A special method to writing CAT

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“The combination of our two companies offers greater diversity while also strengthening our capabilities,” Scott Hanson (pictured), founder and president of CrossCover, told Insurance Business. “I expect fresh ideas from this partnership.”

CrossCover intends to leverage its Catastrophe Capacity (CAT) and apply engineering and technical underwriting to underwrite a non-CAT portfolio largely distributed across the country. Through a panel of AM Top Rated Shippers and Reinsurers, CrossCover offers limits of up to $ 50,000,000 per location on destination accounts.

“We are fortunate to have two of the best technical underwriters and leaders in the E&S market who have previously managed more than $ 800 million in annual bonuses and have incorporated a remarkable systems architect,” said Hanson.

Hanson has extensive experience as chief property executive, having previously worked at GE Insurance, Aspen Specialty and AmRisc. He noted that real estate underwriting has now become CAT driven and model dependent and he hopes to create more balance in the market.

“MGUs continue to focus on writing high-margin Tier 1 business, while some standard markets have withdrawn from occupancy classes or regions across the country due to poor results. CrossCover can bring a different perspective to the midsize market by leveraging CAT capacity to fill the void left by the standard markets, ”said Hanson.

Hanson stated that Tier 1 CAT pricing models are good portfolio tools that can be helpful on an account basis but are not the definitive answer. The real differentiator is a deep understanding of risk, which is often lacking today.

“Reinsurance prices remain strict, especially for those carriers that are considered CAT-controlled,” he said. “CrossCover aims to lower reinsurance costs and reduce the volatility of CAT events by creating a more diversified, geographically more robust portfolio.”

The real estate market also faces challenges when it comes to claims; Estimating CAT damage has become more difficult due to arbitration terms and the increased use of public experts, which has increased the duration and severity of property claims.

Unmodeled or unforeseen hazards like the California forest fires, Uri freezes, and civil unrest will be a perennial theme for the industry.

Hanson said one possible response to this uncertainty could be to add a premium on standard property insurance to pay for unexpected losses until sufficient actuarial data is available.

With the ongoing public debate over global warming, Hanson expects the insurance industry to grapple with unmodeled dangers for the foreseeable future.

“We’re known for real estate right now, but going forward we will identify other businesses that are inefficient and hire experts to challenge the status quo,” said Hanson.