Liability insurance opportunities drive Markel’s Australia launch

Liability insurance opportunities drive Markel’s Australia launch

Liability insurance opportunities drive Markel’s Australia launch | Insurance Business Australia

Property

Liability insurance opportunities drive Markel’s Australia launch

“This is not our first rodeo,” says MD

“If I look at Australia’s insurance market, it’s got a very large pool of liability business and that’s really core to Markel’s DNA,” said Christian Stobbs (pictured above).

The insurance firm of US based Markel Group, a major global company, recently expanded into Australia and announced the opening of offices in Melbourne, Sydney and Brisbane.

“This is not our first rodeo in liability insurance,” said Stobbs, Markel’s Singapore-based managing director for Asia-Pacific. He was discussing the expansion during a soon to be published IB Talk podcast.

“We are a massive player in [liability insurance] in the US, but also in Europe and increasingly in Asia as well,” he said. “We like that pool of a business and we’ve got a lot of capability and experience.”

Stobbs said Australia’s liability market has grown “quite a bit over the last few years.”

Steep liability premiums growth

He estimated that the public liability market has grown by about 50% over the last four or five years and the professional indemnity market has doubled.

Those estimates are broadly supported by figures from the Australian Prudential Regulation Authority (APRA). In May, the regulator reported that public and product liability insurance products in Australia have seen “significant growth in premium”.

The review reported that professional indemnity insurance premiums have seen average rises of 27% since 2015. APRA said the highest increases are impacting large and corporate businesses.

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“Clearly, that’s responding to challenging market conditions three or four years ago and the need for businesses to remediate and improve the terms of the business they’re writing,” said Stobbs.

As a consequence, his firm sees an opportunity in Australia “driven by increased demand” and “significant rate changes in those classes of business.”

Markel, Stobbs said, considers current market conditions to be a “good point of the cycle to be launching our business.”

“It’s a very deliberate move on our part to be slightly more ambitious than perhaps others have been when entering the Australian market,” said Stobbs.

He put the decision to open three offices “pretty much simultaneously” down to two main reasons.

An experienced operator

The first one, said Stobbs, was linked to Markel’s experience during 20 years of growth both organically and through acquisitions. He referred to expansion in the UK and Europe and then across Asia and the Middle East.

“Where we have confidence in the market conditions and the overall market environment we’re happy to be quite speedy with our acceleration,” he said.

Stobbs said his firm “learned a lot” from research and development work last year looking at the Australian market.

“We learned a lot about what some of our peers had done both successfully and unsuccessfully,” he said.

One learning from both his firm’s own experience establishing a presence in other markets and also observations of “some of our peers in Australia” concerned the importance of sufficiently empowering employees.

“In the challenging market conditions in the last few years, we heard examples of the pen being taken away from certain underwriters, or operations or referral thresholds being lowered,” said Stobbs.

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He emphasized the importance of hiring “quality underwriters” and trusting them “by empowering them to take decisions on the ground.”

“That’s clearly also what local brokers want, they need decisions on the day, in the time zone,” he said.

Focusing on the right sectors

He said that another “critical” key to success is making sure the local firm has the right focus.

“We will launch with a clear identity around the casualty and financial lines,” said Stobbs. “That’s not to say we won’t provide other products and services to the Australian market but, initially, we want to focus on those two areas to create that identity.”

Aussie underwriting talent

Stobbs also said his firm has been struck by the quality of the underwriting talent in Australia.

“In appointing Rory [Rory Morison, formerly with AXA XL] as leader we’re very excited about what he can bring and the people that we’ll be hiring around him,” he said. “Where you have quality underwriting talent and you give them the right level of empowerment you can be quite confident about moving quickly.”

Stobbs said there are five employees confirmed for the Australia operation but he expects that number to double in the next six months and to expand further depending on opportunities.

“We’re happy to go quicker than that but we have to be cautious with the market as well,” he said. “But most importantly, we won’t rush any hire.”

Stobbs said finding people who are both the right cultural fit and high quality underwriting talent is “absolutely critical.”

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He said the “Markel model” based around a “core identity of hiring excellent underwriting talent and empowering them” is “well suited to be successful.”

How do you see the opportunities and challenges in the liability insurance space? Please tell us below

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