Behind this specialty insurer’s hybrid underwriting model

Specialty insurer Mosaic Insurance’s expansion across Canada in five specialty lines provides a unique hybrid underwriting model that allows the company to take a Lloyd’s syndicated approach locally in Canada, executives told Canadian Underwriter.

Mosaic announced its expansion last month in cyber, transactional liability, financial institutions, professional liability and environmental liability.

“The model that we have is a Lloyd’s syndicate, which takes the lead line on all of the business that we write,” David White, Mosaic’s EVP, underwriting director, explained in an interview. “From the outset, our plan was to have a hybrid model whereby, in addition to deploying our own capacity, we also have other Lloyd’s syndicates, insurers and reinsurers giving us underwriting capacity rather than reinsurance capacity.”

This means that the insurer can provide a Lloyd’s syndicated approach in Canada, providing “an ability to domestically provide solutions that clients don’t commonly have access to without accessing Lloyd’s through a London placement,” added Ian Fraser, Mosaic’s head of Canada.

Mosaic operates in seven countries: Bermuda, U.S., Canada, U.K., Germany, United Arab Emirates and Singapore. The specialty insurer first opened an office in Toronto in July 2022, where its underwriting hub remains.

“We’re very familiar with Canadian business, and saw Canada as a key part of our broader distribution strategy,” White said, adding that setting up the Canadian office gave Mosaic’s insurer partners access to new markets.

Immediate access

“If you’re in London with a syndicate, you’re relying on wholesale brokers to give you access to the Canadian market,” White explained. “Whereas opening our Canadian operation has given us and our syndicated capacity immediate access to that market.”

Mosaic has seven products lines globally, the five aforementioned lines in Canada plus political risk and political violence. “The criteria that we use for those product lines was we didn’t want anything which had any significant exposure to property Cat losses,” White said. “We wanted to be in classes where we feel that they can grow faster than GDP…”

When asked why Mosaic decided to focus on the five specific lines in Canada, White said it was to ensure the company was offering classes in each jurisdiction where there is an unmet demand. “What we try to avoid doing is saying, ‘Okay, we write seven different lines, so we’re going to sell all of those classes everywhere.’

“That’s a recipe for disaster.”

He added that Mosaic can also take on risks with material U.S. exposures from Canada.

Fraser said there are currently no plans to add new lines of business. “We definitely do want to remain focused on our seven core lines of business globally,” he said. “One of our ambitions globally is really to be Top 3 globally in each of our chosen product lines.

“What you’re likely to see as we grow our market share in Canada, and then more broadly globally, is a strategic expansion of line size within our chosen lines versus expanding outside of our core appetite,” Fraser said.

Mosaic’s model combines capacity from its own Lloyd’s syndicate 1609 with capital from a consortia of carrier partners seeking regional access and underwriting expertise in non-commoditized specialty lines. The company retains decision-making control over rates, line sizes and claims settlement.

Mosaic launched its environmental liability unit in Canada in June, offering energy clients multi-line coverage across other specialties, including cyber and professional liability.

The company also accommodates financial institution clients across product lines, including D&O, E&O, crime and cyber coverage.

 

Feature image by iStock.com/AlexLMX