After two decades in the US market, AM RE management is moving into cyber with the recruitment of Mandy Barder from CFC Underwriting. She explains why now is the perfect time to enter the cyber space.
The firm’s new cyber offering is underpinned by astute risk selection and multifaceted client support.
AM RE’s new cyber offering, led by fresh recruit Mandy Barder, hits the US market at a time of unprecedented demand for cyber cover. In many cases, higher limits are being requested in response to recent claim activity. Meanwhile, rates are set to increase between 20 percent and 50 percent in 2021, and coverage restrictions are being applied.
“Insureds within the small and medium-sized enterprise (SME) market are becoming much more cognisant of cyber coverage and its role as a business essential,” says Barder.
“Of course, the recent requirement for remote working across multiple industries has further emphasised the need. As claims activity increases, it is an opportune time to restructure the product to better meet cyber needs as we head into a hardening market.”
AM RE’s relationship with many primary managing general agents (MGAs) and fronting carriers creates a strong opportunity to support the cyber SME products that are being sold in record numbers. The share of organisations that purchase cyber liability insurance globally is now 75 percent.
Cyber premium globally is at $7.5 billion, with $5 billion generated out of the US, and $2.2 billion from the SME market. The value of cyber premiums is estimated to reach $20 to 25 billion by 2025.
“Combined with significant rate increases and the enhanced awareness of insureds, there is huge growth potential within the reinsurance programmes we’re offering,” says Barder.
Beyond the hard market
As a specialist reinsurance MGA, AM RE brings high levels of technical expertise and deep knowledge of the US primary market to its reinsurance offering. It gives carriers the ability to enter the US SME cyber space with the support of quota share reinsurance, whereby the reinsurer assumes an agreed percentage of the insurer’s risk. This is a model that invites attractive rates and ample capacity.
AM RE’s management team has specialised in programme business, with its quota share structure, for 20 years. This type of business requires a specific skillset and cannot be written at a distance, which is why in 2020 the company relocated to Dallas, Texas, which sits at the heart of the programme market.
AM RE’s new cyber offering will stay true to the company’s focus on classes of business that are non-nat cat, have longevity, and deliver consistent results with a scope beyond the current hardening rates cycle, which began towards the end of 2020 for the first time in the history of the cyber market.
“Ransomware attacks have increased in both frequency and severity, and the average ransom payment is up by about 60 percent,” notes Barder.
“As a result of the COVID-19 pandemic, losses are expected to continue but the primary market is responding prudently by reducing cover, increasing rates, addressing regulatory risk and partnering more with cybersecurity experts.”
At the same time, businesses large and small are becoming increasingly aware of the responsibility they have to protect data. New roles are being created within organisations to do this, especially as the risk of cybersecurity breaches becomes more costly.
“We all know about the large cyber attacks that big corporations fall victim to, but it is now considered common for any business of any size to suffer from business email compromises, phishing scams, or fraudulent wire transfer incidents,” says Barder.
“The perpetual reliance on technology for businesses to function cannot be ignored, and there is a growing sense of acknowledgment and concern for how best to protect your business. The tightening of capacity is also driving recognition, which is something we are acutely aware of.
“This is why we are offering a proactive, seamless way of supporting our existing clients as well as future prospects.”
How is Cyber a growth opportunity?
AM RE intends to bring a selective approach to cyber, as it does for all programmes that it writes, Barder says. The company has a longstanding focus on identifying quality MGAs and partnering with them to create a profitable outcome.
"Our longstanding partnerships are built around stability and sustainability, so it’s essential that we identify the top-performing programmes within cyber and support the MGAs we work with to reduce risk and drive desirable outcomes,” she explains.
She adds that the move into cyber is an important growth opportunity for AM RE—and it intends to take its clients along for the ride.
“Through listening to the market and writing only intelligent business offerings such as cyber, we can further diversify our portfolio of business,” she says.
“I aim to play a role in continuing the company’s track record of sustainable growth and client satisfaction through utilising AM RE’s capabilities and expertise, working with existing and future partners to provide the necessary capacity that they require to support continued growth in their businesses, and partnering with new reinsurers to create diverse lines of business.”
AM RE is structured around the programme segment to deliver on multiple fronts: it offers strong underwriting expertise, specialised analytics, proprietary software, and the services of the recently launched AM Star Claims Co, which provides oversight and guidance to the claims management process supported by its in-house database.
Additionally, the company’s technical underwriting approach allows it to recommend unique risk management strategies such as additional cat cover and/or retro purchase.
“Our offering goes beyond capacity, and we pride ourselves on our ability to support our clients in multiple facets of their value chain,” says Barder.
“We have seen an increased demand for these services due to the increased transparency and efficiency in cost management. We add market-leading expertise and analytics to the programmes we write, which results in superior returns.”
For Barder, who has spent a decade in the London Market—most recently as a primary cyber underwriter at CFC Underwriting—the new role is an opportunity to transfer her primary underwriting knowledge into the reinsurance market, and to have the ability to underwrite business at the portfolio level.
“As cyber grows in appetite, premium and market share, it’s an exciting time to look at how specialised reinsurance solutions can support a growing market space, with huge potential for increased capacity,” she says.
“AM RE provides highly technical expertise in programme business and the capability to deliver tailored, niche products to its existing and new client base. I very much look forward to developing the cyber offering in line with our other successful products.”
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