As insurance markets begin to soften after several years of firm pricing, specialist underwriters are facing a familiar challenge: how to continue growing while maintaining underwriting discipline.
According to Paul Bennett (pictured), underwriting director at NBS, the dynamics of specialist markets mean competition behaves differently than in mainstream lines.
“I think the best description I heard was from one of the directors at Lloyd’s who said: it’s a softening market, not a soft market,” Bennett said.
Specialist players typically operate in narrower segments where underwriting expertise and niche focus reduce the level of direct competition. Even as broader insurance conditions begin to ease after several years of firm pricing, Bennett believes specialist underwriters are still actively looking for opportunities to grow.
However, growth increasingly depends on more precise underwriting decisions.
For Bennett, underwriting discipline is less about broad pricing corrections and more about understanding exactly where losses originate within a portfolio.
“If I have to go to a product and put a 20% rate increase across the board, to me I’ve failed,” he said. “It’s lazy underwriting for a start.”
Underwriting discipline, Bennett argues, increasingly depends on understanding exactly where losses are emerging within a portfolio. Rather than applying broad pricing corrections, specialist underwriters are using data to identify underperforming sectors and adjust appetite accordingly.
That approach allows insurers to remain competitive in profitable niches while tightening terms or withdrawing from areas that consistently generate losses.
“As long as you know what hurts you, then you can be more aggressive on the stuff that doesn’t,” he said.
That approach can produce significant improvements over time. Bennett said that by identifying and removing underperforming segments within certain products, NBS has seen loss ratios improve over several years without withdrawing entirely from those lines.
Another major shift Bennett highlights is the speed at which claims information should influence underwriting decisions.
“How quickly should claims performance reshape underwriting rules? Yesterday, basically,” he said.
Access to real-time or near real-time portfolio data has made it possible to respond much more quickly to emerging trends.
Internal data systems allow some performance metrics to update every 30 minutes, while others refresh overnight. The company is also working to link its claims providers directly into internal systems to ensure reserve changes and claim developments feed straight into underwriting analysis.
This level of data visibility means underwriting rules can be adjusted quickly when loss patterns begin to emerge. Reducing the delay between identifying a problem and taking corrective action is increasingly important in competitive specialist markets.
Bennett believes the ability to respond quickly to performance data is one of the key advantages MGAs have over larger insurers.
Large carriers often rely on extensive historical data sets and multiple layers of underwriting oversight before adjusting pricing or appetite. MGAs, by contrast, can modify underwriting rules, policy conditions or sector appetite far more quickly.
This agility is particularly valuable in specialist markets where underwriting performance can be heavily influenced by specific niches or industry sectors.
For Bennett, combining detailed data analysis with rapid underwriting adjustments is becoming one of the defining characteristics of successful specialist underwriting businesses.
As competition increases and pricing conditions soften, the ability to identify profitable niches, and react quickly when performance deteriorates, may prove to be one of the most important underwriting capabilities.
