Insurance and reinsurance broker Willis has formally announced the launch of its long-awaited Willis Global 360 capacity facility to its specialty insurance clients this morning.
The facility is designed to drive insurance placement efficiencies and to promote competitive pricing, according to Willis. It believes the facility will lead to faster placement and claims agreement for the brokers clients and help to promote greater price competition across specialty insurance lines.
Global 360 consists of a set of seven optional capacity facilities across Willis’s Aviation, Inspace, Construction, Property & Casualty, Marine, Energy and Facultative Reinsurance London-market subscription business. Willis says that the amount of capacity allocated to each portfolio will reflect the market conditions for the particular line of business. Initial rumours about the 360 facility suggested that it could take as much as 20% of each slip.
The first set of insurers which will provide capacity through Global 360 are, Hiscox, People’s Insurance Company of China (PICC) and Warren Buffett’s reinsurer Berkshire Hathaway. Willis is also in on-going discussions with other Lloyd’s Syndicates about their involvement which will please the Lloyd’s market.
Steve Hearn, Chief Executive Officer of Willis Ltd. and Deputy Chief Executive Officer of Willis Group, commented on the launch; “Willis is constantly seeking to improve our client service and capabilities and we are confident this innovative facility will provide our specialty clients with superior service and further peace of mind around their insurance placements.”
“The proposition of access to whole portfolios of business has proven to be very appealing to capital providers. We have attracted high-quality capital from around the world: insurers who wish to provide additional capacity to the specialty market or expand into new lines of business or territories, and reinsurers who want to enter the market in a cost-effective way. We expect to be able to announce further partners in due course.”
“By providing a door though which additional capital can access portfolios of risk, our clients will benefit from increased price competition and faster placements and claims agreement. This will be a welcome addition to our offering.”
The interesting thing about this broker facilities, which operate as a kind of full-follow sidecar, providing capacity on every slip passing through the brokers books, is how alternative capital may be pulled into them in the future. An alternative capital provider could back one of these facilities and the resulting risk it assumed would be highly diverse from across a marketplace. Read some more of our thoughts on how broker facilities could be an opportunity for alternative capital here.
This could be extremely attractive to large investors such as pension funds. It is highly likely that we will see some involvement of alternative capital in a broker facility in the years to come, once the facilities themselves are more accepted in the marketplace.