Insurance Age - Interview by Sian Barton: A Niche Focus
09 April 2021
Insurance Age meets the team at specialist managing general agent Avid Insurance
Avid Insurance hit the headlines last month following its buy of Incorporated Insurance Group (IIGL), which provides cover for the construction sector, as well as property, airside, health and safety and packaged business for SMEs.
The move, which adds to Avid’s niche focus, has taken the business’s GWP up to £75m. Stephen Gibson, Avid CEO, tells Insurance Age that they were attracted to IIGL because of the high level of the underwriting.
“It was a no-brainer. “We were looking for specific skillsets,” he adds. “The strategy from day one of the acquisition was very much around becoming best-in-class.”
John Inwood, commercial director, adds: “That’s probably what we saw in IIGL, the quality of the underwriting.”
Gibson says that the two biggest assets within Avid are its people and they way it manages and mines data. He comments: “I think, particularly for an MGA these days, you have to know your accounts inside out. You have to know the trends within your book. You have to predict when that iceberg comes around the corner, so you plot a different course.”
Gibson explains that part of the Avid process is to extract as much data as possible for clients in order to make the right decisions. “At the outset of any relationship, if a broker or a third party will not provide information to back up risk and risk analysis, we just won’t trade with them,” he insists.
Inwood says the MGA tries to align its focus on data with traditional underwriting skillsets. As an example, Inwood notes: “I’ve sat there in front of a few council leasehold customers recently, on their right to buy portfolios. We provide them with information, and this is going to sound ridiculous, but that information is on exactly where their claims are occurring. And shows if there is a trend in a particular block.
“Other insurers have not done that. They have not engaged with their customer around their claims activity, their trends, and what they can do about it.
“I think there’s an element of traditional aspect in that, but what we can do now is provide that information in real time and give customers access to that.”
According to Gibson, the MGA operates on an ethos of ‘openness’. “We don’t like moving business around insurers,” he explains. “We want to make sure that the insurers are there for the long-term. Fortunately, we’ve got two five-year binders with A-rated paper, which is great, and that doesn’t only give us security; it gives our distributers security as well.
“I think you have to be prepared to be transparent. You have to trust, and you have to be open with your distributor partners as well as your insured.”
One of the things that made the IIGL deal possible was Avid’s relationship with private equity investor, Beech Tree, which took a majority stake in 2019. The company is pinning its hopes on further growth through acquisition, and organically, in the future too. In the next year, the MGA wants to announce at least one more deal.
Gibson comments: “We’re looking to make at least one more acquisition in the next 12 months. We’re also looking at adding different products lines as well. As part of that, we are exploring how we can bring in the right individuals to the business with new opportunities.
“We’re looking for individuals who would like a fresh challenge. The IIGL acquisitions has shown the appetite for what we want to do.”
The MGA is targeting £100m in GWP by the time Beech Tree exits its investment. “It’s a position where, if we can get to that £100m, it’s got a nice ring to it, but it’s not something that we’re absolutely holding on to. But, you set targets to try and achieve targets.”
One consideration for the team is how the travel space bounces back in the wake of Covid-19, as travel is one of the Avid specialisms. Gibson adds: “Once we get a feel for where that travel market is going, we can be a bit more bullish around what that number will look like. But, if all things being equal and travel’s back in there, we’d certainly be around £85m and £90m without a problem.”