After a quiet first half of the year in M&A activity, dealmaking has picked up in the third quarter of 2024, with carriers in the representations and warranties insurance (RWI) market seeing higher submission volumes and a greater number of policies bound.
For the RWI buyer, this is a pivotal moment for getting the most out of the product. With abundant market capacity, there is strong competition among industry players; and for established markets like Liberty GTS, this means being nimbler and more strategic about our coverage and terms, while still providing reliable capacity and a quality product.
Fewer policy turns and collaboration
Policy negotiations for RWI have historically been an intensive, iterative process that can involve a lot of back-and-forth between insurers and insureds. In the current market, buyers have more leverage than ever and expect insurers to make negotiations as smooth as possible.
With an extensive history of writing RWI policies, Liberty GTS can draw on its bank of thousands of negotiated policies, as well as its established working relationships with clients and their legal counsel. This breadth of experience helps us streamline the negotiation process and limit the number of policy turns.
Another advantage for repeat clients is that their familiarity with the underwriting process makes the diligence exercise more collaborative, as our teams work together to better understand and get comfortable with risks. This typically results in fewer policy exclusions, or the use of conditional exclusions where appropriate.
Shorter, More Efficient Underwriting Calls
Gone are the days of the marathon underwriting call. In today’s competitive marketplace, RWI buyers expect carriers to tailor the underwriting process to the risk and limit any “check-the-box” type questions that were once a standard feature of underwriting calls.
At Liberty GTS, we strive for seamless execution and aim to remove any bottlenecks from the underwriting process. In recent months, our U.S. team has seen underwriting calls average around 90 minutes, with many underwriting calls being completed in just over an hour. We have found that the earlier in the process that RWI buyers provide the diligence reports, the smoother the underwriting call, as we are able to tailor our underwriting questions to the specific risks identified in diligence. This is particularly helpful on tower deals and more complex risks, as we are able to provide a bespoke agenda that focuses the discussion on any material open diligence items, rather than a broader discussion of matters that have already been addressed in the reports.
Expanded coverage
Amid a market-wide trend for broader coverage, there is increased pressure on insurers to underwrite risks that would typically have been excluded at the quoting stage a few years ago. However, carriers are still able to innovate and find creative solutions that offer the flexibility that clients are looking for, without losing underwriting discipline.
Liberty GTS leverages its claims experience to determine whether certain enhancements to coverage proposals are feasible. Drawing on our wealth of claims data, we work hand-in-hand with our claims team to evaluate the prevalence of claims in certain sectors and estimate the expected tail length for certain classes of risk. Based on such review, and depending on our risk appetite, we are able to tailor coverage to the specific risks involved and offer broader coverage if appropriate. For example, depending on the nature of the risk, and on a case-by-case basis, we have offered expanded coverage of fundamental representations in our policy to cover specialty representations that traditionally wouldn’t have been considered.
Claims handling and durability
One of the primary ways carriers add value in a highly competitive market is through exceptional client service. Claims handling is critical to this offering, particularly from the perspective of brokers; often, clients and brokers select us because they trust our claims handling, which consistently rates at the top of the industry.
Longevity is also of key concern, both for repeat buyers and newer market entrants who are less familiar with the product. With some notable reductions and withdrawals of capacity in the RWI market in recent years, buyers must be strategic in selecting an established carrier that is in the market for the long-haul.
With Liberty GTS, buyers can be rest assured that not only are they getting value from our product, but that they can trust our service and relationship when the market cycle inevitably changes.
