Niches: The Future of the Insurance Market?

In a conversation with Paul Carroll, Andrew Robinson, CEO of Skyward Specialty, emphasizes the importance of dominating niche markets. With over 30 years in the insurance industry, Robinson outlines a strategy focused on specialized market segments, leveraging technology and talent for top-tier returns and defensible positions.

Skyward Specialty’s approach targets niche areas in the middle market, avoiding the highly competitive small commercial sector. Robinson explains that specialized knowledge and unique data can provide a competitive edge. For instance, in their medical stop-loss business, Skyward uses advanced data analytics to better understand risks and tailor solutions before engaging brokers, providing a significant advantage in proposal stages.

Robinson also highlights the increasing role of technology in niche markets. Skyward’s use of large language models to parse claims notes has shown superior accuracy in predicting reserve developments compared to generalist solutions. This precision demonstrates that even smaller insurance companies can leverage advanced technology to outperform larger competitors.

The discussion also touches on the future of Managing General Agents (MGAs) and the insurance market’s evolution. Robinson predicts a shakeout in the MGA market, with only the best players thriving. Skyward Specialty’s strategy involves thorough market analysis to identify opportunities where they can achieve top quartile underwriting profitability and build strong, defensible positions.