US cat insurer ICAT eyes move into ILS

Soft markets, poor returns on investment, increased regulation—many re/insurers are enduring a tough time at the moment.

Yet for Gregory Butler, president and chief underwriting officer of ICAT, a US insurer that covers businesses and homeowners specifically in hurricane- and earthquake-exposed regions, life is good.

“We are in a segment that we like,” he said. “We have been on the wrong side in the past but at the moment, even with recent rate changes we are still ahead.”

Butler has built a business in the niche market of small commercial insurance in the catastrophe exposure field. It is a sector he feels “falls through the cracks” and other firms ignore because they struggle to make money.

In 1998 he pioneered a web-based policy and premium payment in this sector. He said the average premium then was about $40,000. While that side of the operation is still important, it has been eclipsed by a move into middle-market commercial and residential earthquake cover in catastrophe-exposed regions of the US.

“We respond to brokers quickly and because we have access to external capacity at Lloyd’s we can provide a one-stop shop for brokers,” Butler said.

Through ICAT Syndicate 4242, at Lloyd’s, plus a diverse lineup of strong carrier partners, Butler and his team underwrite catastrophe-exposed residential and commercial needs.

Next for Butler is a focus on alternative capital and insurance-linked securities (ILS) in particular.

“ILS are going to be in the primary market and we are asking ourselves: ‘How do we take advantage of this? Can we be a distribution point, for example?’”