Member spotlight: Pen Underwriting
Can you give us a brief introduction to Pen Underwriting?
Founded in 2015, Pen is a multi-class, multi-territory MGA, which brought together twelve different MGA businesses, to create a single cohesive business. The first five years of Pen’s journey were effectively focused on integrating those businesses, consolidating systems and capacity relationships. In 2020, Pen unveiled a five-year growth strategy intending to nearly double in size from £600 million in Gross Written Premiums (GWP) to £1 billion by 2026.
What is your role at Pen?
At Pen, our growth strategy is split into organic growth, which aims to develop the company’s existing products, and inorganic growth or acquired growth. My role, as Strategic Business Development Manager is focused predominantly on the inorganic growth element of the business. In this role, I work with the Gallagher M&A team on reviewing potential acquisition targets, strategic individual hires and new technologies. The objective is to broaden Pen’s product offering and distribution, enhancing Pen’s value proposition to capacity providers, brokers and customers.
What products does Pen Underwriting offer?
There are five divisions within Pen which are split by product class. These divisions are SME and personal lines; specialty lines; international and financial lines; public sector; and professional indemnity & casualty specialist Manchester Underwriting Management, which Pen acquired in October 2021.
How does Pen Underwriting distribute its products and who is the end customer?
Pen Underwriting offers everything from small, non-standard household policies through to traditional, complex specialty and financial lines cover. The company currently has an agency base of around 1,800 retail brokers primarily based in the UK. Some brokers are also based overseas for example, Pen’s public sector proposition now extends to Scandinavia and the company also distributes cyber coverage internationally. Pen Underwriting also sub-delegates some of its products via approximately 80 different coverholders that have the authority to bind risks on the company’s behalf. This strategy is primarily used in our SME and personal lines business.
How does Pen Underwriting provide solutions to its customers in underserved markets?
Pen Underwriting specialises in developing and delivering niche solutions. The businesses that were brought together to form Pen had served specific risk sectors and industries for many years, typically underpinned by long-term strategic capacity partnerships and having large shares of their respective markets. Pen provides tested solutions to underserved insurance markets and the company can add value beyond the insurance transaction for example, our Hazardous Goods and Environmental Proposition provides 24-hour response and clean-up services to Pen clients. We aim to understand the full breadth of customers’ needs and service expectations and deliver comprehensive solutions accordingly.
What have been the benefits of bringing together 12 businesses to form Pen Underwriting?
The original 12 MGAs sat across separate business classes. This has led to opportunities to increase organic growth through cross-selling and has also created operational improvements through consolidating historic data sets.
Pen is also starting to see the benefits of cross-selling with some of the businesses the company is acquiring. An example is the recent acquisition of Manchester Underwriting; Manchester Underwriting specialises in professional indemnity and casualty lines and Pen has been able to combine Manchester Underwriting’s proposition with the company’s existing proposition to generate organic growth.
The consolidation of historic data sets is benefitting the actuarial and pricing teams as these teams now have increased visibility across multiple, diverse lines. The teams can now both investigate trends in a single division and across the business’ entire portfolio. Access to this data has also benefitted Pen during capacity negotiations with insurers. The company can discuss specific areas of a portfolio as well as take an aggregate view of where value is being provided for its clients and capacity partners.
Can you explain how Pen Central works and who is using it?
Pen Central is a self-serve portal that brokers log on to and is available to any broker that has an agreement to trade with Pen. Brokers can quote and bind on Pen Central without speaking to an underwriter. However, if brokers are placing nuanced or complex risks or require assistance, an experienced underwriter can be easily contacted via the platform. The portal originally started as a way of offering the company’s smaller policies. However, Pen can now offer a range of products including cyber, property owners’ and terrorism through the platform and there has been a huge uptake of these lines on Pen Central.
What value does Pen Central bring to its customers?
Pen Underwriting has seen insurance buyers’ purchasing habits change – and that applies to brokers too. They now prefer to plug in a few details on a web quote engine and get a policy. The self-service option on Pen Central means that users do not have to speak to an individual to buy a product. However, the option to talk to an experienced, specialist underwriter means that brokers still have the comfort of speaking to someone when they need help. Pen sees e-trade as a future area of growth for the business and will continue to review the potential to make more Pen products accessible through Pen Central over time.
How do you decide which areas of growth to focus on?
Pen has defined a strategy for making profitable, quality acquisitions that will contribute to mutual long-term sustainable growth through the benefits of being within the Pen family.
Pen is looking to expand its geographical footprint. This is important as whilst 10% of the UK market is written by MGAs, globally this figure is only 4%. This suggests an opportunity for MGAs such as Pen to launch products in new territories. Pen uses numerous sources including direct market feedback, to review areas of growth across different lines and territories. This has allowed Pen to focus on several products and territories that are currently underserved by the MGA market.
The company also looks at trends where insurers or MGAs are reducing their capacity or actively looking to enter a given class. Pen analyses market news stories and underlying data to identify where opportunities exist to offer a differentiated proposition and equally importantly, which areas the company should avoid expanding into.
What emerging technology is most interesting to you?
Technologies that make the underwriting process more efficient are of most interest. There are still steps for Pen to take before it is set up to algorithmically underwrite business. In the meantime the company is looking at immediate areas of improving efficiency such as reducing the rekeying of information by extracting relevant data for underwriters.
One of Pen Underwriting’s key value propositions is creating solutions that make the relationship between the buyer and seller more efficient. For example, tech-enabled distribution is a big opportunity as insurers are looking at MGAs to provide them with efficient customer access. If Pen Underwriting can offer a tech solution that the insurer does not have to build themselves, this strengthens Pen’s value proposition. Pen also sees embedded distribution as an opportunity to help us open up international markets.
Why did your company join InsTech and what companies are you most interested in connecting with?
Pen joined InsTech to better understand the insurtech market and how various solutions can be used to facilitate innovation. For example, Pen has an interest in parametric insurance and how it aligns with changing buying habits as InsTech noted in your latest parametric report. The company is also interested in connecting with companies offering technology that Pen Underwriting would like to license.
For a demonstration of the Pen Central trading portal, please contact Markus Mohr, E: [email protected]