QBE confirms global cyber growth strategy amid “great time to be an underwriter”

QBE is positioning itself for a “global growth spurt” in cyber and is poised to grow its current modest London market share, according to the group’s international CEO Jason Harris.

Speaking to The Insurer TV on the latest Leading Voices episode, Harris said the Sydney-headquartered insurer was seeking a consistent strategy and approach for its global cyber offering, “deployed locally through empowered teams”.

Currently, the insurer is estimated to write less than $200mn GWP with the majority via its US operations.

Last month this publication revealed QBE had established a separate cyber tower within its 2023 reinsurance program having obtained cyber quota share and stop-loss coverage at 1 January.

In today’s interview, Harris said that placement is a sign that cyber growth is a strategic imperative for the insurer and is an offering that is important to customers.

“Cyber is an area of focus for us and we felt that buying a dedicated cyber product from specialist reinsurers would enable us – as we refine our cyber proposition and strategy going forward, we felt it was much better to have a dedicated cyber tower,” he explained.

Harris said the group would be looking to expand and deepen its capabilities in the cyber space to ensure QBE was relevant to various buyers and sectors.

“We are looking at developing a much more global approach to cyber. We're building on the capabilities we already have in the teams around the globe, in particular those here in London.

“But cyber doesn't respect geographies, management structures and organisations. So we are thinking about cyber in terms of enterprise delivery – a consistent strategy, a consistent approach, deployed locally through empowered teams.

“We are very much looking to position ourselves for a growth spurt in cyber,” he said.

The introduction of the standalone cyber tower was one of several changes to QBE’s reinsurance program for 2023.

Like many carriers, QBE increased its retentions for major cat perils this year, with the firm now holding a group retention of ~$350mn for a major multi-divisional loss event from US perils, with divisional maximum event scenarios of $200mn for North America, $122.5mn for Asia Pacific and $100mn for international.

Harris said the international division works closely with colleagues at group level in securing the correct level of protection from reinsurance markets.

“We went through a tender process early in 2022 for all of our outwards purchases and that set us up really well for having a clearer and coherent strategy for buying for the 1.1 season at the year end.

“Clearly pricing moved and retention points moved,” he said. “But, there's no doubt as we reflect on the process we went through that having gone through that tender and carried out a full strategic review of all of our outwards placements, it really helped us get through the year-end process with fundamentally buying what we set out to purchase. I don't think there are any material gaps in our cover at all.”

Enstar $1.9bn LPT deal

Another key strategic step unveiled by QBE this month was a $1.9bn legacy deal with Enstar which, as well as covering discontinued business, also provides cover for seasoned liabilities in ongoing lines of business.

The unusual nature of the transaction means QBE will retain full claims control for reserves related to continuing lines of business.

Harris said the focus of the deal was to take a source of uncertainty out of the carrier’s balance sheet.

For the continuing lines including in the deal, Harris said the group remains very committed to those classes of business.

“We still want our customers and our brokers to be on the receiving end of the QBE proposition,” he said.

“Maintaining that claims proposition and ensuring we continue to engage with those customers in a consistent way is a really important part of this.”

“Great year to be an underwriter”

Critical to the group’s success in 2023 will be its ability to stay on top of inflation, particularly from a casualty perspective.

“As 2022 progressed, we all saw inflation emerge in a way that perhaps we hadn't anticipated at the beginning of the year,” Harris said

“We're not immune to it, but we think we've got a really good, robust system globally to manage it and provision for it when necessary.”

Despite these challenges, Harris said he was optimistic about the year ahead, describing 2023 as a “great year to be an underwriter”.

“We've got products that are more adequately priced than they have been before and we've got improving yields for investment return,” he said.

“But we also clearly need to think about life through the lenses of our clients and not all of them are faring that well. So, being aware, listening, engaging and thinking about the challenges that customers might be going through in their own businesses is really important to ensure that we put the right solutions in front of them at the right price, to the extent that we can.”

Watch the full 20-minute video with QBE’s Jason Harris for more insight on: