Why intentional underwriting is Westfield's edge in a crowded MPL market

In the last few months, we've actually created two new policy coverages that really didn't exist before. If you're not going to have the backstop of a claims team to be there for your clients, then you know what? It's only really a piece of paper that you're writing on. I used to kind of automatically view those as positive developments, but I've come to learn that that can actually introduce inconsistencies if growth outpaces governance. A clean loss run is just a data point, not a strategy for us. Hello, everyone. Welcome to Insurance Business TV, and an NPL special brought to you in association with Westfield Specialty. Now, in this edition, we're going to take a look at the state of the market, how to build your book, and how you can stand out in the marketplace as well. To take us through it all, we welcome, firstly, from Westfield Specialty, Dan Mogulnicki, SVP, Professional Liability Product Leader. Also from Westfield Specialty, Soraya Penix, an underwriter, and also Emma Anderson, also an underwriter as well. And joining them, we welcome Maria Treglia, EVP, Chief Marketing Officer at ARK Excess and Surplus. So, Dan, if you don't mind, I will start with you. Just tell us why Westfield Specialty decided to enter the NPL space, and indeed, what problems are you trying to solve for brokers? Thanks, Paul. We really appreciate you hosting this. Westfield Specialty is now celebrating its fifth anniversary, and we've built a tremendously broad platform with many different lines of business in the specialty space. And we look back a little over a year ago in terms of, well, where can we go next? And an obvious glaring omission was the miscellaneous professional liability space. It has traditionally been a specialty area within the insurance industry. And since we did not have a platform, we thought about it, we made an investment, and have now spent well over a year in developing a portfolio of forms, coverages, rates, and services that I believe are state-of-the-art and I think serve our producers well. We really have looked at this from two perspectives. In the NPL space, there really are two separate types of accounts that companies encounter. One is the quick and easy, those accounts that are smaller in nature or lower hazard in nature. And we've spent a lot of time on working on process. That process being that we can get a submission in, get it cleared, and as soon as it's cleared, we can get it quoted within five, six minutes. The other thing that we spent a lot of time doing is making sure that we have an internal understanding of all of the different exposures that can be encountered on the NPL arena and educated ourselves to the extent that we consider ourselves to be problem solvers. When you have an account that's other than that quick and easy, you need the ear of an underwriter, we know that we can step in, listen to the problem, and work with you to solve the problem. So we really think we can fill those two spaces within the NPL arena. I see your ambitions here, Dan, but it's of course a crowded space without a doubt. So why should brokers care that Westfield Specialty is writing it? Westfield Specialty is part of an organization that is 177 years old, Westfield Insurance out of Ohio. We certainly have a tremendous amount of financial stability. And not only that, but in this five-year period of time that Westfield Specialty has been around, we've made sure that we hire some of the most talented underwriters, utilizing terrific systems internally, and making sure that we know how to differentiate between a good risk and a bad risk. I like to say that underwriters serve four separate functions. You know, we analyze, decide, negotiate, and make friends. And we make sure that our staff is very good at all of those. And I think that's an important factor to consider. In fact, I wouldn't even mind, Maria, would you like to comment on what you think the role of an underwriter can be in this area and how that might enable you to be more successful in placing miscellaneous professional liability for your clients? Hello, everyone. I'm Maria Treglia, as Paul mentioned. And I do head up a team for Arc Access and Surplus. I'm also their chief marketing officer. And there are more than 100 insurance carriers that are writing miscellaneous professional. So each carrier has a varying appetite of what they like to write. And it's our job as brokers to try, you know, to keep a handle on that and understand what everybody likes to see as far as the submission goes. So having Westfield have the backing of the underwriters that they brought on, I mean, their team is amazing. They really obviously have invested in talent, as you'll see today. They also have invested in a significant claims team, which, again, you know, this is where the rubber meets the road. And if you're not going to have the backstop of a claims team to be there for your clients, then you know what, it's only really a piece of paper that you're writing on. So we think that, you know, Westfield is well poised to handle not only the easy accounts, but more so the complex risks that is a huge differentiator in the NPL space. So we're excited to work with them every day. I've heard some tremendous things here about this underwriting team, some big words used to describe you. So let's talk to them, shall we? Soraya, if you don't mind, I'll start with you. Let's dive into this underwriting philosophy that you have. When a broker brings you a grey area NPL risk, shall we say, what determines whether you work through it or whether you walk away? Thanks, Paul. Thanks, Dan and Maria, too, for the perfect lead in on this topic. For me as an underwriter, these grey area accounts, I love talking about them. They're the most interesting and fun to underwrite, but I also think for the purposes of this discussion today, this is where we at Westfield Specialty can make the most of a difference in the NPL space. As we talked about, it's a crowded space, but I think the time and effort that goes into these challenging kind of grey area accounts is really where we make the difference for both the brokers and our insureds. For me, ultimately, the deciding factor on whether or not I work through one of these accounts or decide to walk away from it is really just whether the broker and the insured themselves can give us enough confidence to find a path forward that works for everyone. And for me, that's really focusing on the story of the account. So does the insured's business model make sense to me? Do I understand why the specific exposure, or maybe if it's a challenging account, there's a claim scenario or just some extra additions to the submission that we might not see in a typical standard risk, how those exist and how the insurance management is thinking about and controlling that risk. If I can kind of connect all those dots and make sense of the story, I'm more than willing to work through it. And that's where I find a lot of success with my key brokers and just finding ways to navigate through those accounts. I think the biggest thing too, for me, like I mentioned, is how those insureds are managing those unfavorable elements, or maybe they have a story about a claim or a story about a new area of operation that they're looking to take on. Every gray area risk is kind of in that category because it has something that would make a typical underwriter pause. And instead of just taking the easy way out, walking away from it because it's not something I've seen a million times before and know very easily, if there's a plan in place, controls and accountability, visibility from management on those issues, those are perfect opportunities for Westfield to really shine. Fantastic answer. And let's talk to somebody else on that amazing underwriting team as well. Emma, if I can bring you in, what has been the hardest judgment call that you've made while building the NPL book? And indeed, what did that decision tell you about the risks that you want to write versus those that you want to avoid? Just kind of to jump into it, I would say one of the toughest judgment calls when we were deciding to build out this NPL book has just been deciding how much weight to give the historical performance versus future preparedness. We've seen lots of firms that have clean loss histories, which is great. But when you actually dive deeper and go into the underwriting of everything, there's often limited evidence. They're thinking strategically about emerging exposures and trends and what might come down the line in the future. So Soraya briefly touched on this, but it is important to remember that a clean loss run is just a data point, not a strategy for us. What gives us confidence is when we see leadership that understands its vulnerabilities and areas of improvement and has a plan in place to address them. That has kind of shaped the type of risks we want to write because a proactive mindset is often a strong indicator of future success. We're definitely more cautious with firms that rely on past success without demonstrating that same level of forward-looking risk management because at the end of the day, we are underwriting not just where the firm has been, but also where it's going. Yeah, and we're talking a lot about how your book is growing. But Soraya, from your perspective, as that NPL book has matured, what would you say is one assumption that you've perhaps had to rethink? And indeed, how has that influenced how you underwrite today? So one big thing that I've had to really rethink is the concept that an insured's main professional liability exposures stem from those core services or just their services that they're providing to others. That's certainly a very invaluable aspect of the underwrite. But as the book has matured, I've kind of found that a lot of the severity potential of an insured's exposures can actually stem from how organizations grow and then how they manage that growth. So in similar light to what Emma and I touched on, management oversight is incredibly important. I think delegation without adequate oversight has become a much bigger focus area for me when underwriting these accounts. Things like rapid expansion, whether that be like opening new offices, expanding to new territories, starting new service offerings, things like that. I used to kind of automatically view those as positive developments. It means your insured is growing, their revenue is increasing, things like that. But I've come to learn that that can actually introduce inconsistencies, some key areas like process, quality control, things like that if growth outpaces governance. So really focusing in on our insured's management team, how they're implementing processes, how they're making sure that these processes are being followed, things like that can really give you good insight into an account more than just what are the possible losses from these services that they're being provided. It's quite clear, isn't it, Maria, that we've got an underwriting team here that knows their stuff. But from a broker's perspective, what would you say a good relationship looks like on an NPL account? I mean, I think from a broker's perspective, obviously the number one thing that we are always going to tell you is your responsiveness. You know, we all have a huge volume of accounts on our desk that we have to attend to. So we always want to hear responsiveness, but really being creative and being able to dig into a risk, asking good questions, which, as you could see, these ladies are already doing, but acting as a collaborator to your broker and being consistent the whole time, you know, not waiting until the last minute to make a left turn and just telling us that you want to decline that account. You know, it is very typical for an NPL account to be complex because it doesn't fit into a neat box. And that's usually where NPL even gets its start is it doesn't fit into another category. So everything else gets thrown into the NPL space. So being open-minded and helping the broker uncover the types of exposures that we need to, you know, find the right home for and being part of that solution process. And I think Dan said it earlier, which is problem solving. Anytime you do that, you make the broker look, well, we're going to keep coming back for more. So that's obviously the one way you will stand out every time. It's difficult to stand out as well, isn't it, Dan? Because it is such a competitive market, but just give me some insights into how Westfield Specialty manages to stay disciplined in this market without becoming inflexible. Well, the word discipline can be applied in a number of different ways. Certainly, we need to be disciplined in terms of making sure that we maintain our underwriting profitability, that we're writing the better accounts or the accounts that we think are going to, in the long run, produce a book of business with a favorable loss ratio. So that's one aspect of discipline. But there's another aspect of discipline too. And that is, we know who our customer is. Our customer is our producer, Maria and others. And we want to be disciplined in making sure that number one, we can respond to whatever the issues are. We can clearly delineate what our appetite is, which happens to be quite broad, I might add. And that we have a willingness to create those solutions to the problems. In the last few months, we've actually created two new policy coverages that really didn't exist before because we have a discipline to not only find areas where we can write profitable business, but also to try to solve the problems that our producers have. And underwriting is technical. Underwriting is something that we all learn in school. We learn how to read coverage forms and analyze submissions. And so there's a technical science to it. But I'll submit that there's also an art to it. And we are trying to make sure that we treat it as both an art and a science so that we have got this clear appetite. We have discipline in terms of type of risks that we want to write. But we're also open-minded and clear in our open-mindedness to be able to have our underwriters respond to those issues when the brokers have these problems that they need to be solved. Well, you heard it from Dan and Maria, you are the customer. So what makes you comfortable about bringing NPL business to Westfield Specialty? Well, as you could see, the team is very bright. They're very hungry to write business, which I love. Obviously, we know we're going to get a response quickly and they really want to try and get us to the finish line on every deal that we send to them. And they're very intentional at that in solving problems. We talked about that earlier. They have a great reputation in the market as having a solid team of people and a solid claims team. They're looking to grow. All their ducks are in a row. The stars are aligned. And I do think that they are really a one-stop. So even if they can't get you a solution, they will try to find you an answer somewhere else, right? They're not just going to send you on your way. They will try to help you get what you need. So that really is super helpful when you're just thinking of them, makes you put them on the top of your list of people that call when you have a deal that comes in. Yeah, that description of one-stop has just flagged something for me as well. Emma, how would you say that Westfield Specialty's NPL product interacts with other products if you're going to be a sort of a one-stop? Yeah, definitely. I would say one-stop is a great description of what we do here. I would say one of our strengths of the NPL product is definitely that it doesn't operate in a silo. We work very closely with other teams at Westfield Specialty, whether that be our environmental team, our financial institutions team, or the other specialty lines. That sense of collaboration kind of gives us a more complete view of a client's risk profile. It also helps us identify areas where exposure may overlap. So from there, we have the ability to tailor coverage and structure solutions that align with the client's broader risk management needs. For brokers, that does kind of translate into fewer coverage gaps and greater consistency across policies and programs. Well, let's talk about that, Maria. Fewer coverage gaps, better policies. Is that something you're seeing? I mean, we want that every single one, every single time we work on a deal. But I think what Emma said earlier is it is an extremely flat organization. And it does feel that every time I call one of them, that they easily are collaborating with other teams. So when they can't, you know, solve that particular problem, they are already like two steps down the road with getting you connected with the right person in another department, which may be able to assist you on that deal. So that's just super helpful in, you know, being a broker of theirs. Once we sort of come to the end of this round table, I'm just going to throw a question out there to the whole team if I can. But maybe, Soraya, I might start with you from an underwriting perspective. If a broker is to remember one thing about Westfield Specialties NPL offering after the day, what do you hope it is? So from an underwriting perspective, I would hope that brokers walk away with the confidence that Westfield Specialty is intentional, accessible, and consistent. I think those are kind of the big three key themes that we've discussed today. As underwriters, we come in and work every day to intentionally be thoughtful collaborators for our brokers. As an underwriter myself, I know that means communicating clearly, communicating promptly as Maria emphasized, working through challenges creatively, whether that, like Emma said, involves other teams, whether that's designing new products, whatever that may look like, kind of putting on our best creative hats and really getting down to, like Dan said, both the art and the science of the underwriting. Dan, do you want to pick that question up as well? Yeah, I think I can just sum it up by saying, I don't know a single broker that doesn't want to grow. Every broker that I've ever met wants to grow their book of business. But guess what? We want to grow our book of business as well. And I know that we can use that common factor to help each other. We're going to help you to solve your problems. We can help each other to grow our books of business. And I think that's a really good key to future success for everyone. Everyone wins in this scenario. Yeah, absolutely. That's the way we like to wrap things up with everybody winning. Great thoughts, indeed. Huge thanks to the entire team for their thoughts today. Remember, if you want to know more about the NPL space, then do visit the Westfield Specialty website. And for more thought leadership from the industry's best, keep it right here at Insurance Business TV.