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Intro (00:01):
Welcome to Financial R&R a show dedicated to financial insurance and risk management solutions and trends shaping the market. Today. Here are your host, Ron Borys and Ryan Farnsworth.

Ron Borys (00:13):
So, welcome everyone. Thanks for joining the latest installment of the Financial R&R podcast. This is Ron Borys, and I'm here with Ryan Farnsworth from the Alliant financial institution's practice. And we're thrilled today to have a special guest from a strategic partner of ours, Howden's Insurance Brokerage in London, Jane Bennett, senior advisor, overseeing and managing financial institutions, financial alliance products and relationships. Jane, you've obviously been well respected and known person in this business for many years. And we're really thrilled to have you here today. So thanks for joining us.

Jane Bennett (00:46):
Thank you.

Ron Borys (00:47):
We want to talk today a little bit about international D&O obviously. Howden is a huge partner of ours in servicing the international insurance needs of our clients. You all are one of the largest in the industry sector and certainly have a wealth of talent and expertise there. Maybe we can just start a little bit with just talking about the broader marketplace. I think we know a lot of the folks here pretty often, right through publications. What's going on in the US marketplace? We know that the market's been really hard pricing has been up. Cyber in particular is extremely challenging. I think to some degree cyber is stolen the show. I mean, we joke that for many years, D&O was the lead product in the boardroom. And I think cyber has started to overtake it. But at the end of the day, we also know D&O is very important, particularly to firms that have directors and officers outside of the US. So, maybe you can start by just sharing a little bit about what we're seeing sort of on a macro basis out of the London market and beyond to the extent that you can give some insight into that.

Jane Bennett (01:48):
Well, in terms of the directors and officers market, I think that, whereas traditionally, we used to think of certain pockets of the world having the real direction offices challenge. I think what we are seeing now is increasingly from various parts of the world, we are seeing regulatory action. And I think that has been increasing and will only increase still further. I think we are very aware of post the pandemic. We're going to have cash trap governments being very vigilant in terms of making sure they haven't got unlicensed insurers working in their jurisdictions. So, I think directors and offices will always be an area we need to be looking at. I think the other big challenge finance institutions have got is around the fact that almost overnight, everything flipped to online and all the different challenges that are coming from everyone working from home, some of their customers needing to operate from home, which is coming up against the fact that finance institutions are definitely needing to also respond to the know your customer issues.

Ryan Farnsworth (02:45):
Jane, I think you've been, without in, for almost a year now. And coming back to the brokerage side in the middle of a hard market, maybe is an interesting career move. Usually that's when you go to the underwriter side, when the market hardens, right, when you can dictate the terms a little bit more, but what is it that you've learned in your career as you've now kind of especially navigated the last 12 months on the brokerage side for how clients are thinking through their problems and using solutions through insurance to solve those types of risks?

Jane Bennett (03:13):
Well, it's interesting you say that Ryan, because the way I've always seen insurance is that it should be a through way relationship between the client, the broker and the underwriter. So, to my mind, whichever place you stand, you absolutely want to try and find a solution that works for all around. So, actually for me, I don't necessarily see it so much as, oh my goodness, me I'm on the other side. And to my mind, the real issue, these are long-tail lines of business is to try and create sustainable products that span the test of time. They're going to genuinely respond for the challenges that financial institutions have now and have into the future. It's no good in my mind having a problem out there and saying, we need to exclude it to my mind. If we are not offering solutions that respond to the issues that our clients are facing now, then what is insurance for.

Ryan Farnsworth (04:00):
No, it's a great point. And especially as you think about it globally, where risk is constantly changing, regulatory requirements are constantly changing for our global clients. And it's great for us at Alliant to have a partner like Howden, who is a part of that, how in one global network and, and ensuring that, that those types of changes and insurance product solutions are available to our clients. I think that's a perfect segue. Jane is we think it's hard to believe we're coming up on the end of 2021. And we're peeking ahead towards 2022, what are some of the trends that you anticipate our financial institution, clients facing, going into 2022? What are some of those things? Ron hit on cyber a little bit, but I'm curious to get your perspective.

Jane Bennett (04:43):
Well, I think one of the things that is heading the way of financial institutions it's here, but it's going to become increasingly the case is clearly issues around climate change. And I think in terms of whether it's stranded assets, what your loan portfolio is doing in terms of issues around disclosure. But I still think that some of the big things out there are the issues related to the fact that when you are a finance institution operating globally, that you are going to have regulatory challenges that you don't necessarily anticipate sort of here and now. I think that's going to be one of the things that has been there for a while. And I think he's increasingly going to be the case. And as I mentioned before, Ryan, I really do think cash trap governments are going to be ever more vigilant on that. And I think also when you're talking about jurisdictions where you haven't got as much sort of insurance case law and case law generally around where litigation or liabilities may set, we could be in for a bit of a challenging time with our clients.

Ron Borys (05:38):
Jane, you talked a lot about the relationship, the three-prong approach between client, underwriter and broker. And I think that's been a big part of what you've built your brand around and why so many large financial institutions and risk managers have such high regard and respect for you. And we certainly are thrilled to be able to tap into that knowledge, because again, I think the most important thing in representing your clients in the brokerage process is getting out in front there in their early conversations and helping them anticipate what some of these challenges are going to be for a bunch of reasons. Number one, to help prepare them for internal conversations and manage and set expectations accordingly. But number two, to make sure that they are aware of how these issues impact risk and how at the end of the day, you're going to tell your story to the underwriters, right? I mean how many meetings have you been in with clients over the years, whether it's at RIMS or the ABA or just general underwriting meetings. You could be the first one to tell how valuable and meaningful it is for clients to understand what these issues are going into those types of discussions and being able to tailor the conversation so that you're getting the answers to the questions that you have when it comes to risk.

Jane Bennett (06:50):
Yes. And I think also full disclosure because what you don't want as an underwriter or a broker or a client is surprising from many directions. So, to my mind, to absolutely ask the questions, be honest with the answers so that everyone goes into the relationship, knowing exactly what's out there so that when the claim comes, when the issue comes, there's not the kind of shock horror running for the hills. And it's the same with approach to some of the issues I'm dealing with at the moment, for example, the one I'm thinking of the social engineering fraud, I think it's much better to underwrite your way around exposures like that rather than think, oh, don't like this let's exclude everything.

Ryan Farnsworth (07:25):
Well, Jane, I think that's one reason we wanted to have you come on this podcast on the Financial R&R because as we help our clients find a more rewarding way to manage risk in a similar way that movie stars go on late night talk shows when they have a new movie, it coming out that Howden just launched a duo-protector product that we want to talk about because it's hitting along those lines of directors and officers liability could be around climate change, other issues such as cyber that ensures that that individuals are protected globally and then adds an element of the social engineering fraud aspect that you just touched. Can you provide a high-level overview of what that duo-protector form is and what it's supposed to do for our clients?

Jane Bennett (08:05):
Yes, it's basically exactly that Ryan, it's taking two prongs of cover. It's taking the A side D&O and it's taking broad form crime and in many ways it's playing to both the appetite and also the capability of the Lloyd's market. So, in terms of the D&O piece, it will sit excess A side above your existing D&O program, but also will have the ability to drop down and cover international exposures where the current domestic placement won't necessarily cover them. So, it's giving protection on the D&O side and on the crime side, it will do exactly the same again. It will sit excess of the cover aren't crime program, but equally where the underlying form is narrower. And the obvious, again, as I was saying earlier, would be things around social engineering fraud and some of the online challenges. It can come and sit and wrap around the existing cover and drop down to a being in the primary. So, as I say, it's the marrying up of real exposures around international D&O issues around increasing regulation in overseas jurisdictions, combine that with the challenges that everyone's got with online operating social engineering, fraud, faceless crimes that people are facing and doing both of those things, sitting excess, but wrapping round and dropping down.

Ryan Farnsworth (09:16):
And what's the market support been like from the market as you've gone out and sought capacity for this type of solution, because it does seem to check all the boxes of providing solutions from a client's perspective, from a broker's perspective and addressing a need that it ensures want to help our clients address these type of risks. I mean, what's been the market support for that.

Jane Bennett (09:37):
Well, one of the things we've been very careful of doing is making sure we're only approaching Lloyds Underwriters, because what we want to use is the power of the Lloyd's licenses. So, there's no debate around whose license where basically the Lloyd's license will sit and be the wrap around it. So, that was the first thing. And then essentially the underwriters we've got signed up, those markets that are interested in writing business in the US and growing in the US. And actually in terms of support, we've got plenty of capacity, you know, six or seven markets signed up for this who are interested in writing this product. And as I said before, I generally think the beauty of this, it really addresses needs from the US based financial institution, client base, but also plays to the capabilities and appetite of London underwriters. They understand international D&O, they understand the dropdown aspects and the power of the Lloyd鈥檚 licenses. And also they're used to seeing crime cover from all over the world. They're also used to underwriting issues like social engineering fraud and erroneous transfers, this type of stuff.

Ron Borys (10:34):
Yeah, listen what I love about the product chain is it very much operates in the spirit of partnership and relationship trait. As we know, one of the biggest challenges that we have in trying to solve for some of these international challenges is people not wanting to move away from existing relationships, right? In some cases, these relationships go back decades. And in many cases, those are situations where a carrier may have paid a claim or a client may have paid a lot of premium over a number of years and, and built up a pretty good report with that carrier. So, what the beauty is of this product is that it allows you to get the best of both worlds. It allows you to continue to partner with those insurers, but also to the extent that you're not comfortable and confident in how that policy may respond or may not respond. And in a situation it gives you that, that DIC feature. I just think it's brilliant with regards to how we need to try to continue to find ways to solve problems for clients.

Jane Bennett (11:25):
Yeah, I think you're absolutely right, Ron. I think the whole issue around long-tail lines of business, it's not easy. And, and it shouldn't be easy to just be chopping and changing your insurer really nearly to my mind, it's absolutely understandable that there are established really. And as you say, pay claims, let's face it outstanding claims. I mean, sometimes outstanding claims can sit around for an awful long time. So, a client not wanting to sort of mess around with a relationship is understandable.

Ron Borys (11:49):
Sure. And, and I think what's equally impressive is obviously we've had plenty of conversations with, with Steve Chappelle and our legal and claims group here, the relationship that Steve has with the similar folks on your end, whether it's Carrie Lynn or anyone from her team who would be handling the claims on these situations. I mean, I think that's a really important aspect of it as well is just knowing that you have two groups of people who have done this very successfully for many years who have committed to wanting to do this together for the purposes of helping clients. So, again I'm really excited for what this product has to offer and I'm hoping clients will take a real interest in it as we start to get it out there.

Ron Borys (12:25):
So, listen with that I think Jane, we really are thrilled to have you as our guest here today and certainly very appreciative of the partnership that we have with Howden both when it comes to these types of products. And certainly, outside of that, for those of you who are listening in and want to learn more about duo protector or understand a little bit more about how we're doing things internationally, please feel free to reach out to one of us. You can also learn more about alliant at www.Alliant.com, but for now we'll wrap up this session of the Financial R&R. Jane, thank you again for joining us. And we look forward to talking to you all real soon.

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