The Insurer TV: Rokstone $255mn US terrorism facility set to compete with “onerous” TRIPRA

Rokstone’s plans to expand in the political violence and terrorism market will provide an alternative to existing offerings including TRIPRA and Pool Re, the MGA’s CEO James Potter has said.

In an interview with The Insurer TV, Potter and Rokstone’s head of political violence and terrorism Arif Rahman spoke of the need for a competitor to TRIPRA with broader coverage options, given the increasing uncertainty and volatility the class of business is experiencing.

TRIPRA is the US federal backstop that was launched after the 9/11 attacks.

Rokstone’s new product – a terrorism facility for US and Caribbean risks with a limit of $255mn – offers an alternative and is expected to continue to grow its capacity.

“The reason behind targeting the US in particular, is that we feel like there’s a very big need for a competitor to TRIPRA,” said Rahman.

“TRIPRA is very onerous in its certification regime. On top of that there’s a $5mn industry trigger that it needs to target, and the scope of coverage is actually very narrow,” he added.

The new $255mn facility differs from TRIPRA in that it offers an act of sabotage and a broader definition of the act of terrorism that includes the political, religious and ideological purposes, Rahman explained.

Rahman recently joined the MGA to help it grow this line of business, having spent the last three years underwriting specialty political violence and terrorism risks at Fidelis.

Speaking of growth ambitions, Potter mentioned Latin America as a geography of “huge opportunity” for the MGA in this space.

Rokstone launched a new Latin American operation in March through the appointment of Marcos Prada as underwriting director, initially underwriting marine cargo and political violence risks.

Potter also said Rokstone is assessing whether it wants to capitalise further on opportunities presented by the South African market for such risks.

The MGA has recently obtained a licence to underwrite political violence and terrorism, as well as property risks in Africa through its Mauritius office.

When asked about potential for the same product to be delivered outside the US and the Caribbean, Potter pointed to the MGA’s existing contract covering the UK which provides competition to the offering of UK’s terrorism facility Pool Re.

Rokstone offers UK terrorism coverage on a quote, buy and bind facility distributed via its iSure platform.

Uptick in SRCC claims

Elsewhere in the interview, Rahman highlighted the impact of significant losses in the political violence market, particularly around strikes, riots and civil commotions (SRCC).

“We’re in this transition period now where we need to start to have a lot more of a rigorous focus on the underwriting discipline, and particularly on the wordings, [which] seem to differ massively between the regions,” Rahman said.

Rokstone’s CEO Potter commented that factors such as social inflation, wage inflation in certain areas or the rise in the cost of living will generate an uptick in SRCC.

“It’s something we’re conscious of and watching out all the time, and trying to give guidance to the market as well because… we think about this, we’re looking at the macroeconomics that are

applying globally and it’s something that we think we do need to be very, very wary of going forward,” Potter said.

As it grows in relevance due to the rise in civil unrest, the political violence market has also seen a change in its dynamics.

Potter noted broker facilities are being “taken back from what was quite a loose market, where many people had lineslips”, following the large losses.

“Also, the landscape for treaty for this class of business is very much in focus at the moment and the coverages and retentions that people enjoyed for so long just aren’t there anymore,” he said.

“So it really does focus the underwriting mind as to what you have, what you are retaining and what you’ve got to live with going forward and I think it’s only going to get worse come 1 January,” Potter added.

Added pressure from Ukraine conflict

When asked about how the conflict in Ukraine has impacted the political violence market, Rahman said it has been a “testing” time.

“It’s the first time the market and these wordings have been tested, so we are finally seeing a little bit of pushback from these huge losses that stem from Ukraine, Chile and the likes,” he said.

“We are definitely seeing a bit more underwriting discipline in that regard, and we’re seeing a lot more pushback on the wordings [but] I think there’s quite a length to go,” Rahman added.

The war between Russia and Ukraine has also placed focus on the aviation market – another corner of the market experiencing substantial rate hardening.

In the interview, Potter mentioned aviation as “a big growth area” for Rokstone, having added some new carriers in this line of business.

He revealed to The Insurer TV the MGA was hoping to announce a couple of new hires to help aviation portfolio manager Wayne Murphy grow this part of the business from a $30mn book to up to $80mn.

Watch the full 10-minute video to hear more from Rahman and Potter on: