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o INSURTECH IN SPECIALTY INSURANCE
o ALI ASGHAR, CHIEF OPERATING OFFICER, ELSECO
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elsecoINSURTECH IN SPECIALTY INSURANCE
Investing in innovation, talent and
technology
Specialty Insurance: Current Market
3
Specialty lines of insurance Insurance Groups
Market challenges
4
Deteriorating
performance
Increasing power
of distribution
Lack of scale/
relevance
Technology
investment to
harness data
High expense
ratio
• Plentiful supply of capital
• Continued pressure on acquisition costs and operating expenses
• Insurer’s market remains fragmented
• Creating the capability to access global business locally tends to be expensive
• Insureds and brokers require lead relevant lines
• Challenging to increase line size in current rating environment
• Growing complexity of risks require greater analysis
• Need for investment in technology and increase in information flow
• Brokers and insurers variable expenses are constantly increasing
• Increasing fixed costs of compliance and technology
elseco: Insurtech to address the insurance market challenges
5
Technology
Pooling
capacity
Best in class
expertise
Technology
elseco provides access to superior underwriting results at lower cost
• Critical mass and relevance to
distribution
• Shared costs of best in class
teams and cutting edge
technology
• Members’ networks to get
closer to clients
Business model attracts
Entrepreneurial, best in class
talent
Innovative thinkers who can
harness distribution and
technology to improve
underwriting result
Team minded players with a
focus on collective success
Use technology to improve
performance
Inform underwriting decision
making
Reduce frictional cost with
single open platform
addressing underwriting,
regulatory and compliance
needs
Service global client base
without expense of global
office network
Improving performance with pooled capacity
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Sharing
expense
Relevance
and
influence
Access
better
systems
while
avoiding
fixed cost
Access
multi-
disciplinary
teams of
experts
Flexibility to
exit without
costs
Proximity to the
customer
Relevance
over terms
and product
Relevance
over claims
handling Differentiation
Pooling
Capacity
Tec
hnol
ogy
Pooling
Capacity
Improving underwriting result with best in class talent
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Best in
class
expertise
elseco has proven it can
attract best in class expertise
who are able to maximize
performance using technology
The ability to create wealth through
profit related remuneration attracts
expertise that is competent,
confident and with stand-out track
records
Access to tools and technology, far
superior than competitors, that allows
talent to maximise underwriting margin at
a lower cost
The entrepreneurial nature of elseco, the
strong culture and business model
attracts underwriters who are
disillusioned within the confines of large
companies
Expertise
Technology – In-house developed platform
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Technolo
gy
In-house
system
developed in
partnership
with SAP
ComplianceFinancial and underwriting
control are imbedded into the
solution and reduce the burden
of reporting and associated
costs. Opens up platform for
franchising to third party teams
Big Data & Data
sourcing
A level of information at
underwriters finger tip, surpassing
that of the competition allowing for
advanced pricing and risk
selection. Proactive data
collection disrupting the current
data dependence of insurers
Scalability
Allows elseco to move from
thousands of transactions to
millions of transactions per
year, opening up new lines of
business
ecommerce
Ability to get closer to the source
of business and reduce the costs
of the supply chain.
Reduce the costs associated with
double entries
Plug in with members
Members can have real time
access to their portfolio, providing
simplified performance analysis
and an ability to manage their
income at a lower cost
Technology
Specialty Insurance: elseco Optimized
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elseco
Specialty lines of insurance Insurance Groups
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01
02
03
04
05
06
11 years
Long term relationships have been
developed and fostered over the last
11 years.
Underwriting Profit
USD 250m of underwriting profit has
been generated since elseco’s
inception
3 successful lines
World wide leader in Space.
Rapidly growing presence in
Aviation and Energy
60 members
Key relationships include
Local offices, global footprintPhysical offices in Dubai, London,
Washington, and Paris, but platform
allows for local servicing and access
across the globe
23% YoY growth
elseco’s growth has been funded
solely through reinvestment of prior
year profits
elseco to date
elseco performance – Net Written Premiums (USD)
11
USD 0
USD 20,000,000
USD 40,000,000
USD 60,000,000
USD 80,000,000
USD 100,000,000
USD 120,000,000
USD 140,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net Written Premium (to date) End of the Year
elseco business model – challenging insurance market dynamics
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Deteriorating
performanceSpecialty lines
Insurers hesitate to enter very specialized lines where technicality
and need of expertise creates high barriers of entry
Arms Race for Talent
Hiring the best talent puts further pressure on expenses and
therefore margin
Placing Broker Control
With no single market controlling the placement, the broker
controls the dynamics to the capacity providers detriment
Pooling Capacity Expertise Technology
Relevance to obtain best terms available
on the placements
Line size to maximise share on
placements where significant margin is
available
Product expertise and innovative
approach, supported by insight analytics to
improve the quality of the risk.
Harness data to more accurately select
risk, optimizing chances to over perform
the market
Market
Challenges
elseco business model – challenging insurance market dynamics
13
Increasing
power of
distribution
Broker channels
Increased acquisition costs as brokers utilize facilities, wholesale,
and retail outlets to bolster hold over business
Distance from customer
Accessing the direct customer is becoming more difficult, as
carriers continually fail to differentiate
Globalization of the supply chain
Risks are originated all over the globe, making it harder to service
at a local level without investment
Pooling Capacity Expertise Technology
Proximity to the client achieved through
relevance of the pooled line, and ability to
lead; use of the members’ local presence
when available
Ability to offer a complete service covering
all the elements of the value chain.
Market leading knowledge is highly valued
and can add to broker’s offering
Ability to service directly retail brokers
worldwide without significant investment in
local offices.
Provides brokers with low cost solution to
quote and bind less complex business
Market
Challenges
elseco business model – challenging insurance market dynamics
14
Lack of
scale /
relevance
Syndication
Capacity is not significant enough to be relevant in pricing and
terms
High fixed costs
High costs of underwriting team, compliance and technology
versus income
Challenge to increase line size
Carriers find it difficult to increase line size and utilize it effectively
whilst maintaining portfolio balance
Pooling Capacity Expertise Technology
Ability to influence placements while
sharing the costs associated with being a
lead market. Natural spread of the risk
reducing the dependence on reinsurance.
Ability to be a market lead, working closely
with clients attracts the best talent.
Scale allows to build larger teams of
underwriters with diversified expertise
Pooled capacity allows for costs of cutting
edge technology to be shared
Market
Challenges
elseco business model – challenging insurance market dynamics
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Technology
investment to
harness data
Increasing number of data sources
Risks are becoming more complex and more accurate pricing
requires harnessing of data from multiple sources
Expense burden of legacy systems
Compounding the pressure on expenses is the heavy investment
required to update legacy systems and improve efficiency
Big data
Many companies struggle with “small data”, so the move towards
harnessing big data is a big challenge
Pooling Capacity Expertise Technology
Access better technology by sharing the
cost of the investment.elseco attracts teams with product line
expertise and entrepreneurial outlook to
understand how to optimise the investment
in technology and big data
Significant investment on technology
infrastructure since day 1. Major upgrade
to open the system and be prepared to
scale up the platform and the volume of
data analysed
Market
Challenges
elseco business model – challenging insurance market dynamics
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High
expense
ratios
High fixed costs
Costs of being a follow market can be disproportionately high
Talent
High costs of attracting talent to underwrite business
Technology
Technology to support underwriting and compliance is high and
replicated many times over in a syndicated market
Pooling Capacity Expertise Technology
Costs are maintained to the minimum due
to rigorous discipline and shared between
the members.
Alignment of interest through PC based
compensation schemes
Access the best talent for a fraction of the
cost
Automate back office functions to gain in
operational expenses.
Manage high volumes of transactions at
low incremental cost
Market
Challenges
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Multi-factorial market over-performance
Sources: Marsh Space Insurance Market Review and Future Outlook,
Lloyd’s audit code data at 31/12/2016 and Willis Re projected aviation
market result
0%
20%
40%
60%
80%
100%
120%
Net
Incu
rred
Los
s R
atio
Net Incurred Results
elseco LR Industry LR
Member
results
improvement
> 27%
21%
elseco’s better informed and
disciplined underwriting
teams have outperformed the
market by 21% through risk
selection
6%elseco low cost structure has
allowed members to operate at a
cost structure which is 6
percentage points better than
their internal expense levels
50% To date, elseco members have received a
50% return on accounted premiums
Going forward
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• Development of market share in Space, Aviation and Energy
• Launch of new products in these lines via the electronic platform
• Launch of at least 3 other lines of business with expertise and/or data
driven barriers of entry
• Development of geographic footprint through innovative partnerships
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The information and data that were used to prepare this Presentation are considered as reliable, but the company makes no
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reasonableness of the contents of this Presentation. Any liability in respect of the contents of, or any omission from, this Presentation is
expressly excluded.
Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business
prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict.
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