Paul Lucas 00:00:06
Hello everyone and welcome to Insurance Business TV, as we delve into the financial services market, 2024 has been a year of opportunity but also increased risk as companies in the financial sector look to leverage AI, increase their cybersecurity and leverage data to to drive growth and include both ESG and DE&I. So let’s dive into the trends shaping the space, and who better to guide us than John Van Decker, Head of Global Financial Lines at Axis? John, welcome to IB TV.
John Van Decker 00:00:38
Paul, it’s great to be with you.
Paul Lucas 00:00:41
So, John, let’s talk about some of the macroeconomic trends that will impact the financial lines market in 2024. Are there any changes you see compared to last year?
John Van Decker 00:00:50
First, I would like to explain the Access financial lines to you. Axis Financial Lines is a global company. They represent a strong platform for us, a platform in which we have invested over a long period of time. It is diversified by product and geography. We offer a wide range of products including D&O, EPO, trust, criminal and many E&O lines of business. We also supply many industrial groups, to name a few: construction and financial institutions. So we have a pretty good overview of the overall financial services market and some of the macroeconomic trends that we’re seeing, two key areas that we’re focused on. One of them is the economic environment. These product lines are sensitive to economic stress and economic turmoil. So looking back to about 18 months ago, one would expect a little more stress in the market recession, as predicted by many analysts across the community. So far so good, but we are observing the underlying cracks in the economy’s potential problems. For example, we are seeing an increase in bankruptcies in the USA. In the first quarter we see higher interest rates and higher inflation. What does this mean for our customers? What does this mean for your risk profile? What does this mean for the latest trends in the future? So that’s an area that we’re keeping a close eye on as we move forward. In the second area of competition, as you know, there were significant interest rate increases across the entire financial business from 2019 to 2022. Of course, that attracted a lot of capital; we have many new players on the market. And we compete with, including long-established competitors. So that’s another area we’re focusing on.
Paul Lucas 00:02:28
So higher interest rates, higher inflation, more competitors in the market. How does the insurance market react to all these changes?
John Van Decker 00:02:37
Well, I think a few things are true. So we’re seeing price competition and starting to see slightly more favorable terms and conditions. But we haven’t seen any significant impact and capacity, have we? We see how boundaries are used, manage it. This is important. For us. It is an area we are focusing on. We also see a lot of industries where the rates are reasonable, right? This means underwriters have better tools and better data analytics to analyze specific customers and specific product lines. And we see a range of opportunities across the financial business we serve, for example private companies, D&O and related lines, small D&O and E&O from London. We grew these businesses by double digits in the first quarter of this year. We believe we will do good business in the future. Construction professional, that’s right, we’re seeing significant amounts of capital and resources being poured into infrastructure development in the United States. This is an area we will continue to invest resources in as we see really good opportunities in the professional construction sector. So there are a number of positive areas and areas that we will focus on. One area that won’t surprise you and that I call challenging is the commercial public D&O segment, which has seen significant rate reductions in recent years. It is an important part of our business. But we are very disciplined in this business. And we will work with our long-standing customers and specifically focus on new business in this segment.
Paul Lucas 00:03:59
With so much going on in the market, can you tell them about some of the business changes you’ve made? I imagine you had to do a fair amount of evolution. So can you go into a little more detail for us about the changes you’ve made at Axis?
John Van Decker 00:04:11
Yes, we’ve made a number of changes and it’s an exciting time for assets. We have increased our ambition as a company to be a leading specialist insurer and to offer specialist products. What does this mean for us? We want to provide a better customer experience and provide a better broker experience by bringing specialized products to this area. For example, what we did in the US when we repositioned our business in sales. Today we have three companies in the US, one of which focuses exclusively on the wholesale financial lines channel (both commercial and FYI financial lines), providing expertise in resolving complex risks. It offers quick solutions. It offers innovation, we’ve seen strong growth in this channel and it’s really a fast-moving channel. On the retail side, we have split our business into two separate divisions: a complex retail finance division, which is our public Fortune 500 company, and a large FI company in that space. You know, our underwriters are experts at what they do. You will work closely with our retail brokers and work closely with our clients to provide tailored solutions to complex risks. And then we’ve also developed a lower middle market business that does business for private companies and mid-market companies in the FI and commercial space, so we can offer a broad product base in those industry segments. And this is more of a fast-flow business, more of a medium-sized company. For us the technology is important, for us the processing is important. It is important that we underwrite at this pace. And we are seeing good growth there. And we believe this will be a steady growth business for us. And we see enormous opportunities in this business. And we continue to invest in the digital side so that things like this come to fruition.
Paul Lucas 00:05:57
You talked about both your retail broker partners there and your wholesale broker partners. Any tips for those watching? How should you navigate finance this year?
John Van Decker 00:06:07
I think they are on their game. You know, I think the brokerage industry as a whole is in a good place. When I look at how specialized they are in their activity by industry groups, be it by product, be it by different industry segmentations, they are constantly improving their services and capabilities. They continue to improve the analytics and insights they can provide to individual customers and industry segments to help them assess emerging risks. So we continue to see them investing heavily in the services they offer and looking for carriers like Access that can solve solutions for them with expertise, specialization and claims expertise, right? These are important areas. And we are well positioned to offer these services to our key distribution partners.
Paul Lucas 00:06:54
And it’s nice to hear that the brokers are doing their best and I’m sure you’ve given them even more motivation to do so. Thank you so much for your time today, John.
John Van Decker 00:07:02
Paul, it was great being with you.
Paul Lucas 00:07:05
John is clearly an expert in the financial industry and if you want more insights from industry leaders who really know the market, stay here and at Insurance Business TV.
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2024-06-27 04:00:00
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