Ep317 Jason Keen CEO Wholesale & Specialty Everest Insurance: No time to be stuck in the middle

0:02Jason Keen: I'm Mark Gegen and you're listening to the Voice of Insurance podcast, produced in association with Advantage Go, now part of Sapiens, enabling enterprise-scale underwriting through a single pane of glass. Today's podcast is a really strong conversation with someone in a significant strategic position within the global faculty of reinsurance, wholesale and specialty markets. That's because across 26 business lines, with platforms in the US, London and Singapore, they run a business that is closing in on$4 billion in gross written premium in 2026. Jason Keane is the CEO of Global Wholesale and Specialty at Everest Insurance, and given his broad viewpoint of the market, this discussion gives a very accurate picture of where we find ourselves at this interesting point in the pricing cycle.

0:52Jason Keen: What emerges is a market where the most skilful underwriters are going to be able to differentiate themselves and one where caution and a focus on margin is the order of the day in some segments but in others there are still clear opportunities for growth. But it's after the day-to-day market questions have been dealt with that this discussion really comes into its own. Jason is an advocate of the digital revolution that is transforming the globally syndicated insurance market in which his business operates and our discussion around facilitisation, fast follow and other digitally enhanced forms of underwriting is insightful and enlightening.

1:27Jason Keen: It's becoming clear that all business leaders now need a comprehensive strategy on how to engage with profound structural changes in the way business is being placed, and Jason is eloquent and unambiguous on this theme. Our broad and frank discussion also covers other emerging big themes, such as nascent AI exposures and plenty more besides. Jason is an underwriter through and through, and this makes for a fast moving and lively exchange. I can highly recommend a listen. Enjoy the podcast. Jason, welcome to The Voice of Insurance. Thanks, Mark. Very much appreciated. For anyone who's out there listening who doesn't know you, we'll do what we do in insurance when we meet someone we haven't met before.

2:08One, you can tell me how you got into insurance, and then two, run us through your career to date and bring us up to date. Oh, I think like most people, I sort of fell into it. My uncle worked for a large broken house and sort of over a barbecue at my mother's birthday, he ended up having a conversation about and it sounded like a good idea. So I looked into it, actually found a lot of friends who were going through sort of graduate schemes at various other broken houses and insurance companies. And I managed to get an introduction to a syndicate within Lloyds. And that's where I really started my career.

2:33I actually worked for two Lloyds syndicates in London, the second of which I then moved to Singapore in 2007. Wow. And what were you underwriting? Underwriting property. That was sort of the basis of my underwriting career really, was writing sort of first party PDBI risks. Well, it's salt of the earth. Well, exactly. It's very simple. Your property is property, isn't it? Other than BI is actually far more complicated than anyone would imagine. And I remember floating stock adjustments were a complete nightmare. No one understood them as far as I was concerned. No, it certainly is. I think that's always been the bane of any property underwriter is trying to establish exactly how to calculate a BI loss.

3:05But no, so that move then took me to Singapore, where I was for a couple of years. And then the same company moved to the United States for a couple of years to set up offices both in Singapore and in the US. And then I returned to Singapore, where I was for 10 years, to join a sort of major global insurance company, which then became a bigger global insurance company as two large companies emerged and integrated. Then I came back to London about six years ago to run the wholesale division of that business. And then five years ago, I moved to Everest to come and build a business. Here you are.

3:34So you're fully up to date. That was pretty quick. So you're running insurance, global wholesale and specialty. Run us through that. What does that entail? Because that could be quite broad. It's a good question. I think a lot of people say, like, we understand the words because we speak English. But what does that actually mean to Everest? And to us, that really means we took a deliberate decision at the end of last year to really focus on a wholesale specialty business. And that really is a North American business, an international business and a faculty of reinsurance business. The divisions that sit within these three businesses have been trading for at least a decade.

4:03So yeah, established teams. Because the syndicate's been around for quite a long time. That's right. And look, it's established teams, established appetite, well known in the market, great balance sheet that sits behind the organisation. As a listed company, the financials are very solid. So for us to be able to trade into a market, we have very core principles that are very strong, not to mention a very strong team that supports our ambitions. How does that fit in with the Everest Group as a whole? where are you sitting strategically with and where do you report in? The way that our business is split is effectively treaty and non-treaty.

4:32So I'm kind of CEO of non-treaty effectively. We have two divisions, reinsurance and then global wholesale specialty, both of which report into our group's CEO, Jim Williamson. Yeah, Jim. Yes, I've met him a couple of times down at Monte Carlo. Well, let's talk about the market. What's going on? What's the state of the market today? It's a particularly interesting market and it seems to be quite fast moving. Well, I think any market is always in transition, whether it's hardening or softening. And I think this is just another stage in that, Having well into my third decade in this industry, nothing surprises us anymore.

4:59This is not new territory. I think what we see with capital increasing and rates falling and competition continues to get bigger and bigger, I think that's one side of it. I think the other side to us is where there's introduction, more complex risk coming through. We see what the geopolitical landscape looks like. We're also looking at the development of infrastructure, the emerging risk that technology is bringing, as well as the climate that persists in giving us challenges throughout any cycle. And I think in any market cycle, there's huge opportunity. And I think the way that Everest is positioned with not just only the product suite we have, but the geographic spread that we're able to achieve, allows us to trade and navigate through these transitioning markets.

5:34And I think that's what presents always opportunity for us. You've got plenty of fingers in different pies. And so where is it best at the moment? Where is it sweetest? Well, look, if I think about our business, I really think about it in three different pillars. There's core P &C business, property, casualty, financial lines, our specialty business, which is our real special source, which is our credit, political risk, surety, aviation, marine, energy construction, surety business. Not everybody accepts that risk. Not everybody writes those lines of business. And that's something that we've done and continue to do very well.

6:02And then the third pillar is our facultative reinsurance business, which is where we really can deliver to core clients a very bespoke market offering. So it's not just a annual renewable cycle. It's actually bespoke solutions for specific issues. And actually going back to your business, what sort of scale is it for anybody who doesn't know platforms and the amount of people you've got working under you? We're closing in on about 4 billion. And obviously, we've got the rest of the year to run. But we've got 1000 employees across the globe. And really, how we're structured is really, we have multiple offices in the US, but we're sort of headquartered of Warren, New Jersey, London, and then Singapore.

6:34Those are the three offices we trade out of. The premiums kind of split 60 % US, 40 % international. And we took 26 products. So the most product density we have is in our London office. And London, what sort of percentage is London? Obviously, because I'm presuming you're also writing some US risks from here. Yeah, so London will make up, again, of that 40%, the majority of it. Singapore is a small office for us, but it's strategic and it's a very important office for us. Just because of the wealth creation and the growth of Asia Pacific, we want to ensure that we have a flagship office there to ensure that we can maintain growth.

7:05Yeah, where in the world are you seeing the most growth at the moment? The opportunity for profitable growth, obviously, not just growth for any... Yeah, so our core P &C business, it comes as no surprise, property and casualty is particularly challenged at this point in time. I mean, particularly property and more from a rating perspective. We're seeing terms and conditions creep for sure, but the rating environment, the reductions are relatively accelerated. And for us, that presents an underwriting profit. And certainly when we think about our internal metrics of what we want to hit with regards to returns, it starts getting more challenged.

7:31It's a bit more marginal now, is it getting closer? Yeah, it is. People will talk to you about the difference between rate and rate adequacy. And I think that both are getting challenged at this point in time. So for us, again, And consistency in market for us is key. But obviously, because we have those 26 products, we can dial up and dial down where we see opportunity. Now, really for us, where we're seeing terrific growth is our specialty business, which is where that is non-correlated to the P &C environment. And that for us has been, the year to date, has been a real success story in 26. And on the property side, what about things, you know, when I read all the brokers' reports and things, we're looking at the data centres.

8:03Is any of that coming to the rescue? One presumes, you know, that's capacity constrained. So one presumes that hopefully you can get the sort of rate that you actually need to get those when someone's coming in the market asking for a$10 billion limit for a mega, mega centre. I'm amazed we're sort of 10 minutes into this discussion. We haven't mentioned data centres up until now because that's usually just the first thing that gets made. It is one of the great hopes that everyone's got to sort of, will this bail us out of a difficult market? Well, look, I mean, I'm not sure whether it'll bail us out necessarily.

8:28But I think the emerging risk of large risk in of itself for data centres is something that is not necessarily the first time we've seen it. We saw the emergence of these large risk in kind of semiconductors in the 80s and early 90s. But of course, the scale of the data centers and the digital infrastructure build is just staggering. And so I think it's going to take a lot of the global economy to support these, because obviously private insurance industry just can't do it alone. But I think ultimately for us, it's something that we're very much involved with, not just from the construction phase, but we're also excited about when it goes operational.

8:57Yes, because of course, I mean, they're quite risky, aren't they? I mean, obviously you can have proper firewalls and these things, and maybe the fire risk isn't so bad. But there is fire risk, of course, because if they overheat, they do set themselves on fire. They've got very nice cooling systems. But again, the roofs aren't particularly special, are they? It just looks like a little Walmart. Well, I think the interesting thing is when you think about the size and scale of these builds, you'd think they're into their five, ten years of actual duration. They're not. They're being pulled up in 24 months on an average basis.

9:22So these things are flying up, which inherently reduces the exposure because the risk isn't so long tail, which obviously, as you have a blend between long tail and short tail in a portfolio, is an attractive part to it. We have a very active construction business, but that becomes a very favourable part of it. It's just really making sure, and certainly for brokers, our core partners, trying to provide them with enough in the way of sustainable capacity to be able to support these type of risks. The fact that it's short-term means that you're rolling off risk quite quickly, so your capacity can be redeployed in another status centre going up next door.

9:49Absolutely, and I think obviously it's where we deploy our capital to get the best returns. And I think ultimately when we look at those builds, the short-term nature of it puts less stress on that capital base. Facultated reinsurance, obviously, that's the most dynamic form of reinsurance. It's the spot market for reinsurance, where if your treaty renews only once a year, your facts renewing every day. Well, I think that's right. I mean, that's where our facultative business is over a billion dollars. So it was one of the biggest portfolios globally. That's had fantastic growth. But obviously, let's say it's the one that goes up the most when it goes up.

10:17And it's also the one that goes down the fastest and furthest when it goes down. And if we're on a down phase, is it vertiginous? Well, look, I think that's right. But again, if at the heart of the portfolio is based around underwriting discipline to generate underwriting profit, we'll grow where we can grow and we'll also contract where we don't see necessarily the opportunity. And that's not to be inconsistent with the marketplace. That's obviously just trying to recognise that underwriting profit and return on capital becomes a major part of how we actually deploy capacity. So what about the balance between long and short tail at the moment?

10:44Obviously, if property is looking less attractive, relative attractiveness is a bad thing. You say, well, something's relatively cheap when you look at a stock and say but it's not actually cheap is it it's just relatively cheap because everything else is so expensive is casualty now looking relatively more attractive than it did before because shorter tail lines are less attractive yeah i think it's really around the deliberate composition of any portfolio to be honest i think having enough product like we do 26 products we're able to flex where we see the opportunity so you get the diversification whatever happens so we do and i think that that allows us to be as a comprehensive insurer to have that product available allows us to really not only be consistent overall, but certainly be able to flex.

11:22So we can continue a growth trajectory on the business, which is absolutely what we'd like to do. But growth sits inside profitability. So we have to keep making sure we monitor that inflection point. Yes, because presumably you don't say, right, I want to be 15 % property, 20 % this and 20 % that. I suppose in the end, you have to say, I want my property underwriters to underwrite the rate adequate business that is available to them. And if that ends up meaning that we're only up being 12 % property this year, that's just the way it's going to be. Or do you say, no, actually, no, we do want to be 15 % property or whatever?

11:51No, look, given the governance that we have over our business, we are on a monthly, quarterly basis. We scrutinize to the very nth degree about the reasons why we don't just roll up at the end of a quarter to see just how we lived or died. We monitor all the way through and the understanding of the rating environment, the retention environment, behavior, the way that we see the market moving. Obviously, our competitor landscape, which is very distilled when you look at it from a Lloyd's perspective. So it's risk by risk. You get to see competitors very actively moving on a day-to-day basis. So for us, there's no set hard and fast, but ultimately when we plan our financials, we do it in a way that composes the portfolio in the right way.

12:22US, London, Singapore, is that the way we should think of you, is to say that's your sort of finished article in terms of the platform that you've constructed to do your business? Or is there more to come? I think based on where we are right now, that really does an enormous amount of heavy lifting. We've got two platforms we write on out of the UK. one company, one Lloyd's. In the US, we have our own licenses out there. For us, we think about us being almost$4 billion. We're pretty small in the context of the real estate that we can grow into. But really for us, with those two offices and really those two regions doing the heavy lifting, we don't really need to expand into anywhere else.

12:56And given the wholesale broker nature of what we're doing, our access points become much more simpler for the brokers to understand and much easier for our underwriters to be able to deliver into. Yeah, there aren't that many wholesale hubs in the world. Correct. And I think for us to make that easier on our brokers to know where to find us, becomes a much more simpler business plan. What about in terms of lines, 27 lines, 26? There are more lines. Should we expect to see you adding more? Never say never, but I think 26 is pretty comprehensive for us right now. I'm not afraid to make the tough decision when it's necessary, but ultimately I think the businesses that we have and the lines of business that we have today are very much a full complement of what you can expect from us moving forward.

13:32Of course, when you add a 27th and a 28th line, in terms of capital commitment, I mean, it's not quite a free ride, but it's much freer ride than if it was the only classy road. And that's right. And one of the things that we don't, because it's never a good look to be pulling in and out of lines. It's very inconsistent. That just doesn't feel the type of business that we want to be. So ultimately, the businesses that we're in right now, we feel very good about. We've been trading them for a long time. We understand exactly how they contribute to the overall portfolio. But ultimately, we have had some lines of business that either just misaligned at appetite or ambition.

14:01But ultimately, to make the right decision for the organization, let's pull out of those lines, unless we can really scale them meaningfully. and or brokers see us as a real value proposition. And so when you do pull out, we're not expecting to see you back in again just because when the market hardens in that particular segment. I think with 26 products, we've had enough to look after. You've done a lot of thinking and homework about that long-term strategically about whether you can really play there and will that fit what you're looking for. Look, absolutely. And in a wholesale specialty and facultative reinsurance, it gives us a lot of flexibility to be able to trade and to be able to price risk the way we want to.

14:31And I suppose that also means that the brokers know if you're into something, you're fully committed to it. Which is so important to know as a broker when you can tell your client that these people are really committed, you know, on the claim side and everything else. It's going to be they've got the expertise, they'll stick around. Unquestionably. And I think the track history that Everest Group has in the market, I think there's a real track record of sustainability. And that's something we definitely look to grow and preserve. Something on the specialist side more specifically, we've had the Iran conflict, which has had wider repercussions around the Arabian Gulf.

15:03How's that affected the market? Obviously, it's the market you're in. How's it affected your own appetite? And also, have you seen a market reaction? Yeah, look, obviously, there's a humanitarian aspect to it, which is very saddening. But look, I think we do write political violence, terrorism, and it's a product line we are committed to. How does it change our appetite? Obviously, with an increased exposure, it sharpens the attention on what that looks like. But one thing I would say, as a global business, the Middle East is not the only exposure that we write into our political violence and terrorism portfolio.

15:28I think what's always very important at these certain times is looking to see the response of the market. And I think typically Lloyd's has had over 300 years of writing complex risk and certainly writing political violence and terrorism. It's been a terrific response from the market, strong support and continued support. Again, of course, with the increased exposure, there's some great adjustments that need to be made. But as expected, I think this is a positive response to a situation. And that's not just PVT. That's also we see it in Marine as well. It's something we can trade through, even though obviously it's going to be a bad year.

15:56Yeah, look, I mean, it's loss generating. There's no question about it. And again, Again, that shouldn't be a surprise to anyone as long as any and each carrier is managing their PMLs and aggregates the right way. If there's any overexposure, then that's on them. But ultimately for us, we're of the market, but again, we look to support. We don't run away from it. And I suppose, is it stimulating demand? And presumably also demand all over the world. It is. I think the important thing, like any demand and supply, is recognising where it's needed most. And of course, the duration of this conflict is going to be interesting to understand how long that goes on for, and of course, what that means for the market as a whole.

16:27One of the things that's been happening recently is quite interesting within the Lloyd's market. Lloyd's being used as a conduit for reinsurance by some very large entities, also some reasonably small ones. Is that a structure that appeals to you in any way? I think there's lots of attractive structures. And I think Lloyd's does a very nice job for insurers, reinsurers, third party capital providers to try and introduce it into the platform. I suppose it's good for the platform as a whole, because the more that the platform is utilised, the lower the unit costs everybody who's in the platform.

16:56Yeah, I would agree with that. I also think that Lloyd's is such an attractive market, given the global nature of it, either through geographical product density and diversity. Lloyd's is almost in a position where they should be looking to attract capital. But one of the things that we have, we have our own division called Mount Logan. So we're no strangers to sort of alternative risk capital and being able to support different vehicles. So it's something that we do in the past. You would have seen there's a recent announcement around the Annapurna re-deal. I think things like that that will continue to give us opportunities as we move forward.

17:22It's a competitive reinsurance market, much more competitive than it's been for a long time. Is that a help or hindrance to a business like yours? Obviously, as a trader in the marketplace, writing attractive lines of business profitably, is it an opportunity to lock in some of that profit yourself? I think there's a couple of things there. As a trader, at least it's a very liquid market, so it's good for traders. Well, look, I think the overall rating environment from the primary side, as well as the reinsurance side, they're connected, right? So where you might win on the reinsurance side from a pricing reduction in any treaty that gets placed, you're also seeing rate reductions in the upfront.

17:54So there's activity there. So whether you lose or win, I'm not entirely sure. But I think the way that we always buy our treaty reinsurance is very stable. We don't look to year-over-year to change. We also look for strong relationships and partnerships from our core reinsurers. So kind of being too opportunistic too much of the time, it adds a flex to the portfolio that maybe destabilizes it. And the other thing as well, from a consistency perspective, our appetite is very constant. So I think that having a treaty structure that matches that, it allows us to year-over-year not to re-underwrite our portfolio, which is basically, it's just too much like hard work.

18:23You can have the same panel, but you can increase the order. You can increase the session. Of course you can. They'd be very happy with you if you did today. And there's always opportunities for that. But wholesale changes, no. There's going to be nips and tucks. And some of it's opportunistic through market cycle. But overall, our overall brying strategy is relatively robust. So it's pretty solid. So it's just nibbling around the edges occasionally, yes. And look, we have a really fantastic panel of treaty reinsurers that support our business. And we love the conversations with them about where they see the market, because that helps very much the inference.

18:52It helps for us to think about our portfolio and it's just good hygiene factor. It certainly is. Nothing better than a really knowledgeable reinsurer who also is around. Well, they get to see so much of the market as well that we get kind of a very distilled view of the wide canopy that they see of the market. So that lens is really important for us as well as we have a kind of Everest reinsurance franchise, which is well established, which we get a lot of market insights from them as well, which is terrific. I suppose you get together and have a word with the other side of the business. Yeah, all market related, by the way, that's all.

19:21No, no, no, absolutely. Obviously, results have been great for a few years now. Where do you feel we are? Obviously, we're on a day when actually when Lloyd's half year results are out. Good numbers, good combined ratio. How much longer do you think this can carry on, including the growth? I think about it a couple of ways. I think that the duration of the cycle, it does its last three years, does its last 15 years. I think certainly pre the hard market in 2020, we saw 10 to 15 years of a soft cycle, which was really a very long walk. Yeah, there were loads of extended circumstances. We had that global financial crisis.

19:54That really didn't help. Right. And the speed of decline. The duration and speed of decline, I think, is interconnected. So how do people protect margin? I mean, I do think that there's an opportunity. People want to continue to grow and they're happy to sort of see margins compressed. That's their call. But again, the market will turn when ultimately people do say, you know, I don't think I can go any further than this. And I think by and large, the insurance and reinsurance community has a much better handle on those thresholds these days. Let's say, yeah, because if we were sitting here 30 years ago, you'd say, I think it's rate adequate as of what I'm writing today.

20:25And then five years later, you might find out that actually what you thought was rate adequate wasn't. But today, I think it's probably fair to say that there's less excuse, if you know what I mean. I thought it was rate adequate at the time, whereas now I think people have got a much, certainly in property, got a much clearer handle on what rate of return that is likely to produce if you write enough of it at that price. And look, to pick up what you said about 30 years ago, making decisions, I think the benefit we have now is 30 years more of data. And I think if people are using data the way they should be, it's less of a subjective view.

20:54It's much more data driven, which the numbers do the talking. And I think that really starts then establishing thresholds and benchmarks, which are undeniable, really, because you could start on leveling with your actuaries. You can start looking at the rate environment. What does that mean for your technical hurdles to benchmarks? those type of things that we all look at as insurers and reinsurers to make sure that our level of profitability sits within side thresholds we set for ourselves. Because of that, a lot of the market's been slightly surprised by the speed at which we've gone down. Do you think that superior knowledge of what we're doing at any given moment is actually a partial explanation for that?

21:28Because if you know that something's going to produce a 20 % return, and you know that the next year, what the broker's offering you is going to produce to 17.5 % return, but that's still adequate. You can write it, but it means it might go down quicker so you know where the floor is quicker. But it also means that hopefully, I mean, when you do hit that floor and you start rubbing along against those return hurdles, then, you know, the brakes get put on pretty quick as well. And then hopefully the rate will start coming back up again. I think that's right. It can't be unrelated. I don't think this has happened by chance.

21:54You know, I think that's something, you know, optimists will say, hopefully the rates go down quick enough to reach the bottom fast enough, and then it bounces up, as opposed to a slow descent into 10, 15 year type cycle. And we'll see where that goes. And I think obviously, how long is a piece of string? It'll depend on what people's levels of tolerance are along that journey. Of course, yeah, we're talking in those sort of olden days, you know, of course, you could be writing rate and adequate business, but just be lucky for a couple of years and nothing bad happened. You just got away with it.

22:18You missed all the losses. These things happen, anomalies happen, you get a lucky year, and then it just carries on for another year. And I think it really comes down to portfolio management under those circumstances. You know, If rate just puts lipstick on a pig, when the lipstick comes off, then what are you left with? But ultimately, if you've actually done proactive portfolio management, you really do understand the sort of thresholds that really butt up against the levels of tolerance that you set for yourselves, as any organisation should. In this modern market, I mean, a fantastic and really interesting feature of this modern, technologically driven, more digital, more data savvy, interconnected, hopefully less frictional market than it has been in the past.

22:54You know, obviously that 30 years ago, that mythical 30 years ago when I was broking, it was all paper-based. Every time something moved from one place to another, it was at least another 10, 12 points of cost. And these days, you know, hopefully, at the flick of a switch, things can move around. Look, I'm delighted. I'm so pleased that I'm at the stage of my career that it's heralding this sort of mass change. When I started almost 24 years ago, it was still very much paper-based. And where we see it now, the nice thing is everyone's talking about tech and air en masse. before it was sort of individual people who were wearing the yellow jersey trying to get a bit ahead of the other.

23:25Now everybody's doing it. And I think that that is something that really should in this industry, which we know insurance, reinsurance has lagged behind other financial institutions. I think this is a really, really good way for us to be able to get not only the speed at which we operate, but the clarity and the cleanliness of the actual data, the flow that allows us to be much more accurate. And I suppose your expectations are so much raised. Now, if an underwriter that you've known for years starts with a brand new MGA today and they're asking for your support, You're going to first say, well, you know, the tech stack, you're going to say, well, presumably you're going to be AI native.

23:55Presumably I can have real-time underwriting information about what you are putting on the books on my behalf. And you would have those expectations today, whereas, of course, 30 years ago you'd expect you get a border in about six months. I think these days that's table stakes. And you say, what's that? You know, exactly. But look, table stakes is that because I think, again, the more that we do that, the less frictional costs we put into the business. But also as we start making developments for any established institution, we start reducing the frictional cost, which from an efficiency perspective, and also when you think about the end client, they're getting a better product price more appropriately, as opposed to price for the inefficiencies or how we operate our businesses.

24:28Yeah, because if you've got to load on, you've got to load on 50 % cost, the product is not as good as it would have otherwise been. Yeah, that's absolutely right. Yeah. So with that, in this digital world that's really emerging, particularly we can see it in the London market now, and we can sort of touch it. And I had some really interesting people on the podcast recently, Clyde Bernstein from Aon. Yeah. And all the different people I've interviewed in the smart follow world. And we're starting to see portfolios with billions in them. And we've got modern consortium, we've got digitization, automation, smart follow, broker facilities.

25:00What's your strategy around that? Because it's happening all around us. I'm a fan of this. I think if we step back and actually understand why they're being put in place, basically they serve one purpose, enabling fast, reliable flow of capacity from carrier to client. And that has to be a relevant part of our business model. Brokers are obviously finding a more efficient way to place business. We're talking about 20, 30 years ago, we were walking into Lloyd's, the shoe leather that gets used. That's a level of inefficiency that I think enabled AI and technology. And certainly the exchanges that brokers are encouraging us to use and the way we develop tech sort of enable that is really around the speed of data flow.

25:30How do we make decisions quicker? How do we enable all the tools that we use, both sides of the fence, to be able to come out with a solution that's not slow, not cumbersome? And I think that's a real power that the technological revolution is providing for us. Do you think the ultimate goal is that we should be able to grow, particularly the London market, should be able to grow without having to grow a headcount? We can lower the threshold. Before, say, well, I was a broker, I said in Madrid, if I sent something to my London office and it was below X, below X brokerage to them and premium to the market, they'd say, well, Mark, that's very nice and everything, lovely.

26:03Thanks for sending it, but it's going in the bin. And then these days, hopefully, that now we'll find and it'll be a digital conduit, which would have been a couple of buttons pressed. I could have had a quote back with that 30 seconds later. And, you know, even if it was that there should be no minimum premium, one presumes these days. Well, look, I think if any insurer or reinsurer has a stable enough ecosystem that can connect the various tools that are used to be able to price risk appropriately, there's no reason why they shouldn't be able to generate a quote within an hour, two hours, depending on the level of complexity.

26:31Now, for us, I think the exciting part about the technological advances, as well as the introduction of AI, is what it does. It gives our underwriters and our claims experts more time to concentrate on judgment and not data assembly, which is not valuable. So I think that's a really cool part of it. It cuts out a big part of it, which is really important. I think certainly from an underwriting side, if I may, when you have a kind of a lead market and a follow market, you can be lead and credible or follow and fast. If you're stuck in the middle with expensive underwriters making slow decisions, then that's really a bad place for you to be.

26:57And that's where you start getting inefficiencies in your business model. So I think tech is sort of enabling a lot of that. Yes, certainly from that conversation I had with Clyde Bernstein, which is a great episode everyone should listen to. I can see the future now. I can see where it's going. There's that broker facility taking a large slice. There's a lead line. And then there's 50 to 60 % in the middle. What do you think is going to happen to that? And obviously, a lot of the brokers are going to try and turn that into something where your underwriting appetite has been digitized as far as it can be to package a lot of that follow business into semi-automatic follow so that you can make life easy for that broker.

27:34So what happens to that traditional follow? It speeds up the process. It enables it. It allows capacity to flow quicker to clients and to brokers to be able to be more sustainable and more reliable over a longer period of time. I don't think fast follow in any way, or should, and certainly the way we don't think about it, is divorce you from underwriting decision-making or actually sort of being able to draw the guardrails enough around where your appetite sits and your capacity deployment, how you price it. And as I said, if the ecosystem is robust enough where you've got your pricing models, your cap models, and various other different models that you use to arrive at a quotation are sufficient, then that process doesn't in any way, you're not delegating anything to anybody.

28:08You're actually, you're in control of it. It's just the data is flowing and you're using the tools that you use to engage automatically to come out with a solution that otherwise would have taken you a long time had it just been an under-icer with cool and ink. Yeah. Does it become a more senior responsibility again? So effectively, if we're turning something into a load of sort of knobs and whistles, if you dial something up or down, that's on you, isn't it? You can't blame a rogue underwriter. No, and I think working with our actuaries and working with the data that we've used over time, we should be able to price risk in accordance to the way we think is appropriate.

28:39And so the misquoting, I think the system doesn't allow that. If we calibrate it the way we feel, we're not asking the system to quote, we're telling the system what to quote. It's just the speed that changes, and I think that's an important factor. And do you think headcount will go down? or do you think actually it's going to be stable or probably going up because those people will be freed up to do other things and actually we can grow our share of the global marketplace? For us, any growth business, there should be a tension between growth and the relationship between headcount. But ultimately, whether headcount goes up or down, ultimately what we want to call talent and our colleagues to be doing is spending their time on value-added work, not work that is traditionally done by, when I started the industry, we were talking about data scrubbers who would scrub submissions that would come in for hours, and there was hundreds of them.

29:24Well, you do things overnight and send them to India. Yeah, and the value of that over time, with the real birth of this real sort of surge in technology and AI ability, really does diminish that in a meaningful way, because it can replace it, not just by the fact that it's by virtue of actually building a capability, but it also manages expense, which in any cycle should be something that's atop people's minds, and certainly is ours. It sounds like it bodes reasonably well. I'm a huge proponent of the direction that we're headed in with all things tech and AI, and I think the way that the broken community and the underwriting community is embracing it, has real, real promise for the future.

29:55One of the potential growth opportunities is, of course, to bring that more sophisticated bespoke style specialty product, but lower down the buying chain to the more small commercial, to the people who would never have fulfilled those minimum price requirements and certainly would not be able to spend money that is required on the shoe leather that would have been required 30 years ago to get something placed because, yeah, it just wouldn't work economically. these days, if that could be done digitally, presumably some of those more sophisticated products can grow better, i.e. that a lower premium, higher volume market can now buy those products.

30:32Well, I think the distribution of that, certainly there's a couple of parts of what you're saying. I think the distribution side, absolutely. I also would pull it back to, depending on your risk appetite, do you want to be selling certain risk into a small commercial market if that's not your necessarily your market segment that you're really kind of looking to write into? Typically, you'll put yourself between a major account, a mid-market or a small commercial, where do you want to access the market point? And for us, it depends on where that product is best sold and is it appropriate for the risk.

30:57Yeah, I suppose. But if we look at something like cyber, we know there should be better penetration lower down to the smaller businesses. Again, it's a very sophisticated product and there's no small business that wouldn't benefit from the same product that BP is buying. Again, it's around the sophistication of the organization. Do they have the ability to really invest? I suppose, yeah, they're not going to have a chief information and security officer, I think. But of course, obviously, the exposure is proportionally that much less, of course, than the example you used. The nice thing about the cyber products, a bit like AI, is it's developed over time.

31:28We're talking about five, ten years ago was silent cyber. How does that mean developed over time? Now it's a standalone product. The same like terrorism. Terrorism was buried into property products for a long time. 9-11 was a catalyst that sort of moved it outside of property portfolio. Same with cyber. And now we have a sort of silent AI consideration that we have to... I'm always of the view that if you have an exposure that you want insured, you either accept it or you don't accept it. It's one of the other. And you need to affirmatively say it's in. Exactly. Because ultimately what you don't want to do is let down a client where they think they've got coverage and they haven't.

32:00But also what you don't want to do is not price for a risk and exposure that exists. So it sits somewhere in between. And I know London has been a really strong advocate for this over the years of developing product that actually pulls it out of the grey areas and ultimately allows a client of choice. Because we get bitten by this so many times. And, you know, look at the pandemic. it was a sort of, oh, guys, are we still here again arguing about whether something's covered or not? It's like, why wasn't it clear? Well, because we hadn't thought about it that way. Yeah, I mean, there's so many examples of infectious contagious disease, ICD, around the world, and wordings that hadn't been updated and coverage that was inside and outside and legislation that had changed.

32:32And I think about some places that I've done business in the past where legislation's changed, but the wordings haven't been updated. So it's now no longer relevant. And that ultimately just leaves the clients with a level of ambiguity, which doesn't do the industry any favours, ultimately. And for us to close that gap is going to be something of real importance. I mean, I've had people on the podcast who are more tech savvy, perhaps, and have really thought about it and said, look, it has to be affirmative because you can't exclude it. Because it's so embedded in everything we're doing, it's a bit like trying to exclude telephones or trying to exclude electricity or the use of computers.

33:01I'm sure someone in the early 80s, when finally everyone started getting computers on their own desk, some liability underwriter said, oh, my goodness, that means these people are all going to be going crazy, aren't they? Well, I think, yeah, ubiquity makes it sort of slightly more difficult to sort of have a blanket exclusion. it is a clear and present exposure that we all need to address. And I think if we do it thoughtfully and with consideration, we've done this over the years, we can find and will find a solution. Of course, in many situations, it's going to make the risk better. Hopefully, solicitors E &O will be better.

33:26You know, you won't have the classic situation where someone forgot to file something because they hadn't properly logged it. Whereas, hopefully, the AI will have logged, you know, the fact that you have to file this claim before the statute of limitations expires, etc. You know, this is... Yeah, with AI, it's such a broad church. It depends on exactly how you use it. of course, whether it's between generative, agentic or autonomous, how do you put it within your profession to be able to use it in a way in which it can't replace decision making or it shouldn't necessarily, certainly in the way I think about it.

33:53But ultimately, it can be additive to the ultimate decision process once you have a human oversight. Yeah, where's your own gut? On what I've just said about, I don't think you can exclude it. If you were forced to make a decision. There's got to be one way or the other, it's either got to be excluded or included. And I think ultimately, like I said, if it's excluded, that should be a client choice, an affirmative client choice to not have that coverage. And obviously you want to buy something. And often if they want to buy something, that tends to lead to a standalone marketplace, which then becomes black and white.

34:18It's very affirmative. And I think that becomes something that clients should feel good about. I mean, would it require more spend from their insurance program? Yes, but ultimately if they want that coverage and they feel that the wording of that coverage is the right, then that should be the right answer. What about AI, your own use fit? Where are you finding the best use cases? If we'd been talking two years ago, we'd be saying, what are you experimenting with? then these days, well, you've experimented. Now, what have you implemented and where are you getting the best results? We're really seeing it embedded in our underwriting workflow, submission, ingestion, and turnaround to quotation time.

34:52We've seen significant acceleration of that, which again, prepares us from a service proposition. It really improves that massively. And what sort of productivity gains that time, isn't it? Well, time, I think, is probably the right measure at this point, but I think also accuracy is another one because of the consistency around that. But look, with production in time comes cost efficiency. And that's a really important part of our business. And we've implemented it into four segments of our business. And we're already seeing improvements. But again, like anything, AI is going to continue to evolve and we're going to continue to use it differently.

35:21So on that underwriting ingestion, getting the binding quote back to the broker really quickly. What about claims? We are using it for our reinsurance contracts, extracting data and first notice of loss, all those type of things. That for us is not just underwriting data flow. It's actually being able to interrogate a kind of more contractual work that we're seeing real benefits from. and claims definitely sits within that for sure. Delegated authority. Obviously, it's a big part of, we're sitting in London, it's a big part of the London market. What's your view on that? Obviously, in terms of, we've had this amazing period of strong growth and almost, it seems to be like a secular change.

35:55There's cyclicality to it, all changes as well. Of course, we're in a cyclical market. And I think most people would now accept that there has been a secular, i.e. a permanent change in some of the way that business is transacted. I would probably guess that technology has got something to do with that in this, i.e. if you can remove friction, going back to that mythical 30 years ago, you add 10, 12, 15 % cost every time you change hands. If you put an MGA in front of something, you're just adding 15 points of cost. There better be 15 points better on the loss ratio. But these days, of course, you don't have to.

36:26You can actually isolate the skill of underwriting and reward the skill of underwriting and distribution in a way that is meaningful. I think delegated, by Lloyd's definition, is quite a broad church. It can be fully delegated or it can be bulking line slips. And anywhere in between, people have their own opinion where that sits on a delegation scale. I think about delegated as more a distribution channel than anything else. Any business needs to think about what they want to underwrite themselves and what they don't. And is that in support of the ambitions they have or is it in complement? Is it stuff that you don't write or is it access to a market that you just couldn't get yourself?

37:00Or is the barrier to entry too expensive to be able to get in there? Oh, it's too niche. Well, completely. And delegated is very much a relationship basis. We do write some delegated business. It's not a major part of our portfolio. We feel very confident in our underwriting ability. And given the platforms we use today, our access to global business is such that we feel that we have access to the business that we want to. But again, if there's a right opportunity for us and we see there's a partnership that's valuable, then of course we'd entertain it. I think I've come to the end of all my questions.

37:26You're very concise, very direct. That's not what my wife says, but no. is there anything that we haven't spoken about that you wish we had no look i really appreciate the questions uh mark it's been a terrific conversation and i think there's so much in there that is really exciting and i think over the next three to five years i remain as i came five years ago to build everest i remain hugely optimistic about the future of this business closing in on four billion what was it five years ago not four billion um but looking out our business has real scale it has real opportunity we've got a real product density that is very attractive to brokers and to clients.

37:58We've got a terrific team and the opportunity to continue building a business motivates me and the terrific team I get to work with. Thanks very much, Jason. Thank you so much, Mark.

38:07Jason Keen: Well, I hope you enjoyed today's episode. If you did, don't forget to subscribe or leave a like or a review or recommendation on whatever podcast platform you used to access this programme. These really help get the word out. Before we go, just a quick reminder that advertising slots are available here and in other places in the Voice of Insurance podcasts. Podcasting is the fastest growing medium and attracts a high quality audience of key decision makers. It's also an intimate medium where you, the listener, are right in the room with me and the interview subjects. Needless to say, that means it's a great way of getting your message out directly to an audience because you know you've got their full attention.

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39:08Jason Keen: Voice of Insurance is produced by me, Mark Gagan. Music was written by Anna Gagan and produced by Carlos Gagan. Check out more podcasts and written comment pieces at www.thevoiceofinsurance.com. you