Eyes on the horizon

Markel is sharing global emerging risk information after putting ‘boots on the ground’ in Australia

By Wendy Pugh

Forever chemicals, 3D-printed houses and human trafficking are among emerging risks Markel is monitoring as the global insurer shares insights across its expanding international operations.

Global executive underwriting officer for casualty Mia Finsness says the group, which is pursuing growth in the Asia-Pacific region, has a central emerging risks team that can help local offices.

“The fact is, now we’re such a globalised industry and economy, so you can’t really isolate different jurisdictions,” she tells Insurance News.

“We have a corporate emerging risk group at Markel where we look at different emerging risks and we share that information across our platforms and teams.”

Per- and poly-fluoroalkyl substances, known as PFAS, represent one of the most high-profile emerging risks.

In Australia, the chemicals have come into focus for their use in firefighting foam, while drinking water contamination is a concern. There is also potential for product liability claims. A US lawsuit filed earlier this year against Apple focused on PFAS use in watch wristbands. Clothing suppliers are among companies facing legal action as the presence of the chemicals in other products is highlighted.

“It’s too early to tell how much traction these [cases] will get, whether they will prove out causation, but it’s certainly something we’re mindful of, because we could start to see those in Australia and other markets as well,” Ms Finsness says.

In the construction sector, the increasing adoption of 3D printing for building projects, fuelled by rising demand for affordable housing, could lead to new litigation areas, particularly in the US where uptake is greater. In Australia, some early projects have tested the innovative process.

The technology involves industrial gantry-style machines quickly layering building materials to create homes and other structures in days, cutting costs and time frames compared with traditional methods.

Ms Finsness says the 3D print processes are still relatively new and, from an insurance perspective, the risk profile requires careful consideration.

“We’re taking a very conservative appetite towards those risks until we get a better sense of how strong these materials are: are they going to hold up, what is the shelf life, what are some of the ancillary risks?”

Other US developments include human trafficking law reforms allowing civil litigation against commercial enterprises such as hotels in cases where they knew or should have known the crime was taking place at their sites.

Legal and regulatory environments are among the differences affecting risk exposures internationally.

Casualty insurers in the US have faced increasing challenges from social inflation, with claims costs soaring above economic inflation as shifting societal perceptions affect attitudes to risk, fairness and redress.

The courts have delivered “nuclear” verdicts of $US10 million and “thermonuclear” awards exceeding $US100 million.

“It’s driven a lot in the US by the nature of civil litigation, which involves jury trials,” Ms Finsness says.

“There’s a lot of anger over economic inequality and a perception that the cost of living and healthcare will continue to get more expensive, and juries want to award large verdicts to punish corporate defendants and ensure injured plaintiffs can support themselves in the future.”

International casualty is not always subject to the same pressures as the US, but other jurisdictions are closely monitored as new technologies are deployed, issues related to products widely used in the past emerge, and risk and legal landscapes change.

US-based Markel dates back to the 1930s. It went public in 1986 and began trading on the New York Stock Exchange in 1997 on its way to becoming a global speciality insurer. In 2000 it acquired Bermuda-based Terra Nova and it has an international headquarters in London.

Ms Finsness joined the group in 2014 after working as a lawyer with Clyde & Co in New York, and spent several years with the Markel Bermuda operation. She also led casualty claims for North America and the Dublin and London assurance divisions, before taking on global casualty underwriting responsibilities.

Markel opened offices in Sydney, Melbourne and Brisbane in 2023, seeing opportunities to build a presence in a relationship-driven market. Before that, it serviced Australia through its Lloyd’s syndicate and underwriting agencies.

“We determined that we really wanted boots on the ground,” Ms Finsness says. “We wanted to set a proper foundation and have leaders here – we didn’t want to be just writing … Australian business out of London or the US.”

Other centres where Markel has established teams include Dubai, Hong Kong, Singapore and Mumbai, with approaches targeted to varying requirements.

“Each will have different appetites and different strategies depending on the market,” Ms Finsness says.

“It’s not a one-size-fits-all strategy when it comes to casualty.”

Markel Australia head of casualty Ahmed Farag, who joined from Swiss Re Corporate Solutions, says the insurer has a broad appetite, offers strong support for making decisions locally and has built its presence at a time when businesses want additional specialist capacity in the complex risk areas on which it focuses.

“I would say that our entrance into the market was really well received by our broking partners and we’re involved now on many different Australian accounts,” he tells Insurance News. “We’re really well positioned to continue to capitalise and grow our portfolio.”

Markel looks mainly at businesses with revenues ranging from $50 million to $1 billion. It can deploy up to $50 million in capacity locally without referrals and covers areas including mining, construction, transport, energy and the public sector.

Mr Farag says the pricing environment varies. Some areas more sought after by insurers are seeing increased competition; sectors where conditions remain difficult include construction and power and energy risks with bushfire liability.

“The market’s in an interesting state,” he says. “We’ve seen a number of years of firming, so there’s certainly industry segments that may potentially be at rate adequacy, but there’s other segments that are really challenged.”

While social inflation is not the same driver as in the US, there has been a rise in mental anguish and mental injury-related claims, and cost-of-living increases are adding to anxiety and stress.

Mr Farag says economic pressures are affecting many sectors. Construction examples include projects left unfinished and cost-cutting on building products, while labour hire and contractor use has increased in a range of industries, with claims implications.

“Historically, it’s been predominantly the construction space where you’ve seen injury-to-contractor/ worker-to-worker claims, but the use of contract labour/labour hire firms has increased in a variety of other industries and we are now seeing those claims come through,” he says.

In January, Markel appointed former Chubb team leader Scott Jordan as claims manager for casualty in Australia, reporting to local claims head Lisa Mitchell, who joined from AIG in 2023.

Ms Finsness says Markel has put together a team with extensive experience, and claims was a priority from the beginning.

“A lot of companies will treat claims as an afterthought and wait until there are a lot of claims before hiring a claims person,” she says.

“We did the oppositive. We hadn’t even written a single policy before we hired our head of claims. That was our way of telling the market that we want to be a solutions provider, we want to work with our clients and we want to be there when they do have claims.”