In an interview with this publication, Paul Amrose, CUO for property at Accredited Specialty Insurance Company (ASIC), said that the Randall & Quilter-owned platform is being highly selective about the programs it onboards as it takes an underwriting-led approach to its pipeline of opportunities.
Despite rapid growth and onboarding eight programs in 2021 to date, hybrid fronting carrier Accredited America has only pursued 10 percent of the $2bn of potential premium volume it has been presented since bringing in Pat Rastiello a year ago initially as CEO of its new E&S arm, said Amrose.
He also described a program fronting carrier and MGA environment that is dramatically different from 20 years ago, when the sector acted in a way that led to a less than stellar reputation.
“Back then there was no control, nothing was real time, and by the time you found out about losses it was three months later, and who knew where the premium was and where it ended up. It was totally different,” he said.
The operating model has evolved with the professionalisation of the US programs sector, with today’s MGAs and MGUs often tech-driven with sophisticated APIs allowing fronting carriers and reinsurers access to real-time underwriting data.
“It’s much more advanced. Those that combine underwriting skills with the technology to employ those skills can make better underwriting decisions even than a traditional insurance company. The MGAs can move faster and more efficiently and they don’t have the same legacy issues,” he said.
At the same time, the emergence of the hybrid carrier model has revolutionised the sector as reinsurers look for deeper strategic relationships with the new players that are tied to an alignment of interest through the retention of risk, in contrast to the traditional “pass through” pure fronting carriers.
Amrose joined Accredited earlier this year after a lengthy career on the carrier side, with positions at Ascot including head of programs and CUO for property (re)insurance, as well as facultative and reinsurance executive underwriting roles at other carriers.
Also this year Accredited hired former ProSight, Ironshore and AIG underwriting executive Dawn Puro as CUO of casualty at its E&S and admitted carrier platforms.
Amrose said the moves demonstrated the company’s underwriting first strategy.
“The MGA is looking for our reinsurance relationships, but we’re also offering a service to the reinsurer. For them our relationship with the MGA has to go beyond that of the hybrid carrier to effectively being the underwriter.
“Since the MGA is underwriting on behalf of Accredited and the reinsurers, I function as the chief underwriting officer of the MGA and challenge them in the same way the reinsurer would,” he explained.
As previously reported, hybrid carriers typically retain a portion of the risk ranging from as little as a couple of percent to 20 percent in some instances.
“The hybrid has to be more than just a front. If you’re just a front or pass through what role are you serving?
“As a hybrid we only take a limited amount of risk, but if I can’t make money on my share then the reinsurer loses money and why would the reinsurer then want to partner with me? So it has to be all about the underwriting,” Amrose said.
Puro, CUO of casualty at Accredited’s E&S and admitted carrier platforms, added to this publication: “There is a power of engagement between the MGA and reinsurers which did not exist 20 years ago. R&Q Accredited serves as their underwriting conduit.”
Amrose said he believes the current growth hybrid carriers are seeing in the program sector is not cyclical, with considerable forward momentum.
“The pipeline is full. There are a number of opportunities between property and casualty that we’re working on with the intent of bringing several of those to market this year,” he commented.
The executive explained that typically Accredited parses the significant number of potential deals it is presented with and only enters due diligence on those that have passed a number of hurdles and criteria that meet its own appetite and quality threshold.
Once diligence is complete, the lengthiest part of the process can be structuring and placing the reinsurance for the deal, in a tightening marketplace.
Amrose added that the professionalisation of the MGA sector – with the emergence of larger sophisticated standalone operations as well as the underwriting platforms of wholesale giants like Ryan Specialty Group, Amwins and CRC – means that demand for hybrid carrier capacity is here to stay.
At the same time, the appetite from reinsurers to access primary insurance risk through the program sector is as strong as it’s ever been.
“But as hybrid carriers if we’re not bringing value to reinsurers and MGAs, we’re going to disappear,” he warned.