Resilience’s Vitale ‘troubled’ by softened cyber market conditions; ‘not good for anybody’

By James Thaler

May 27 - (The Insurer) – Resilience’s Mario Vitale said he is “troubled” by softened cyber market conditions after a period of “responsibility” that led to rate hardening, acknowledging that current market conditions make it “difficult to grow,” which he said is “not good for anybody.”

Vitale made those comments in an interview with The Insurer TV at this month’s RIMS Riskworld event in Chicago, where he also discussed Resilience’s growth outlook and changes in personnel the cyber insurtech has made over the last year.

“As a student of insurance, I've done many lines of business for many years and being solely involved in cyber since 2019, I'm troubled a little bit by the market,” the insurtech’s president said.

“It wasn't that long ago, 2019 and 2020, we saw very disturbing conditions where many, many insureds were being breached, and they had contracts that were not clear in coverage,” he continued.

“There were terms and conditions that weren't favorable and imbalanced. There was a great deal of (pressure) profitability. And of course, by 2020 we saw a great contraction of the entire market,” he added, with adequate coverage difficult to come by, if at all.

“Some might say (there was) an over correction, but certainly a lot of responsibility came into the market,” he elaborated.

“A lot more attention, a lot of better underwriting, a lot better loss control, a lot more resiliency, like ourselves, bringing cyber hygiene into the equation, and to make it a risk reward equation back in balance, and it had happened, and we've seen a growing market.”

‘NEW ENTRANTS TRYING TO BUY THEIR WAY INTO THE MARKET’

However, after a stretch of improved profitability, Vitale said the market has now entered what he calls “a troubling period,” which he said “is basically going to make it more difficult to grow.”

“You've seen a lot of new entrants into the business. A lot of those new entrants are trying to buy their way into the market, not bringing a lot of new value. What are they bringing? They bring in better pricing, right? That's one factor,” he argued.

“Second factor is growth ambitions that have caused lower pricing against competitors. It's caused a return to what I think is less than responsible underwriting terms,” Vitale said.

“I start to fear that if we continue down this path, we're going to find ourselves in 2019, early 2020 all over again. That's not good for anybody. It's not good for the insureds themselves with a roller coaster in pricing and coverage,” he continued.

“It's certainly not good for the brokers that advise them and sell that coverage. It's not good for the insurance companies and their shareholders that are responsible for adequate profits and returns,” he said.

Vitale said that “The Resilience Way” has been to “stay on course being responsible,” while providing what he says is superior cyber hygiene to clients on both a primary and excess basis, and “responsible terms and conditions that allow us to be there forever for those clients, regardless of market conditions.”

“And I think if more markets acted that way, if the top 10 markets in the business acted that way, particularly around provisions like wording, I think you'd find us having a more consistent market, which I think is good for everybody, for the buyer, for the broker and the insurance company,” he argued.

GROWTH BY REGION, PRODUCT EXPANSION

Vitale said that Resilience has generally been growing more than 35% per year.

“Would we like to grow at 50%, 60% 100% a year? Absolutely yes. But again, responsible growth is more important than the percentage of growth, so we are going to continue to grow.”

To that end, Resilience’s growth strategy is focused not only on gaining market share, but expanding globally in London and Europe, with an eye on moving downstream into the middle market from its current position in the large account segment.

“We're looking at what may be next, whether it be the Asia Pacific region and other places too. And we're also looking at additional products we put on board like tech, D&O, media coverage and some other things like that,” he added.

“There were ways to grow organically without having just to grow in the same product lines. But ultimately, growth is part of our culture, and we intend to be a top 10 market share player ultimately,” he said, adding “never say never” on whether Resilience would consider SME business.

‘CHANGE IS INEVITABLE’

On personnel changes at Resilience in the past year, Vitale acknowledged “change is inevitable, and people moving is inevitable”.

“And certainly, in this product line, there is not a day or a week that goes by (where) you don't see somebody moving from one company to another.

“But in addition to that, we have a lot of very young, up and coming and bright people, and some of that movement has presented us with opportunities,” he added.

Watch the full interview with Resilience’s Mario Vitale to hear more on:

• Why the executive is “troubled” by soft conditions and entrants “buying their way” into the market

• How Resilience plans to grow by market share, region, and product line

• Personnel changes and why “change is inevitable,” especially in cyber

• The insurtech’s aim to bring consistency to distribution partners

• Its runway around funding and emphasis on organic over inorganic growth

• And more...