In the January-February issue, Colin Thompson, Nexus Underwriting Management’s group chief executive tells Insurance Times how those businesses that learnt from the challenges of 2020 will be one step ahead this year
Every year presents challenges and opportunities, and 2021 is no exception. The immediate impact of the Covid-19 pandemic continues to be felt globally and I expect to see the economic aftermath, exacerbated in the UK by Brexit, present a significant short-term headwind – alleviated, to an extent, by continuing low interest rates and the return of pent-up consumer and corporate spending.
The impact of Covid-19 on the insurance sector has already been enormous and I expect a period of continuing, profound change. Fragile underwriting profits have tipped into negative results for many in 2020, compounded by declining investment returns.
The consequences can be seen in one of the sharpest, most generalised market corrections since 2005 along with the entrance of new players, such as Conduit, that expect to take advantage of more benign conditions. Beneath these financial pressures, the pandemic has highlighted the expectations of purchasers, the importance of clear policy wordings and responsive claims handling.
Rightly, these concerns are noted by regulators around the world and I expect to see even greater emphasis on how we design, service and sell our products. This is likely to drive a greater embrace of technology as we respond to changing customer demands, the need to understand the driving factors behind our results and the imperative for reduced costs.
Similarly, Covid-19 and technology has irrevocably changed the workplace. As agile working has become the norm, new questions are asked of us – how we manage effectively, how we sustain the collaborative, vibrant environment that most of us want to be part of and how we nurture the engagement of our colleagues.
As an MGA, Nexus has always operated as a ‘virtual insurer’, placing the need for consistent, profitable underwriting performance ahead of top line growth.
We trade in niche product lines, employing experts in their fields and have a successful track record over the twelve years we have been trading. Unquestionably, the market has not kept pace incrementally with the fundamentals in many lines and a pricing adjustment is required.
However, we must be sensitive as an industry to the need to build greater trust with our customers, and opportunistic, unsustainable price increases will fall away as quickly as they arrive. Product innovation and differentiation – adding relevant depth and value to our proposition – is a vital component of this trust building.
Nexus has a strong M&A record, complementing our organic growth – the acquisition of the Yacht Marine team from Hiscox in December last year is our most recent success. I suspect that the challenges facing us all will prompt some to consider disposal or exit of all or parts of their business. Individuals and teams may also be considering their futures in light of the working experience during the pandemic.
Last year was a year unlike any other. We face continuing challenges and can learn a lot from these experiences as we adapt and grow.
With a trading presence in the UK, continental Europe, the US and Asia, we have strength in diversity as well as a clear, successful philosophy and a fantastic group of committed people making it happen. All of which is why I believe that 2021 is a year of opportunity for us and why we’ll be an increasingly relevant option for brokers across the countries in which we operate.