Ventus MGA looks to insurtech to efficiently transfer risk to ILS capital

Ventus Risk Management, a recently established MGA focused on sourcing and underwriting property catastrophe risks, with backing directly from the capital markets and ILS investors, is embracing technology to help make the transfer of its risks more efficient.

Following a trend that is developing rapidly, Ventus is not just looking to directly transfer insurance risks to the ILS market and collateralised reinsurance capacity, it is also looking to embrace the insurtech trend, by utilising insurance technology to make its distribution of risk to capital as efficient as possible.

Ventus, which has an in-house wholesale broker and specialises in underwriting U.S. coastal property insurance for small and mid-sized enterprises, has signed up to use the Dovetail Platform from Marsh as it expands the technology helping to make its agency service more efficient and to help accelerate its commercial insurance market growth.

Ventus’ business model is all about making the transfer of property catastrophe risk more efficient, from the primary buyer through to the capital markets, thus resulting in an ability to offer keener direct insurance pricing to clients.

One factor is the direct transfer of these primary risks through to alternative capital and ILS, disintermediating the typical risk-insurance-reinsurance value chain.

We saw evidence of this development just the other week, when Ventus and XL Catlin announced a partnership to bring commercial property insurance to small and mid-sized enterprises with backing from collateralized reinsurance funds.

Another factor is its ambition to use insurance technology (or insurtech) to increase the efficiency yet again.

The Dovetail Platform will be used as a virtual back office (VBO) by Ventus, largely on the policy administration side.

Steve Francis, CEO of Dovetail Insurance, commented; “Dovetail offers a unique, state-of-the-art platform that enables carriers and agents to deliver faster, better service and an expanded product selection to their small business clients.”

The technology will help Ventus to offer clients real-time electronic proposals, binding and policy administration, as well as offering a single bill for multiple policies. The technology is also designed to help its users rapidly roll out new products or expanded coverage lines, with much more efficient back-office processes and a straight to market approach.

Interestingly, Dovetail’s cloud based underwriting and electronic marketplace platform also incorporates social media into the class and risk selection process, which it says can result in more accurate premium pricing. Social signals could also assist with improving risk selection, adding another indicator against which a clients risk can be quantified.

Ventus is also developing its own technology, to help it to make the flow of risk from primary insured client through to the capital market backed capacity, a more efficient and seamless process.

But technology aside, it is the merging of more efficient business processes and improved customer experience, with efficient capital from the ILS and collateralised reinsurance markets that makes Ventus particularly interesting.

Technology is also being developed and embraced by other capital markets backed MGA’s, such as Nephila Capital’s Velocity Risk Underwriters LLC, as they also seek to ramp up the efficiency and enhance the product offering even more than just the direct transfer of risk to the capital markets provides.

These two trends, of insurance technology or insurtech advancement and growth, alongside the use of efficient capital market and ILS capacity, could provide significant advantages for those companies embracing them both.

Ultimately though, the beneficiaries will be insurance buyers, as the disintermediation and breaking down of the risk-to-capital value chain, using ILS capacity alongside insurance technology, help to lower costs and provide an enhanced and lower-friction customer experience.