Matt Lane became CEO of Davies Insurance Services, Intermediary and Market Services division in April 2023. In this Q&A he discusses the key issues in the market and how Davies is now in a unique position to progress.

How have you found the new role?

The past six months have been a busy period at Davies Insurance Services during which we have been able to focus on developing our strategy to create a truly full spectrum and global solution for the market. The opportunity is huge and harnesses the combined strengths of Davies, Asta and other recent acquisitions and extends our solutions offerings globally.

I took up the new role having previously been Chief Information Officer at Asta, and my links with Asta remain as I am still the company’s CTO. My role as CTO however has allowed me to identify where the two operations can leverage their respective areas of expertise. Given both are part of our overall Insurance Solutions proposition there are clear benefits to harnessing the combined depth and breadth of knowledge and experience to deliver for our clients.

What’s the strategy for Insurance Services in 2024?

The first two questions we asked ourselves were where will we operate and how?

In terms of the where, Davies Insurance Services has operations in Guernsey, Europe, the UAE and Singapore alongside London, where we have established our broker and MGA incubator platform. Our Captive management business also has operations in Bermuda and the US.

Many of our MGA and Broker clients want access to the major insurance hubs around the world so very quickly we understood the need for a global solution. We are therefore looking at widening our capabilities and footprint to Bermuda, the US, and extending our permissions to encompass broking in Europe. They are three key centres and markets where we are keen to build out the platform.

However, these efforts have been complicated by the fact that in some of the markets the regulatory regime was such that an incubator platform such as the one we provide was not explicitly considered in the regulations.  In those jurisdictions, we have been talking with the regulators to explain our operating model, and the benefits to clients and the local economy. This has seen the rules changed by some regulators and we’re in close discussions with others.

In terms of how the business operates, the need for what Davies Insurance Services now provides is clearly something the market was seeking, especially for those looking to drive innovation in the industry. Entrepreneurial underwriters and brokers continue to look to decouple themselves from larger organisations to create new businesses which are smaller and more agile. However, they often find that rather than being able to focus on underwriting, they end up operating outside their area of expertise managing the many service providers they work with including accountancy, IT, and compliance. They are engaged in co-ordinating conversations between all of these entities like a hub in a wheel and find they cannot get on with the business itself.

By offering a full spectrum of services and options for our clients, they can find everything they need under one roof and pick and choose the services they require so they can get on with underwriting.

How important is it to be able to offer such a broad range of services to clients?

Davies Insurance Services streamlines operations for brokers and MGAs by providing a wide range of services, freeing them to focus on their core strengths. Our services are designed to provide a straightforward solution, backed by unmatched expertise. We organise and coordinate these services centrally, ensuring a single point of contact for clients, allowing them to focus on their business. Even if a client makes the move to become directly regulated or is acquired by a firm that takes on regulatory responsibility, they often find that retaining our services remains cost-effective.

Combining our capabilities is a powerful strategy. In the specialty market, global reach is crucial, and we recognise the growing demand for operations in multiple jurisdictions. The expansive scale of Davies enables Insurance Services to draw upon expertise across the organisation, especially in our Consulting & Technology, Legal and Claims Administration businesses.

Personally, this is a hugely exciting prospect, and I hope it will be equally rewarding for our clients. Partnering with us opens the door to solutions for nearly every business need.

Much has been said about the future for Managing General Agents (MGAs). How do you see Davies Insurance Services making a difference?

For MGAs, there is more to come, in terms of new start-ups, the opportunities for growth and the opening of new international markets. I do not think we have reached the high-water mark in terms of the MGA sector. As regulators continue to bring in new regulations, we will continue to see entrepreneurs and innovators who are at highly regulated entities moving into the MGA space. For that reason, I believe the MGA space will continue to see growth. What I am hoping is that we will become a market maker going forward.

Where we have an advantage is that other incubators and directly regulated MGAs are unable to easily deal with multiple jurisdictions. For MGAs, at present, they need to be of a certain size if they are to move outside of their domestic markets and build out all the necessary functions & capabilities. You must have scale to break the current barriers. With the work we have done to extend our global reach, I hope we can lower those barriers to entry for MGAs and create more opportunities. We want to make it easier for firms to dip their toes in new markets. We believe that we have the regulatory reach and the breadth of operational capability that will enable us to become a market maker. Our message to an established MGA and those considering the formation of an MGA is that you can get everything you need here at Davies.

Our geographical reach sets us apart. We are dedicated to helping MGAs in the UK, Europe, Singapore, and Dubai. Engaging with regulators in Singapore, Dubai, and Bermuda has been crucial for our operations. Looking ahead, we plan to extend our MGA solutions to Bermuda and the US, with the aim of establishing a comprehensive global offering.

As part of Davies, Insurance Services has access to the capabilities and expertise of the wider group, how will this aid the ability to support the clients and their aspirations?

We’re working on bringing together all of the Insurance Services platforms that have been acquired over the last few years – to take the best of what each platform offers to create a single, powerful proposition under the Davies brand.

What we offer is highly flexible depending on who you are and what you’re trying to achieve.  We provide a streamlined AR model for a lighter touch, as well as a more intricate and risk-intensive model, particularly addressing issues like conduct risk. Our goal is to eliminate entry barriers while ensuring that the process adheres to the necessary standards and is approached in the right manner. While we aim to bring businesses to market quickly that doesn’t mean we compromise on quality. And we’re not just turning the key for MGAs, we’re a strategic partner who wants to support their diversification and growth.

Market conditions have also seen a spike in interest for businesses to use captives as a risk transfer vehicle, and here again our combined range of solutions provides the client with a significant advantage. Davies is the seventh largest Captive Manager globally and the decision by Lloyd’s to allow the creation of captive syndicates will create new opportunities for businesses which have a global footprint and require international coverage from their captive.

If a business sets up a captive in Bermuda for instance, they will require a fronting partner in each of the jurisdictions where they are looking to underwrite, and they will also need licences in each of those states for US business. If they operate in multiple continents, then it is likely that they will need several fronting partners all of which will look to take a percentage of the premium for their part in the process. For some businesses the captive syndicate solution – accessed through our Lloyd’s Managing Agent Asta, will end or reduce the need for a fronting partner which will help to materially reduce acquisition costs.

At Davies we have a range of tools and capabilities to support our clients and it is a powerful arsenal, broad in both function and geographical scope.

With Tech being a key part of the Davies proposition to what extent is Blueprint Two a factor in the future?

The progress which has been made is not a surprise but is also a real opportunity for Davies Insurance Services. I have a solid background in the Lloyd’s and London market having been involved for many years, so I have seen first-hand the efforts that have been made to modernise the way it operates.

There are two ways to look at the impact of Blueprint Two on Davies Insurance Services both from an internal and market wide viewpoint.

Blueprint Two is seen as essential for the market, as it seeks to develop a world-class ecosystem for all stakeholders. Davies has been working with the market including the Lloyd’s Market Association to shape some of the strategy particularly around the delegated authority initiatives.

When it comes to Davies Insurance Services the progress of Blueprint Two and the future plans for the market, it really is a case of business as usual. Over the years we have seen a continual flow of operational and regulatory change across the London market, both internal and external such as Solvency II, LM TOM, Brexit, Part VII, to name just a few and our approach has always been to be agile and flex our services and solutions to respond whenever change happens. As we put MGAs and brokers into the market, we must be aware of all and any changes.

We have seen the move to the second phase of Placing Platform Limited (PPL), including the formation and demise of Delegated Data Manager (DDM), which almost certainly merit a new, lower run cost, solution. When we look at Blueprint Two and the changes that it is seeking to make, we view it as the latest move forward, as with every incremental change.

How do you the view the opportunities for London and Davies as a business?

From a wider market point of view Lloyd’s Blueprint Two will create opportunities for Davies Insurance Services. We want to offer a full spectrum of solutions to our clients, but when it comes to market facing operations there is a lot more we can offer as the implementation of the modernisation programme continues.

For some time now we have operated a Central Premium Control Service, which has been adopted by a number of Lloyd’s syndicates and London market entities. When you are operating in the wider market, the technology you are required to use is commonplace and as such you are tied to the technology’s capabilities and any legacy issues. Blueprint Two will change the way the market operates and for us it will allow us to free ourselves from the operational shackles which come with the use of legacy market technology and processes.

Technology forms a critical part of Davies’ offering. Knowledge of the wider IT landscape, new developments and trends is therefore essential as we serve & advise clients going forward.

From a personal point of view, you have a degree in Physics and your previous roles focused on IT. How do these experiences influence your approach to your new role?

My degree in physics brings a diversity of thought and a technical/analytical approach which I think is useful for the modern CEO in a technical workspace such as the London market, as well as softer skills. I have been in my role for six months now however, I am also Chief Technology Officer at Asta, so I have considerable experience of the industry’s IT journey as well.

I have also been a keen historian through my life, and I have sought to take lessons from history within my approach to management. The story of Prussia is fascinating. Following its defeats in the Napoleonic wars, Prussia looked to redefine its military doctrine (i.e. management approach). The result was Auftragstaktik. It is a cultural philosophy, where the military leadership seek exceptional professionalism from its officers of all ranks and instil in them the ability to make decisions during any actions which they believed would achieve the stated objective. Lessons can be drawn from many sources.

There are also times in my job when a scientific management approach which is more rigid has to be applied but there is also the ability to delegate authority to those who are dealing with issues at the time given, they understand the desired outcome. The key is the ability to decide when to use which management approach, but both have a place.

If you would like to continue the conversation, get in touch with Chief Executive Officer, Intermediary & Market Services, Matt Lane at matt.lane@davies-group.com