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“It’s a wonderful time to be in wholesale”

“It’s a wonderful time to be in wholesale” | Insurance Business America

President opens up about AI’s influence and market challenges

Insurance News

Gia Snape

The excess and surplus insurance market is on a steady growth trajectory, with the industry forecast to exceed $100 billion in overall premium in the next few years, according to data by Allied Market Research.

This growth, combined with the need for specialized expertise in areas like professional liability, cyber risk, and tech risk, creates a fertile ground for wholesale insurance brokerages like Flow Specialty to thrive.

David Derigiotis (pictured above), president of brokerage and head of insurance at Flow Specialty, told Insurance Business that he was excited to join the wholesaler at a pivotal time.

“It’s a wonderful time to be in wholesale,” Derigiotis said. “Wholesale is growing significantly. There’s more room for specialization and deep levels of expertise to offer the right consultation and guidance to clients.”

How AI is impacting wholesale insurance

Like the rest of the insurance industry, artificial intelligence (AI) and other technologies are influencing the wholesale market. Derigiotis pointed out that small to medium-sized enterprises (SMEs), which are particularly underserved in insurance, stand to benefit from these AI-driven advancements.

Derigiotis explained that brokers often lack the time to meticulously examine small accounts, which leaves SMEs wanting expert insurance and risk management guidance. This gap is where Flow Specialty wants to make an impact.

“We have an unbelievable team of engineers and product people focused on research and development, continuously updating, developing, and training the model on insurance-related data,” he said.

“For example, if a carrier likes to write law firms but is less aggressive in certain practice areas, our model captures that through conversations with markets and carrier partners. So, while 15 markets might fit lawyers’ professional liability, only three might suit intellectual property or patent prosecution. Of those, one might offer the best coverage and pricing.”

Flow Specialty’s AI is trained on highly relevant, insurance-specific data, which includes policy forms, language, and back-and-forth communications between brokers and underwriters.

The technology helps brokers make nuanced distinctions in the market’s appetite for various risks. According to Derigiotis, the most important aspect of Flow Specialty’s approach is leveraging AI to empower brokers, not replace them.

“We’re people-first and technology-leading,” he said.

Challenges and opportunities in wholesale insurance

However, the path forward is not without its challenges. Market consolidation is a notable trend, with both wholesalers and retailers growing larger and more selective about the partners they work with.

This means brokerages like Flow Specialty must continually prove their value and uniqueness to clients and carrier partners. Overcoming restrictions on the number of wholesalers and markets partners work with is also crucial for continued growth, said Derigiotis.

“Wholesalers are getting bigger, and retailers are also expanding with more refined approved lists of wholesalers and carriers,” he said. “We want to give them a reason to work with us and be our partners.”

What’s next for Flow Specialty?

Derigiotis joined Flow Specialty in April. Headquartered in California, the venture capital-backed firm was founded in 2021 as a “next-generation” specialty wholesale insurance brokerage. Prior to Flow Specialty, Derigiotis garnered specialty insurance industry experience from Embroker, Burns & Wilcox, Argo Group, and Markel.

In April, Flow Specialty emerged as Capitola Insurance’s rebrand, alongside its new leadership and enhanced capabilities. The brokerage also announced it raised $15.6 million in its Series A funding round, led by Munich Re Ventures, the reinsurance giant’s venture capital arm.

“There’s been a lot of positive fanfare regarding our rebranding and mission to provide a higher level of service to our clients and be more efficient with our carrier partners,” Derigiotis said.

“We’ve received a significant outpouring of interest to work with us and experience the value we bring. As we continue to grow, we have a long pipeline of brokers looking to provide increased value to their customers and clients. The positive outreach has been wonderful to see.”

Have something to say about the trajectory of the wholesale insurance brokerage sector? Please tell us your thoughts below.

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