Envelop Risk’s Spry: AI, Cyber and the Future of Reinsurance

0:03 We're here in Monte Carlo for the rendevous to September for Amb TV. I'm Richard Banks and I'm joined now by Jonathan Spry, CEO and co-founder of Envelop Risk. Jonathan, good to have you with us. Welcome. >> Great to be here. Hi. >> So, Jonathan, Envelop is coming up to its 10th anniversary. Tell us about how you got here and where you envisionage going in the future. >> Well, it's been quite a journey. we were set up, yeah, 9 years ago, I suppose. we were set up really as a technology company. our heritage is advanced analytics, machine learning and the like. and we decided that cyber reinsurance needed more capacity, needed more disciplined analytics and bringing those two things together really was the origin of envelop and here we are few years later and the largest excess of loss market for cyber globally and large white labeling business. we call it platform business. and underwriting hubs in Bermuda and in London.

1:01 >> And tell us a little bit about the opportunity then where where are we going in the future? >> Well, we believe in datadriven underwriting. and we're seeing more and more use cases for the principles of using the best of AI plus the human in the loop. So, augmented underwriting, algorithmic underwriting and the like. We think there's an application for this in many other areas of the reinsurance industry. so we're quite excited about growth prospects. >> So you mentioned AI a couple of times.

1:29 It's been a bit of a topic here in in Monte Carlo this year with people having I guess diverging opinions on the opportunity and the challenges that that AI presents. You've obviously got a clear view of that. Tell us a little bit about that. >> Yeah, I think we're we're certainly of the view that particularly the machine learning techniques we've been using for many many years. Very well grounded, well proven they absolutely have a a home in the insurance industry, the reinsurance industry. very useful predictive analytics, very useful for portfolio management and kind of capital management. but equally some of the newer generative AI techniques are very very useful to us. So we're using some of that large language model based approaches to thinking about exposure management for instance and sort of name matching and s such like.

2:13 So I I think perhaps some of the hype is just that it's you know a great buzzword and and people are talking about it but there are some real world proven use cases and I think you know we're not we're not going to pedal backwards. This is this is here to stay. >> So let's talk a little bit about the business that you do cyber in particular. where are we in the in the cyber cycle and what are the what are the opportunities? What are the challenges?

2:37 Yeah, I think the cycle has been portrayed as being a little bit softer recently. I think we're beginning to see some evidence that that softening is is slowing down and in certain pockets actually reversing now. And it's important to remember that, you know, a couple of years of slight softening has come on the back of a much harder market for something like four, five years now. and I think, you know, there's clear demonstrable rate adequacy. so we're very comfortable that the the primary market remains disciplined. We we think that renewals on one and and and later next year it should be fairly orderly. Probably seeing a little bit of growth actually. but you know, nobody wants to get too carried away with with price wars and and and the like, but we're just not seeing that.

3:22 So, >> and what about the claims environments? >> you know, it's interesting. We see a lot of incidents that are well reported. I think there's a lot of attention quite rightly as it paid to to to cyber claims. our claims experience has been has been very very good. We've we've run to a appropriate but you know competitive loss ratio. and I think we you know always delivered a decent return on capital. but you know cyber claims is an evolving area. the cyber threat landscape certainly isn't getting any easier. and as you can imagine with AI related risks, with political risk, ge geopolitically, what's going on in the world, I think cyber is never too far away from people's minds in terms of visibility of risk and and concern and quite quite rightly so.

4:10 >> So, a lot of people that we've had through the doors here with us have wanted to talk about MGAs and the MGA segment. What's the the secret of of success for a good MGA? Well, I think MGAs that are truly expert within their niche and their focus area clearly have a role and that role I think has become you know perhaps a little more sort of exalted in the industry that than it was before. there were always good MGs and not so good MGAs and I think you know capital flows to those that have track record and success and that's understandable. so I do I do think it's you know an area where we see talent wanting to be perhaps somewhere where they're a bit closer to to to feeling like you know true ownership within their company decision-m ability.

4:59 but equally in our case a lot of this is about finding the best use for technology that we've developed. So we we differentiate ourselves a little bit with data and our proprietary technology. >> Jonathan, one one final question if I may. Is there one issue that's being overlooked today that's going to be really important in the future? >> that's a really good question. I think we will probably find that there was more AI liability across the industry. not necessarily just in cyber actually, but as a sort of embedded silent issue. perhaps in the future we'll look back at this time and realize some of the craze and use of chat bots and so on is is is probably impacting the liability landscape. we're maybe a little bit behind the curve as an industry on what that means, but I think ultimately that just will create opportunities for new products and new class of business and so on. So I I think perhaps that that use of the word AI is appropriate in this in this conference this year. So >> Jonathan, it's been a great pleasure to talk to you. Thank you very much indeed.

5:58 >> Thank you very much for Amst TV. I'm Richard Banks.