Underwriters looking to diversify must possess a good understanding of the areas that they are diversifying into.
This is the opinion of Ian Burford, joint active underwriter at Novae syndicate 2007.
He believes that, due to the way that capital models work, underwriters end up writing in territories for the sake of diversification without understanding what the true exposures are.
“We have seen underwriters exposing themselves to certain areas of the world, because it makes their business in other areas of the world more capital efficient,” he says.
Burford makes his comments in a London syndicates feature in the summer issue of Intelligent Insurer