Cyber set to lead Beazley’s Apac growth: Mounier
‘As we look towards 2024, I expect our cyber and property businesses to be the two main contributors to our growth,’ Beazley’s head of Asia-Pacific, Lucien Mounier, says
Beazley’s Apac regional chief says cyber will become one-fifth of its book in the region as he outlines the next steps in the re/insurer's hub strategy
Beazley expects cyber to account for half of its growth in the Asia-Pacific (Apac) region this year, becoming at least 20% of its overall book in the region.
In an interview with Insurance Day, Beazley’s head of Apac, Lucien Mounier, says 20% is “significant”, considering the re/insurer introduced cyber to its product suite as recently as 2019.
“From 2020 to 2023, our cyber book doubled each year and this year I’m expecting it to grow another 50%,” Mounier says. “We started from a low base but we’re now getting to a substantial cyber book that represents 20% of our Apac business, which is significant. In fact, I anticipate half of our growth in the region this year will be from cyber.”
Beazley initially wrote cyber in Apac through its financial lines team until it appointed a dedicated cyber underwriter, Teck Siong Ng, in 2020. It now has four cyber underwriters and a cyber claims manager and is looking to hire a cyber services manager early next year.
“Cyber services will be the third pillar of our cyber offering, in addition to underwriting and claims. Within that pillar, we’ll look at incident response, but also provide value-add services throughout the policy period for our insureds,” Mounier says.
Mounier was cyber product leader at AIG in France before joining Beazley in 2016 as a cyber and technology underwriter. Two years later, he was promoted to head the company’s Apac office, which is in Singapore.
The Apac region is so diverse that “maturity to risk isn’t necessarily equal to maturity to risk transfer”, he says.
“If we use cyber as one qualifier then this region is still a few years behind the European market, which is itself a few years behind the US market in terms of maturity. But Apac is catching up and we are seeing increased demand, which is why we’re investing a lot in our cyber business here.”
A “fascinating observation” he made when he took the helm of Beazley Apac was cyber was still viewed through the lens of data privacy and liability and regulatory fines. Asian countries typically are “not very litigious”, he adds, and cyber insurance was not something they “felt they needed to buy”.
“The growth of ransomware attacks in Europe has been a wake-up call that cyber presents tangible first-party exposure, which is agnostic to geography, so we’re seeing more adoption of the product,” Mounier says.
The cyber market in Asia is still small, he stresses, and there is “complexity around crafting a product that makes sense in each territory”.
For example, it is hard to trade in South Korea without a product in the Korean language, Mounier says, while obtaining regulatory approval in Indonesia can take as long as two years.
“Cyber is a product with incredible potential in this region but we are very much at the beginning of what cyber insurance will be to Asia-Pacific. Australia is a highly mature territory, of course, and from a penetration perspective it is comparable to Europe and North America, but much of the rest of Apac is at the start of that journey.”
Demand for cyber insurance is primarily from big organisations that are either international or have a large presence in their own countries, Mounier continues. There is currently a lack of appetite from the small and medium-sized enterprise (SME) sector, with many lacking an understanding of the risk they face and how insurance can help prepare and manage a cyber incident. It is crucial, he says, the insurance and cyber industries and regulators work to boost access to cyber coverage by SMEs.
“It will be an interesting challenge for us, in a region that is not homogenous, where each territory requires a specific type of work, to build cyber solutions for SMEs that are easy to access and easy to understand,” he says.
In Apac Beazley has chosen a “hub” approach, with Singapore at the centre as a “hyper-mature” territory, where there is already substantial demand for specialty insurance products, including cyber, Mounier says.
Another example in north Asia with this same high level of maturity is South Korea. In south-east Asia, Malaysia and the Philippines have a “fairly mature” cyber market, while Vietnam still has a “very nascent” cyber market that will have increasing potential over the next five to 10 years, he adds.
“This region gives opportunities and work to do over a career’s worth of time,” he says.
“If we use cyber as one qualifier then this region is still a few years behind the European market, which is itself a few years behind the US market in terms of maturity. But Apac is catching up and we are seeing increased demand, which is why we’re investing a lot in our cyber business here”
Beazley Plc is the British parent company of specialist insurance businesses with operations in Europe, the US and Asia. It manages seven Lloyd’s syndicates. It is within this context that Mounier can take a global view of cyber as a re/insurance product.
He says: “During Covid, there was a fairly hard market for cyber, both in this region and globally. After three years of market correction, we’ve started seeing more capacity coming back into the market. With that, we are seeing clients pay more attention to in-depth quantification of their risks. They’re saying, ‘Where I used to buy a $10m or $20m limit, now I need closer to $50m or $100m’.”
Ready to go deeper
Beazley now has a team of 55 people in Apac, most of whom are based in Singapore. It also leverages its parent company’s presence at Lloyd’s to expand its reach across the region, including China, where it has two underwriters.
“The hub model works very well for us because we’re able to concentrate expertise and have a team that collaborates when it comes to opening doors to various parts of the region,” Mounier says. “Our team comprises 12 nationalities and this helps us to trade in 10 different territories.”
This diversity is vital for serving a region with such a wide range of languages, cultures, regulations, ways of trading and forms of licensing, he adds, because “each market really is its own beast”.
Lloyd’s gives Beazley access to insurance licences in Singapore and Hong Kong, as well as in Australia and New Zealand. Everywhere else in the region, the company trades on a reinsurance basis.
Mounier estimates Beazley’s business in Apac has an 80:20 split between reinsurance and insurance. Most of this is either direct insurance or facultative reinsurance. Treaty represents 15% of its book.
Is the larger share in reinsurance more out of necessity than a choice?
“Yes, because we have to adapt to each country and each regulation and our licensing only permits us so much,” Mounier says. “But our team here is very well versed in trading on a reinsurance basis, which still allows us to add value to the end customer.”
Beazley has operated in Singapore for 17 years, Mounier points out, but really started to accelerate its product diversification at the turn of 2019/20.
In 2017/18, its products were treaty, property, political violence, political risks and marine. It has since added cyber, financial lines and “a whole suite” of directors’ and officers’ liability, financial institutions and professional indemnity, Mounier says.
It also offers mergers and acquisitions liability, with a team devoted to transaction liability. In addition, it covers jewellery, fine art and specie, as well as healthcare and life sciences. Last year, with the move from the US to Singapore of one its underwriters, Jae Pak, it added product recall.
The other way Beazley has grown in Apac is through innovation, Mounier says. For example, its financial lines team has recently created two new products: multi-family office and private equity portfolio liability.
It views property risk, he continues, from three angles. First, open market property focused on industrial type risks on a facultative basis. It plans to deepen this expertise under the leadership of Simon Wilson, who joined Beazley in January 2022 to head the company’s open market property teams internationally.The second angle is Asian treaty and the third is jewellery, fine art and specie, which Beazley considers to be “property”.
Mounier says: “In its global reports, Beazley has been talking a lot about the growth of its property book in North America. Now, in Asia, growth in property will really come next year for us. That’s because we’re reinforcing that team and hope to hire two more people early next year.”
Most of Beazley Apac’s property book is focused on Australia, Japan and South Korea, with an increasing focus also on Taiwan.
Beazley in Apac has four marine underwriters, two for hull and war and two for cargo and project cargo, and a fifth person for claims. Beazley as a global firm has a broad marine offering that also includes subsea, space and aviation. Those specialities are not represented in the form of dedicated underwriters at its Singapore office, but the parent company does write those risks for the Apac region.
“If we zoom in on the hull market, the feeling we’ve had in the hardening market of the past couple of years and up until the first half of this year, when rates started to flatten, is that our Singapore underwriters seem to have been competing for London capacity more than they needed to during the Covid period.
“What I expect, at least from a Beazley perspective, is to take a similar approach to marine as we have with cyber and financial lines, which is to build depth in our underwriting by bringing in claims expertise as a package. The objective is consistency in disciplined underwriting, with incremental growth and responding to the market’s demand for investment in claims.”
He continues: “We want to continue to grow, I would say at a 20% pace year-on-year, but we’re more focused right now on adding depth of talent to our teams. As we do that, we’ll be backing up our senior underwriter layer with younger talent through the graduate programme we created a few years ago.”
Mounier was himself on a graduate programme in his earlier days with AIG. “Having the opportunity to have one out here with Beazley in Apac is a great way to give back,” he says. “Attracting talent that doesn’t naturally gravitate towards insurance is something I really want to do in Singapore.”
On the evolution of the Apac market, Mounier gives two examples. First, the Vietnamese government earlier this year produced regulation on environmental risk, which has led to interest in that country for environmental liability products.
“The insurance market in Vietnam reached out to a number of carriers internationally and asked for solutions in the environmental space. That was a very interesting conversation,” Mounier says.
A second example is data privacy regulation in Thailand and the Philippines, which demonstrates the growing maturity of those markets, he adds. “The disadvantage of the Apac region is you never get one piece of regulation that suddenly impacts everyone. There is no European GDPR that impacts every country automatically and simultaneously. Instead, what you tend to see is Singapore as an early adopter of new regulation, such as data privacy, and then other countries in the region taking an interest in what Singapore is doing because it is a highly regulated market.
“So, to some extent, there will be a domino effect, but you don’t get the benefit of broad adoption of a piece of regulation in one go. Political and economic groupings, such as the Association of South-east Asian Nations, don’t have that influence to enforce regulation broadly,” Mounier says.
This makes Apac a complex region in which to trade, but also makes it interesting as the company explores territories at their various stages of development.
Beazley has deliberately avoided a strategy of having local offices in Malaysia, Vietnam and other countries, instead partnering with local insurers. “Having our underwriters share knowledge on their local markets means we can contribute to the evolution of the region. And because we operate as a reinsurer, we can partner with local markets,” Mounier says.
“Beazley does not have a team dedicated to India because currently our business in this region is in its infancy and the team’s experience of operating in this market is limited, so for the time being our focus is on regions where we have experience and a track record.”
He concludes: “But you’re only ever a new underwriter away from entering a new territory.”