Todd Evans leads Engle Martin’s business development and client retention efforts as Executive Vice President of Business Development. Todd’s extensive experience in the insurance space has made him an invaluable asset to Engle Martin, including serving three years leading the business development strategies across all platforms under Cor Partners, Engle Martin’s parent company. A graduate of Mercer University, Todd has earned the Chartered Property Casualty Underwriter (CPCU), Associate in Risk Management (ARM), and Associate in Claims (AIC) designations. He is active in the Target Markets Program Administrators Association (TMPAA), Wholesale & Specialty Insurance Association (WSIA), and Risk and Insurance Management Society (RIMS).
Q: As we approach the second half of 2022, where is the insurance marketplace today?
A: The market is currently in a state of transition. In 2021, we experienced multiple natural disasters, COVID implications, and a change in the way we conduct our business, i.e. remote/hybrid work environments versus physical offices. The insurance market is rapidly pivoting as compared to what we’ve experienced in the past.
It is most prevalent on the production side and how insurance is actually placed. In the past, it was more of a traditional model – insurance companies had agents and brokers that brought business to them, and companies managed the entire transaction including underwriting and claims…they did it all. Now, there is more segmentation where capital is being dispersed via third-party specialists who do the underwriting. Those underwriting organizations often have third-party administrators who manage the claims. There’s been an increase in specialization in terms of duties.
For example, you may have an insurance company that writes core lines of business, and they have outsourced underwriting partners who augment those core lines. The shift to outsourcing is how capacity is now being deployed and how the underwriting market delivers that capacity to the insurance buying public.
I believe this shift is being driven by efficiencies. If you have an underwriting team who only underwrites transportation business, and that’s all they do, they can focus solely on that class of business. They should then produce better results and do it more effectively, providing a lower cost basis.
Q: In other industries where processes have shifted from in-house to third-party vendors, the transition has gone smoothly for some sectors and not so smoothly in others. Has this shift been disruptive in the insurance marketplace?
A: It has certainly been a change. What we are seeing now is a movement of the underwriting function away from insurance companies to MGU/MGA models which essentially provides a platform for underwriters to operate their own business and potentially share in the profits of their book.
This approach is certainly more flexible. This is how innovative businesses are developed and right now they’re prolific. The new hybrid companies are comprised of seasoned leadership and supported by significant financial backing. It is really going to be interesting to see how it all plays out.
Q: Where is the market going next?
A: Right now, there are numerous new participants, channels of distribution, innovative products, and new organizations. I think where we’re going depends on how successful these entities are and the direction of the economy. The trend towards specialization and outsourcing of underwriting is likely here to stay. This will be a new way of doing business. What a traditional global insurer looks like in 10 years will likely be considerably different than it is today…only time will tell.
It will also be interesting to see which of these new companies have staying power and which don’t. They’re all, within reason, offering a similar efficiency proposition. There can be so much inertia inside large operating models and that is the reason we have seen the formation of this alternative distribution channel. This allows producers to do what they do well in an entrepreneurial environment. It allows those underwriters who want to be entrepreneurs to share in the rewards versus more traditional settings. There is a lot of excitement and opportunity for talented individuals to gain greater autonomy and get incentivized for their results.
Q: What kind of opportunities does this create for Engle Martin and its customers?
A: For us, the real opportunities from market changes is the creation of more customers. It does change our view of the sourcing and sales cycle. There are more doors to knock on. Essentially, the overall size of the pie is the same, but it comes in smaller slices.
It produces great opportunity for our organization since most of the new underwriting platforms generally have to have an outsourced claimed partner. If you’re taking the core underwriting function out of an insurance company, you’re likely going to change your approach to claims. It’s exciting times for the insurance market.