Introducing Phil Furlong, IQUW's Head of Marine & Energy

At IQUW, we’re bringing together the most experienced underwriters in the business with unique data and intelligent automation capabilities to build a different type of multi-line insurance provider.

Our Head of Marine & Energy, Phil Furlong, began working in Marine & Energy liability insurance straight out of university and has been honing his underwriting expertise ever since. We asked him for his reflections on a two-decade career writing some of the most complex and diverse risks around…

How did you first arrive in the insurance industry?

I wanted to be a trader in the derivatives market, but the big investment banks had dramatically scaled back their graduate programmes in 2002 following the tragedy of 9/11, and the recruitment process had become unbelievably intense. Job searching whilst studying was taking so much time that I started to worry I might fail my finals.

Fortunately, I’d spent some of my gap year working at Lloyd’s, so I started sending out CVs in this direction instead. Little did I know it, but the insurance sector was going from strength to strength at the time. I went to four interviews and got offered four jobs!

And what made you take the Marine & Energy liability role?

I’m really grateful that Talbot offered me a choice of two roles – a conventional graduate role that would involve a few months in every department of the business - or a job in the Marine & Energy team as a trainee underwriter. I loved the idea of underwriting and was too impatient for the grad role, so the choice was easy to make.

You’ve stayed in this field throughout your career. What’s the attraction?

I’ve always found the liability classes to be incredibly interesting. Things tend to be more abstract than in the physical damage classes – you have to use your imagination to try and predict where losses could come from.

It’s also incredibly complex. Liabilities arise in law and under contracts, and we have to understand how each liability differs from country to country – or state to state in the case of the US, where liabilities can arise from pretty much anywhere!

And what interested you in the opportunity with IQUW?

I already know some of the IQUW team, having worked (and in some cases lived!) with them in the past. We’ve been close friends for years, and we’ve always spoken about wanting to work together again at some point

What’s exciting is that we have an opportunity now, in a rising market, to pool together our collective underwriting experience – of how to do it, and how not to do it – and create a brand new proposition. It’s also a chance for me to step up in my role and assume more management responsibilities across a broader set of product lines, something I’ve aspired to do for quite some time.

What does a typical week in your role look like?

We’re building something from the ground, so there’s a sense of everyone doing a bit of everything. I’m spending half of my week underwriting and the other half in broader business planning. Over time I expect my role will become more strategic and less focused on the day-to-day, but at the moment, I’m relishing the chance to chat with brokers and introduce them to our business. It’s just a shame that there isn’t more happening in person due to the pandemic.

Tell us about IQUW’s risk appetite within Marine & Energy.

We will write predominantly excess liability business while trying to keep large-scale volatility to a minimum. It’s an interesting time to be in the marine space, as the market is only just waking up to the problem of social inflation. Big losses are costing more money, so we have to stay focused on managing the downside on a risk-by-risk basis.

Generally speaking, however, we have a broad appetite across both Marine & Energy. We’ll be looking to the US market, first and foremost, to grow our book, as we have a lot of prior experience in writing that business

There are very few subclasses that we’ll steer clear of. The nature of Marine & Energy businesses is that all risks look potentially terrifying on paper! You really have to learn your skills as an underwriter and fully understand the nature of each risk. I find that practically all of this business is writeable if you do it in a specific way and for the right price.

How often does this involve physically observing the risks for yourself?

It’s not necessary for every risk, but ultimately, you have to understand the subject matter, and you can’t just do that by looking at pictures. The difference between the theory and seeing these things in practice is massive.

There are a number of courses designed for people starting out in this space, from vessel familiarisation trips to rig school, where you’re flown out to Houston to learn from oil and gas veterans, observe drilling rigs, and possibly even venture offshore onto a working platform.

What is it that makes IQUW stand out in the market?

We’re combining the world of an agile, modern insurer with the very best of traditional underwriting discipline. Our team comprises experienced people with serious underwriting muscle, but we’re only recruiting people with an interest in, and an eye on, the future. So, for example, we want people who are excited about the possibilities of using AI and data to improve our underwriting.

We’re also committed to building a broker- and customer-centric team, fostering strong relationships and building a balanced portfolio rather than only going for the highest paying risks. We want to be commercial and recognise the need to create this culture across our divisions to take on broader risks from customers.

Tell us about some of the recent changes you’ve observed within Marine & Energy?

Climate change is obviously a massive issue. We frequently see lawsuits against clients accused of causing specific damage to the local environment, but now we are also beginning to see class action lawsuits against companies alleged to have contributed to climate change in general.

It is a grey area because, in honesty, most companies have contributed to the problem in some way, and it’s something we’re only now learning about as a society. I’m expecting to see climate change exclusion clauses starting to appear within policies as the market looks to control its exposure to these liabilities.

Clearly, there’s a growing anti-hydrocarbon sentiment globally, and many syndicates are now starting to pivot towards the renewables space, which is highly competitive on pricing as a consequence. But we shouldn’t forget that the oil and gas giants are all looking to transition to renewables too. There’s an advantage to insurers like ourselves developing solid relationships with these companies and going on the journey with them.

In terms of other issues, the auto liability market is an area of real caution. I’ve seen several instances of relatively benign auto liabilities escalating into much broader, hugely expensive liabilities around driver safety.

How has the underwriting approach to Marine & Energy changed during your time in the industry?

The starkest change has been the way we use and think about data. It used to be that almost all decisions were determined by the underwriter, with no outside input. Today we’re far more capable of better understanding the risks by looking at the data – from pricing performance and exposure to examining alternative data sources. The more you understand Marine & Energy, the more you can identify some quite surprising trends in different data sets, such as how the daily price of running a boat correlates to large scale marine casualty rates.

The industry is now using data to make much more informed decisions and predict future performance. The challenge is how to prevent this from slowing down the ability to transact business, give that the process is more convoluted. So our goal is to use automation and AI to speed things up again, using machines to empower underwriters to make smarter, faster decisions.

Everyone in the industry is thinking about this issue. IQUW’s advantage is that we have no legacy IT whatsoever. We can incorporate all of this technology from the get-go.

What sort of technology are we talking about?

To give one example, we’re already building what internally we call the ‘Underwriter Workbench’. This involves using AI to parse the incoming quote requests, pull out the most pertinent risk elements, and automatically notify the relevant team members across our business. It will be a great example of automation done properly – cutting down on time and making our team members more accessible.

Finally, will human underwriting still be as important in the years ahead?

Absolutely, and this is creating a challenge we need to address as an industry. I learnt to underwrite by sitting next to an underwriter and asking endless questions about what they were doing. The pandemic has changed this and working from home has had an impact too.

Our industry needs to be thoughtful about how we develop the next generation. We want them to be better than we were, more multi-faceted than some of the mono-line roles we experienced. But we’re trying to do it when fewer people are in the office together, and more business is transacted online. Upskilling young underwriters needs to be a core focus for our industry going forwards.

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