Now4cover chief executive Michael Muzio explains why the unrated option was the better choice in this case

MGA now4cover chose to secure replacement LAMP cover with unrated Gibraltarian insurer Red Sands over an alternative rated option.

Around 13,500 now4cover customers were left without cover when fellow unrated Gibraltarian insurer LAMP failed in May, with 8,365 customers transferred to Red Sands earlier this month.

Brokers and MGAs use of unrated insurers has proved a controversial issue over the last few years following a number of failures, with the FSCS often passing the bill on to all insurers through a levy.

But now4cover chief executive, ex-Towergate head of pricing Michael Muzio, said he “couldn’t ask for a better partner” than Red Sands and explained to Insurance Times why he decided the unrated choice was the better option in this case.

As part of the due diligence, Muzio revealed he looked at insurers track record with existing personal lines partnerships in the UK - he said Red Sands had the best track record of this.

He also looked at the nature of other risks on the licence. “With Red Sands their primary exposures are to product lines with high frequency but low severity profiles and thus claims experience is highly predictable,” he told Insurance Times.


Muzio previously told Insurance Times how extensive due diligence had been done on former carrier LAMP, which had a reported healthy solvency ratio of 237%, and that the collapse had come as a huge surprise to him.

Red Sands’ solvency ratio was most recently reported by Insurance Times as 145%, but Muzio said unlike LAMP, Red Sands has reported stable solvency and expense ratios over a number of years.

Another key aspect Muzio considered when choosing the new carrier was the exposure of the account to other brokers the insurer may partner with.

“There are a lot of brokers that have been the victim of a general change in strategy and appetite,” he said “This could be from losses on other brokers they partner with. This is currently happening within the Lloyd’s market and some composite insurers. I’ve also seen a lot of that over my time while I was at Towergate.”

Muzio said that on considering these factors, along with the insurer’s capital position and the quality of its management team, that Red Sands was the right option.

“The final point we looked at is would I and the team at now4cover be happy insuring our homes with the proposed insurer,” Muzio said. “It was a resounding yes with Red Sands.”

“Drive and integrity”

Now4cover had built its home insurance offering with LAMP, but former Towergate head of pricing Muzio confirmed customers will see no changes to their policies.

“We are delighted to have partnered with Red Sands, who have secured the financial position of our existing policyholders following the insolvency of LAMP,” Muzio said.

“Throughout our dealings with Red Sands they have demonstrated a fully customer centric approach and acted with drive and integrity.

“Their lean operating model and complimentary skills mean we can offer great value to customers. Red Sands commitment to now4cover demonstrates their confidence in our business model and customer centric technology, and we couldn’t ask for a better partner to go with us on the next stage of our journey.”

Muzio also revealed through the deal all remaining LAMP customers had been transferred to Red Sands.

Shaun Cawdery, Managing Director of Red Sands said: “Partnerships are embedded in our DNA. We always seek long term, mutually sustainable relationships where we fully understand the risks and the value for policyholders.

“Our independence also allows us to think differently and act quickly. We saw the deep sector expertise of now4cover and the cutting-edge technology they utilise to improve the customer journey as the perfect foundation for a prosperous new relationship.

“Together we moved swiftly to give the now4cover customers a great outcome.”