The Catlin Group’s roots go deep into the Lloyd’s market where it was formed 30 years ago. But Catlin has since become one of the most innovative companies in the global insurance hierarchy with offices in more than 50 cities around the world, writing some 30 lines of business in both insurance and reinsurance.
Reinsurance tends to gather in “hubs,” the largest being London, Bermuda, and more recently Zurich (Catlin Re is headquartered in Switzerland), as well as cities in Asia and the Middle East. Primary coverage, however, is invariably locally oriented.
The Group’s COO, Paul Jardine, explained the philosophy that has led to Catlin’s success, and how it plans to continue that success in an interview at the Reinsurance Rendezvous in Monte Carlo. “Insurance business stays within geographical boundaries,” he said. “In order to build a successful business you need to be on the ground or ‘in situ.'”
This is especially important for paying claims. Catlin is an heir to the legendary injunction of Lloyd’s Cuthbert Heath, who simply ordered that Lloyd’s insurers “pay all claims,” following the 1906 San Francisco earthquake and fire.
Jardine explained that in many cases the people who are in charge of satisfying those claims are also often the ones affected by whatever disaster caused them, as they are local people. Their families and friends are the ones most who are suffering.
“Our business culture is to recruit people who share our values,” Jardine said. “We want to be as close to our clients, the policyholders, as possible.” Catlin follows that philosophy for sound business reasons, as “local people trust the people they know.” That basic level of confidence has enabled Catlin to grow its presence in a number of markets in Europe, the U.S. and beyond.
“Capacity isn’t enough,” Jardine added. “By having a presence in local communities we remain relevant to their needs, and we’ve found that people will pay top dollar prices for high quality service.”
Even though the Group’s holding company has been based in Bermuda since 1995, Catlin maintains a significant presence in the UK market, where one of its primary lines is auto [motor] coverage. According to Swiss Re 41 percent of all claims come from this sector, therefore improving driver safety has long been a priority.
Jardine said that the growth of “telematics” has ushered in a new era when it comes to auto coverage.
“Ten years ago we’d ask drivers how many miles they drove in a year, and most of them would say between 5,000 and 6,000. We accepted this, but actually had no way of learning the actual mileage figures.” The improvement in telematics, which is widespread in the U.S. for trucks, has made it possible, through the use of an SIM card, to monitor individual drivers.
It records not only the mileage, but also frequency of use, where people go, at what speed, what time of day, etc. Insurers like Catlin can now refine their policies to reflect the real time driving habits of their insureds and to adjust the rates they charge for those policies accordingly. Such devices will be mandatory for vehicles sold within the EU, starting in 2016.
Jardine also pointed out that the next step is “driverless” cars, which, he said “would shift liabilities from the driver to the manufacturer.”
Catlin is looking for future growth in both the primary and the reinsurance markets. The strategies, however, differ from the mature markets of Europe, North America, Japan and Australia and emerging markets such as China.
“When China’s GDP per person is equivalent to one quarter of the U.S. GDP per person, it will have the largest economy in the world,” Jardine said. “You cannot ignore it,” nor other similarly emerging markets. “You need to enter those markets now, and be patient to wait for the returns in the future. If you wait [until the future] it will be too late.” Catlin’s strategy is simple: As Jardine said: “Hire good people on the ground – local people – who know their country’s values and culture.”
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