In this edition of IBTV, we catch up with Scott Polkinghorne of Augment Risk. He delves into how the insurance market has become increasingly specialized and outlines how the opportunities this creates can be capitalized on.
[00:00:10] Chris Davis:
Hello, I'm here with Scott Polkinghorne, Partner MGA at Augment Risk. Scott, many conversations that I've had this year with brokers about how the market is getting more specialized, more niche markets. I was wondering if we can talk about, are you seeing that in your organization and how you're adapting to that and how to capitalize on the markets?
[00:00:30] Scott Polkinghorne:
Yes, no, and good morning. Yeah, I mean I always go back to say 2016 when the MGA program market was probably in its infancy where at that point the industry was about 34 billion in premium. If you look at today the market will probably finish this year at about 120 billion and if we are, we understand it's growing at about a 19 percent clip so by this time next year when you and I sit here it'll probably be $145 billion. So over that period of time, we now have 30 plus hybrid fronting carriers. We've probably got 20 plus MGA hosting platforms. So as that market has grown, the specialties within that market have become more specialized and have grown. So within our organization, and again, we're three years old, we look at the business more of a holistic approach of how we can solve capital issues for our customers and clients and prospects. And whether that's for traditional reinsurance paper, fronting paper and reinsurance support, or the other services that we bring or products that we bring, such as parametric, structured reinsurance, ILS, captives. And again, that all feeds into the more specialized nature of the business as the overall business has basically matured.
[00:01:51] Chris Davis:
Right. And talking about Augment Risk, the products and services that you provide, certainly compared to the carrier and the MGA space, if you wouldn't mind explaining that to me.
[00:02:00] Scott Polkinghorne:
Yeah, so again, you know, if you look at the individual MGA and again whether that's a startup or it's grown into a, you know, a larger one, whether that's purely finding paper and or reinsurance to support that or if you've got a larger MGA which has your multiple product lines, you know, we at Augment would look at that and look at what their capital need is from a capital and premium perspective. And how whether it's a structured reinsurance program across all the programs, whether there's a need for parametric, whether it's cat peril driven, whether the MGA is large enough or sophisticated enough to entertain the need for a captive. So again, as the MGAs have grown, become more sophisticated, our product offering is there to basically react to how sophisticated they've become.
[00:02:47] Chris Davis:
Right, thank you. I mean, it is a very busy market, a very growing market, many specialty lines. I wonder if we can talk about how Augment Risk is really standing out ahead of your competition.
[00:02:58] Scott Polkinghorne:
Yeah, again, as the MGAs have become more specialized, whether it's property cat, I mean, we can solve for that, whether it's a structured reinsurance, whether we introduce parametric on a specific cat peril, and whether or not the MGA's become large enough to bear a captive. And again, we can take part of that risk into the captive and protect that in its own right. So again, there's so many layers of the growth of the MGA and then protecting their capital and how we can help them do that.
[00:03:30] Chris Davis:
And as we were talking at the beginning about how everything is getting very niche and many lines getting very specific, just looking ahead, I wondered what you're seeing within your organization over the next one to three years.
[00:03:42] Scott Polkinghorne:
Yeah. So again, as I said earlier, I mean, we see the industry growing next year, you know, 145 billion and probably by 2030 we'll be north of 200 billion. And with that, the MGAs will become more sophisticated. And again, our product offering will basically react to that. So we see with the 20 plus MGA hosting platforms, the specialist underwriters coming to those platforms to create their own MGAs, there'll just be more specialty products within this MGA program segment as we go forward over the next decade.
[00:04:19] Chris Davis:
Scott, thank you for speaking with me at Insurance Business.
[00:04:21] Scott Polkinghorne:
It's been a pleasure. Thank you.
[00:04:22] Chris Davis:
Thank you.
