Beazley’s Smart Tracker offers hope of a more efficient market

There has been much talk in recent times of how insurtech will revolutionise the insurance market by enabling more accurate pricing and delivering a far more efficient ecosysytem for the benefit of all, not least policyholders. The experience of most corporate risk and insurance managers during recent renewals, however, does not suggest that much progress has been made as they struggled to complete their programmes in what remains a largely antiquated and frustratingly opaque market. There are some signs, however, that change may be coming to the commercial insurance marketplace and one example is the relative success of London carrier Beazley’s Smart Tracker. Launched in 2018, the Smart Tracker Special Purpose Arrangement (SPA) 5623 participates on London market broker facilities, line slips and consortia business using an efficient, lower cost “follow” model. Business is accepted into Beazley’s Syndicate 3623 and ceded back to SPA 5623. Supported by Beazley actuaries, Smart Tracker writes commercial business with high-quality data that enables actuaries to credibly assess the historic and future performance of broker facilities. The aim is to provide investors with a lower volatility portfolio that will track or beat the Lloyd’s market average underwriting result, and return consistent profitability over time. The Smart Tracker is a pure follow syndicate that always follows a trusted Lloyd’s syndicate. It relies entirely on brokers providing a pipeline of new and renewal business. And brokers have responded positively to the structure. The majority of business currently comes via larger global firms that tend to have access to data of sufficient quality and granularity. The main lines written include property, casualty, marine and terrorism. Beazley said that policyholders benefit from pre-agreed, guaranteed capacity, which means they can expect speedier confirmation at the point of placement, something sadly lacking for many during recent tough renewals. The carrier said brokers benefit from the certainty of placing business behind approved leaders, quickly and efficiently. It allows them to focus on new business production and other value-add activities. Beazley benefits from gaining access to a broad range of business that it might not always see in the open market. This may not be the answer to all risk managers’ dreams but it looks like a useful addition to the market enabled by the use of the latest technology and data analysis. Beazley certainly sees a future in the concept, as this week it announced it has been granted in principle approval from Lloyd’s to transitioning its Smart Tracker SPA 5623 to a full syndicate from 1 January 2023. Beazley said that Smart Tracker has been profitable for all closed years of account to date. From January, Syndicate 5623 will exclusively underwrite business accepted by Smart Tracker. All business will be written directly into Syndicate 5623, and the Smart Tracker’s underwriting appetite will remain unchanged. Will Roscoe, who has managed the Smart Tracker since 2019, has been appointed active underwriter of Syndicate 5623. Adrian Cox, CEO of Beazley, said: “The Beazley Smart Tracker’s innovative ‘follow’ model, is designed with operational efficiency and rigorous underwriting at its core, reducing the traditional duplication of costs and improving efficiency for brokers and clients. Its success demonstrates broker, client and third party investor support of this new underwriting approach, which I’m delighted has been recognised by Lloyd’s’ support of our plan to transition the Smart Tracker from an SPA into a full syndicate from next year.” This innovation may not revolutionise the entire commercial insurance market but it does appear to represent a healthy step in the right direction. As Roscoe explained on Beazley’s website: “Transformation in the insurance market generally come through incremental change rather than seismic shifts, but this needs creative thinking to drive it, just as those more show-stopping big-bang moments. Finding a problem to solve is a key driver of innovation and for the London insurance market, the ultimate challenge is how to significantly improve efficiency and competitiveness without diluting the core offering of writing the large and complex risks that other markets find difficult.”

Beazley’s Smart Tracker offers hope of a more efficient market

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