No need for a Shark Tank: calling all entrepreneurs
SiriusPoint—the specialty re/insurer created by the merger of Third Point Reinsurance and Sirius International Insurance Group—is very much open for business. Launched in late February, the Bermuda-based re/insurer has already announced partnerships with several companies, and is hungry for more.
“Even though we’re big enough to matter, we like to think we’re small enough to move fast. Our real orientation is how do we lean in on entrepreneurial talent in insurance,” said Prashanth Gangu, chief operating officer and president, insurance and services at SiriusPoint.
Speaking with the Re/insurance Lounge, Intelligent Insurer’s digital hub for interviews, debates and panel discussions, Gangu explained that SiriusPoint is extending an open invitation to all.
The invitation fits easily within SiriusPoint’s three-pillar strategy: focus and stabilise the existing reinsurance book; revitalise and grow; and modernise and break out. Working with technology-focused startups forms a large part of the third pillar of modernise and break out.
“There’s a huge opportunity to disrupt the insurance space and it’s very hard for industry natives to do that,” said Gangu, adding that startups focus on the needs of consumers rather than products already available in the industry.
He cited two recent examples of partnering with startups: RV rental company Outdoorsy and Rhino, a company offering security deposit insurance.
“We are providing them with long-term capacity and a stable partner that lets them innovate and help create long-term value. We fundamentally think this is the role of SiriusPoint,” said Gangu.
“We are providing them with long-term capacity and a stable partner that lets them innovate.” Prashanth Gangu, SiriusPoint
Future of innovation
“The managing general agent (MGA) model, in my mind, is the future of innovation in the insurance industry. Historically the MGA was sort of a backwater thing—people started MGAs in specific niches that the traditional market couldn’t serve,” said Gangu.
“It was a secondary part of the industry. As I look at the industry, which needs to change and innovate to meet the changing needs of consumers, I think the MGA model is at the forefront.”
Partnering with MGAs rather than hiring underwriting teams in areas the re/insurer wants to grow forms a large part of the second pillar: revitalise and grow.
In July, SiriusPoint announced the launch of Banyan Risk, an MGA underwriting directors’ and officers’ (D&O) insurance. Founded by industry veteran Tim Usher-Jones and SiriusPoint, Banyan Risk will focus on custom D&O insurance risk solutions in complex risk areas including life sciences, global initial public offerings, the technology sector, and special purpose acquisition companies.
SiriusPoint owns the majority stake but, over time, Usher-Jones and others on the management team will increase their ownership stake.
“We now have 20 MGAs in our portfolio. We think that the number will be a multiple of that in the next few years,” Gangu said. However, he added, although the re/insurer is “truly leaning in” on partnering with MGAs, he acknowledges that not every MGA will be successful, so the company is selective in who it works with.
“In the first 100 days of the company, we looked at 100 deals. We have announced five or so in the last few months, but the pipeline is pretty big,” he said.
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“We pride ourselves on being the most business and entrepreneur-friendly firm in the industry.”
A close-knit community
The reasoning behind the re/insurer’s strategy of partnering and working with startups and MGAs is straightforward.
“There’s a huge unmet demand for risk management and risk transfer. The industry needs to address this, otherwise it will become irrelevant. We feel our platform is one which can help us continue to be relevant and create innovative solutions that meet the needs of businesses and consumers,” explained Gangu.
The pipeline is big and Gangu is confident about the future of the re/insurer, but there was some concern when launching.
“Initially when we had the strategy and opened our doors, we frankly weren’t sure anybody would show up, or whether we would have to create a Shark Tank or invest in an insurtech fund to get a flow,” said Gangu.
But thanks to the close-knit nature of the industry and the ability to get the message to market easily, the strategy has been a success. Gangu attributes a big part of this triumph to being business-friendly.
“It sounds very simple but a big part of the challenge in the insurance industry is just being friendly. A lot of innovation in the technology sector is based on being consumer-friendly. It’s easy to say, but very hard to put in place.
“A large part of the work as a management team over the next few years is to live up to that promise,” he added.
SiriusPoint is working hard to maintain its friendly environment for innovation.
“In a more traditional format, if you have a new idea, you have to go through a reinsurance broker and convince a lot of reinsurance companies to provide your capacity, even if you don’t have a track record to show. It’s a fairly unfriendly environment,” said Gangu.
In contrast, he said, SiriusPoint is ensuring that its incentives are truly aligned with its partners and saying “we can back you”.
“We are open for business, and we pride ourselves on being the most business and entrepreneur-friendly firm in the industry,” he concluded.
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