This article is by Oli Williamson, Co-Founder and Chief Underwriting Officer – Aspect
Even while rates are softening, some areas of the commercial insurance market are becoming more selective about the risks it is prepared to take on, with AXA’s new three-year strategy offering a recent example of insurers reassessing their appetite and how they deploy capacity.
A more risk averse industry could leave some businesses struggling to find cover, widening the UK’s already significant insurance gap. For brokers placing more challenging or specialist risks, finding an insurer with the right expertise and appetite could become even more difficult.
As these traditional options become more limited, they may need to look beyond the standard market to find suitable cover for businesses that fall outside conventional underwriting criteria. Specialist underwriting can play an important role here, providing a more tailored assessment of those areas with more complex requirements.
What brokers need to consider
If brokers cannot find alternatives when insurer appetites narrow, the implications could extend beyond individual projects. The Bank of England has warned that protection gaps can have wider economic consequences where they prevent businesses from investing or carrying out planned activity. For sectors such as waste and recycling, hazardous warehousing, and distressed residential accommodation, this could mean greater difficulty securing finance and contracts, or getting new developments off the ground where protection is a prerequisite.
To put this into perspective, The Environment Agency identified 229 waste sites in England as presenting a high fire risk during 2024-25, highlighting the potential consequences where risks are not properly understood and managed. Specialist underwriting can play a role beyond providing cover, by identifying the measures that can reduce the likelihood and potential impact of an incident, helping businesses protect themselves, while reducing the wider consequences for people, property and the environment.
When market appetite narrows, specialist placements can become more time-consuming, with brokers needing to provide greater detail and approach a wider range of markets. This makes access to underwriters who understand these industries increasingly important, particularly where a more detailed and nuanced assessment is needed – this is where specialist MGAs are most valuable.
How MGAs can help
Specialist MGAs can help address gaps by taking a closer look at what is driving the difficulty of insuring a business, rather than treating its sector as the deciding factor. Their value doesn’t just lie in providing another route to cover, but in assessing the measures already in place and identifying where further improvements could make the business more manageable to insure.
That more focused approach can also give businesses greater clarity over what they need to address before cover is arranged. Where improvements can be identified early, businesses have an opportunity to strengthen their risk management rather than discovering later that a particular issue limits their options. For lenders, investors and other stakeholders, that can provide greater confidence that potential problems have been considered and addressed.
The ability to combine specialist knowledge with underwriting authority is beneficial where businesses do not fit neatly into standard criteria. Rather than applying a broad approach to an entire sector, specialist teams can make decisions based on the circumstances in front of them and the evidence available.
Technology
Technology can also help strengthen this approach by taking on some of the more administrative elements of underwriting, from data entry and information gathering to keeping records aligned across systems. McKinsey data estimates that 30-40% of underwriting time can be spent on administrative tasks such as rekeying data and manually executing analysis, taking time away from the assessment itself.
MGAs utilising innovative technologies that reduce the time spent on these tasks are best positioned to give underwriters more time to focus on assessing the details of a business while making sure the information used to determine its cover is accurate and up to date.
Keeping data aligned across systems can reduce the risk of key information being missed, duplicated or becoming outdated, helping underwriters make more informed decisions and ensuring cover continues to reflect the business as it develops, which is key as they become more complex. Used in this way, technology is not replacing human, specialist judgement but supporting it, allowing for more attention on the areas where expertise adds the most value.
Closing the gap
A more selective insurance market does not necessarily mean the insurance gap has to become wider, but it does put greater emphasis on ensuring that businesses have somewhere else to turn when conventional options become less available.
For brokers, that means having credible solutions and reliable options when a client falls outside standard criteria. Specialist underwriting can help fill that space by giving businesses a more considered assessment of their individual circumstances, while technology can make that expertise more efficient and accessible. Better data and streamlined processes can give underwriters more time to focus on the risks that require specialist judgement, helping extend the reach of this approach.
The right underwriting approach can also help businesses understand where their vulnerabilities lie and what can be done to manage them, giving greater confidence that a project can move forward safely. Insurance can help demonstrate that risks have been properly considered and managed, bridging the gap of underinsurance.
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