A new report from Am Best has underlined the current favourable conditions to be entering the market as a start up, however there remain significant hurdles for new companies looking to establish themselves quickly.
Hurdles include the need to secure capital, regulatory approvals, licences and underwriting teams.
Am Best note how start-up re/insurers in 2020/21 face the unique challenge of creating an organisation’s internal culture and gaining acceptance in relationship-driven markets during a period when remote working is the norm.
The path to success for new insurance players will be reportedly be through maintaining discipline through the underwriting cycle, combined with prudent management of catastrophe exposure, particularly in the early years of operation.
Additionally, any new start-ups in 2021 are reportedly likely to be attracted by improving market conditions in a broad range of sectors in both insurance and reinsurance markets.
In addition, there may be some new technology start-ups and a greater push on technology-driven solutions which have not yet come to the fore.
New companies benefit from clean balance sheets that are unencumbered by legacy claims.
AM Best says this is particularly pertinent at a time when more market participants are strengthening reserves for US casualty business.