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View from the top: Matt Dolan, Liberty Mutual

Matt Dolan

Matt Dolan is president of North America specialty at Liberty Mutual Insurance Co. and its Ironshore unit. He joined Ironshore shortly after its 2006 founding and remained with the specialty insurer through its acquisition by Liberty Mutual in 2017. Last year, Liberty Mutual changed its commercial, specialty, and excess and surplus lines distribution channels so U.S. wholesalers would access the insurer through Ironshore. Gavin Souter, editor of Business Insurance, recently spoke with Mr. Dolan about the change in distribution strategy and trends in the commercial insurance market. Edited excerpts follow.

Q: How have the changes in distribution of specialty and excess lines affected your strategy?

A: We made that announcement really as a culmination of a lot of steps that we had been taking since 2020 to become much more intentional about our engagement with the wholesale channel. As we continue to see the migration of business into the E&S segment … we thought that it was important to align our underwriters and codify our commitment to and engagement with that fundamentally important part of the broader distribution channel.

Since that alignment, I think the transactional experience has been enhanced meaningfully, our understanding of their inventory and their understanding of our appetite have been increased exceptionally, our ability to collaborate around emerging issues and opportunities has improved, and I think that our relevance to them and their view of us as having a demonstrated commitment to that part of the channel have been very meaningful. 

Q: What has this meant for buyers?

A: We’ve been able to in real time understand some of the emergent issues that clients have been confronted with, some of the market forces and factors that have been disruptive to them as well as to the carrier community, and we’ve been able to lean in and collaboratively try to find the right answers and the right solutions. 

Wholesalers … are uniquely positioned as a major conduit in the E&S business to figure out bespoke solutions and find markets that are able to listen and provide solutions to address the needs of retailers and, most importantly, at the end of that chain, the needs of the customers.

Q: What are some of those emerging issues that they’re having to deal with?

A: It runs the gamut. The continued elevation of the risk factors associated with the right kind of procurement of cyber insurance and its availability and responsiveness to the risk … I think that’s critical because we’ve seen the market move very, very significantly raising rates and restricting terms. Retailers and wholesalers are trying to make sure that customers who are taking the right steps are being recognized.

The issues in the property space, which are not new, have really become much more acute. That market has become much more dislocated due to capital constraints, rising reinsurance costs, uncertainty around supply chain valuations, economic inflation and everything attached to that. … Wholesalers bring an important vantage point and perspective to that challenge.

Then there continues to be the very meaningful challenge around social inflation and how that’s impacting insurance customers and the cost and structure of the right kind of risk transfer solutions. 

In the broadest terms, our system writ large is under stress and a system under stress opens up a lot of latent fault lines around risk that require a particular kind of responsiveness and expertise. 

Q: Buyers have been facing about five years of increased pricing; how do you see the outlook for pricing?

A: We certainly recognize that there is some rate fatigue that our customers are facing. They are seeing increased costs across their business, including their cost of risk transfer. At the same time, they’re facing some of their own economic headwinds, the potential of recession and an inflationary economy. So, they’re thinking about alternative risk structures, ways to reduce cost.

The hard market hasn’t been monolithic, it’s attached to different products at different times with different levels of acuteness. So, in cyber we saw very, very significant increases in rates and restrictions in terms and we’ve seen it moderate a bit. We saw a very significant increase in the cost of public D&O, and that has moderated very quickly, but now that may reverse course and begin to harden again against the backdrop of some of these bank failures and other economic uncertainties. 

Property was following a pretty steady trajectory up and then that trajectory steepened quite dramatically in the back half of 2022 and meaningfully as we moved into 2023. There doesn’t appear to be any abatement in the impact of social inflation and the kind of volatility that’s bringing into risk portfolios. (When it comes to identifying) the equilibrium point between price and risk, I don’t think the market has settled on that yet because there remains so much uncertainty. 

At the very least, I think carriers are still struggling with loss cost and, as a result, I don’t expect any meaningful softening in the rate environment.

Q: Where do you see opportunities for the business in the next couple of years?

A: Energy transition is a tremendous opportunity for the marketplace. It’s an area that our organization is investing in very, very heavily. What we want to be able to do, with a keen appreciation for the importance of ESG, is to facilitate the appropriate kinds of energy transition. We think that there’s going to be a very significant deployment of capital toward those objectives as organizations and corporations really begin to embrace and live the ESG imperatives. 

Cyber will continue to be an exponential growth space for the marketplace. Existing, new emergent risks and new technologies are creating opportunities for better protection but also creating greater risk. … The whole evolution of technology and what it means for the cyber space and the proliferation of that risk is a massive opportunity and one that we’re investing very heavily in.

Property continues to be very difficult but is a tremendous opportunity for those who will continue to invest in understanding the pace and impact of climate change, the compounding impact of some weakened U.S. infrastructure and how to design products that are responsive to that. That’s an opportunity to be thoughtful and responsive and responsible in a space that’s very, very dislocated, and it’s an opportunity to continue to evolve our models.