forwards, Wood confirmed. The insurer continues to have a capacity commitment to its homeowners’ portfolio, but this is set to “significantly” diminish into 2025.
“That’s going to be a continuation that’s showing our commitment to drive down cat exposed areas,” the CEO said.
Despite industry-wide struggles with crop and the drought impact, QBE remains committed to the line, which makes just over 50% of its North American gross written premium (GWP). QBE North America achieved a 96.6% CR for crop last year, a far cry from the AM Best reported US private crop and multi-peril crop industry averages of 109.8% and 102.8% respectively.
The insurer is banking on building out its financial lines and accident & health propositions this year as it looks to diversify and targets a sub-100% CR across the board. Its commercial markets business will forge onwards in a more casualty-driven guise, though property will continue to have a role in a more “balanced” portfolio, while specialty remains a priority.
Recent additions to the QBE North America stable have included construction and captive products that will continue to garner investment from the business.
“We want to have new businesses continuously stood up throughout the year, that is really with the intent to stay balanced,” Wood said.
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|
2021 |
2022 |
|---|---|---|
|
Gross written premium by segment |
Crop - 42.9% Alternative Markets - 30.6% Specialty & Commercial - 21.6% Retail - 4.9% |
Crop - 48.6% Commercial - 26.1% Specialty - 25.3% |
|
Gross written premium by class of business |
Agriculture - 42.9% Commercial & domestic property - 22.7% Professional indemnity - 12.6% Accident & health - 7.7% Workers’ compensation - 5.7% Public/product liability - 4.0% Marine, energy & aviation - 2.4% Motor & motor casualty - 1.0% Financial & credit and other - 1.0% |
Agriculture - 48.5% Commercial & domestic property - 20.8% Professional indemnity - 10.0% Accident & health - 7.9% Workers’ compensation - 5.9% Public/product liability - 4.0% Marine, energy & aviation - 1.7% Motor & motor casualty - 1.0% Financial & credit - 0.2% |
Getting better at communicating with insurance agents and brokers will be key to a turnaround. Marsh veteran Wood acknowledged that QBE North America has struggled to get this right in the past.
“Since I joined the organization, there was a bit of a question of what was the QBE brand in North America – what were the products we really wanted to trade on, how did we want to grow, and where did we want to grow?” Wood said. “Frankly, I just don’t think we articulated it that well – we had a bit of a strategy, but we hadn’t pushed it outwards as much.”
Wood also pledged to get back to “basics” with greater commitment to service and investment in technology and systems to boost the broker experience.
“I think the industry struggles with this, and maybe it’s because I came out of a broker role, but it’s also because the industry has an opportunity to be better here,” Wood said.
The North American insurer is looking at restructuring and simplifying how it handles claims. Todd Greeley, formerly the insurer’s specialty claims SVP, has been appointed QBE North America chief claims officer.
“For all intents and purposes, we had three claims organizations running, and there’s a real interest in managing that down to expand upon best practices, and leverage [that] across the entire group, and have an overall streamlined organization [with] a consistent experience and value proposition being experienced by our customer base and brokers,” Wood said.
Greeley’s appointment and the recent exit of QBE North America chief underwriting officer Laura Coppola are not a sign of further imminent leadership changes, Wood stressed.
However, she noted: “There always are aspects around making sure that we have the right leaders – as a priority of mine, we are influencing the culture and continue to look at leaders that are helping us optimize the portfolio, grow the portfolio and leading culture and people to drive customer service and new experiences.”
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