Steven Goate, Managing Director, Insurance Services explains delegates heading to Brighton for the sold out Insurance and Reinsurance Legacy Association (IRLA) Congress 2023, will be faced with some decisions to make, the first of which will be whether they will attend the opening day.

The success of the event and the forward planning required could not have envisaged the death of Her Majesty the Queen, and the opening of the congress will take place on the bank holiday set as side to celebrate the coronation of His Majesty Charles III. The question for delegates is whether they will eat into the bank holiday to attend both days.

Whatever they decide it is clear when they arrive the message will be that the market remains buoyant particularly for those companies who continue to look to acquire portfolios and business. Lloyd’s remains a very attractive market for companies and the activity in Lime Street over the past year has continued to increase.

The US remains a positive place in which to do business and Europe has started to open up to companies. Asia, given the need for strong and lengthy relationships to be built, is not seeing a great deal of movement but there are few who believe that it will be dormant in the years to come.

Such has been the activity by the acquiring companies there may well be discussion over whether we are set to enter a period of consolidation, given the past year has seen growth by the established companies augmented by the arrival of new entrants keen to make their mark.

The legacy market has been in good shape, and we are seeing increasing numbers of A rated markets that are actively reviewing their portfolios and looking to dispose of their legacy business. Increasingly the view of what is deemed to be a legacy book is switching from the likes of the long tail asbestos risks, into quite simply books of business that the underwriters are no longer interested in writing and may not come with long tail or distressed exposure levels.

Regulation is bound to be discussed as the UK and USA continue to refine and define how they envisage the market and its operations.

The US has seen some significant movement in the past year with a number of states repealing the statute of limitation on a range of claims. It has created a situation where the market is already paying claims in areas such as historical sexual abuse, with the claims against the Boy Scouts of America a high profile example, and we are seeing a rising number of personal injury claims for sports related head injuries and the long term damage they have caused, to professional and amateur American football players alike.

There is also likely to be significant discussion around the new risks the market faces with cyber cover and its implications high on the agenda. The live market is still wrestling with its approach to cyber risks and the legacy market must be prepared for the challenges and opportunities it will bring in the future.

As with last year we have seen a greater involvement of the major (re)insurance brokers who are increasingly being asked to look at new ways of mitigating legacy risks and are now playing an ever more active role in the sector. Many have formed dedicated legacy units and they recognise the role they can play in identifying and facilitating new deals.

However, as the IRLA agenda highlights while the future for legacy and run off business is increasingly secure it cannot be said for those that are tasked with executing it.

There are greater efforts being made to attract new young talent to the sector and the buoyant nature of the market is sure to aid the market in highlighting the opportunities that the legacy sector can provide, and the dynamic nature of the market and the roles within it.

The industry has always faced a fight to attract talented young people and within the industry there is now a collective agreement that the legacy market needs to better highlight the rewards that a career in the runoff sector can deliver. That includes the need to promote greater diversity, bringing with it different perspectives and a wider skill base.

For Davies, our role continues to work with clients across the legacy sector to provide support and services. For many of the new investors they have the capital but not the staff to manage the investment once the deal has been completed, and all too often the books acquired do not come with the staff needed to operate them. This is where our expertise can provide solutions, particularly around the back office and collection capabilities.

As one of the sponsors of the congress we have the opportunity to provide a view on the market and one area which is likely to feature heavily in years to come is legacy issues around the MGA sector. As the MGA market matures the debate around run off and legacy books has increased, and I believe we are likely to see the MGA opportunities discussed in greater detail this Congress and beyond.

The legacy we leave will be how well we have been able to address those opportunities and created a supply chain of talent that will see the sector thrive in years to come.

If you would like to continue the conversation, get in touch with Managing Director, Steven Goate at steven.goate@davies-group.com