Speaking to The ReInsurer, Bains, the founder, chief executive and CUO of Volante Global, believes this alignment of interests will be a key differentiator for firms, not only in the MGA space but across the entire (re)insurance market.
“There is one differentiator that will see a number of entities and institutions in this market rise above the rest and that will be alignment,” he explained in a video interview.
“It’s about alignment with clients, alignment with brokers and alignment with capacity”.
By aligning the interest of all stakeholders, underwriters and brokers can collectively reduce costs for the end client and capacity providers. It will also enable underwriters to better price risk and therefore provide an improved service to customers with a better return, Bains said.
Improving pricing conditions combined with the new challenges born out of the Covid-19 pandemic have created significant opportunity for underwriters, Bains said. But, the executive warned that a long-term view and a renewed focus on discipline will be required if those opportunities are to yield positive results.
“The opportunities are multiple but the key is discipline,” he explained. “What we have to do as a market is look at the long-term viability of those opportunities and not the short-term gain.”
Addressing market challenges around discipline, operational structures and cost, Bains highlighted the importance of “defining our processes for post-bind administration and getting more rigor, discipline and challenge around pre-bind administration.”
To achieve alignment across stakeholders, it is critical that underwriters seek to challenge both brokers and clients to gain data required to better price the risk and also fully address the client’s needs, Bains said.
“As an industry we do not know the price of our product,” he added.
“Let’s ask those questions we haven’t been asking for a long time to get better empirical data in order to price risk better and make that pricing sustainable so that clients don’t get a surprise due to something they have not done,” he said.
Volante Global has pursued a strategy to align its interests with those of stakeholders since inception, Bains said, noting that current market conditions have provided “greater certainty, greater stability and greater generosity around capacity”.
“Volante entered the market three years ago with a completely new model based on alignment of interest – how do we align our bottom line with the bottom line of carriers and have a strategic relationship for the long-term,” he said.
“That was a big risk when we entered the market three years ago but so far that risk is bringing rewards and paying dividends from a strategic perspective.”