Jack Ross, Author at Costero Brokers

Learn why media liability insurance is now vital for all kinds of public-facing organisations, including retailers, brands and non-profits.

In an age where every organisation has become its own publisher, the risks traditionally associated with media companies are now a pressing concern for non-media businesses too. Retailers, brands, non-profits and other organisations are increasingly exposed to media liability risks through their social channels, websites, media partnerships and marketing content. This article explores the evolving media risk landscape and how partnering with a specialist like Costero Brokers can ensure these organisations are adequately protected with bespoke insurance solutions.

The expanding media risk landscape for non-media organisations

Public-facing organisations such as retailers, brands, and non-profits are embracing content creation to engage audiences, raise awareness, build loyalty, fund-raise or drive sales. From publishing newsletters and launching marketing campaigns to engaging with followers on social media or collaborating with influencers, these organisations are now actively involved in content dissemination. While this offers new opportunities, it also opens the door to a growing array of risks.

Some of the most common media liability exposures include:

Defamation and libel: A social post, advert, or article could inadvertently harm someone’s reputation, leading to legal action.
Copyright and trademark infringement: Using an image, piece of music or even a slogan without proper licensing can result in costly disputes.
Invasion of privacy: Publishing personal data or images without consent can breach privacy laws.
Misleading marketing or advertising: Unsubstantiated claims or endorsements, including by paid third-party influencers, can lead to regulatory action.

These risks extend across an evolving variety of media channels, activities and platforms, such as:

Social media (including Instagram, X/Twitter, LinkedIn, Facebook, TikTok)
Websites and blogs
Advertising and marketing communications
Podcasts and video streaming
Printed promotional material and in-store displays
Quotes in the press or broadcast appearances
Media tie-ins with partners and third-parties

Unfortunately, many of today’s media exposures are often not covered under standard commercial general liability (CGL) or public liability insurance policies. As noted in this article by law firm Hunton, many businesses mistakenly believe they are fully protected, only to find that media-related claims fall outside the remit of their existing coverage.

Real-world consequences: High-profile media liability cases

The business and reputational impacts of media liability cases can be severe. Here are some recent notable examples:

Regulatory penalties: The U.S. Federal Trade Commission (FTC) recently issued formal warning letters to brands including Coca-Cola, Walmart, and nearly 700 other companies, cautioning them about the potential for civil penalties due to misleading practices involving social media influencers and product endorsements. The FTC flagged concerns over inadequate disclosure of paid partnerships and endorsements that could deceive consumers – highlighting how brands outside the traditional media sector face growing scrutiny and liability exposure for content shared by or through third parties. This serves as a clear example of how retailers and consumer brands can face regulatory and reputational risks related to the media they disseminate or sponsor online. (Source: Emarketer)

Copyright crackdowns: Organisations penalised for using unlicensed copyrighted music on social channels recently have ranged from cosmetics brands to sports teams. A high-profile example has involved U.S. restaurant chain Chili’s, which faced a copyright lawsuit from Universal Music Group (UMG) in early 2025. UMG alleged that Chili’s used 62 of its songs in its Instagram and TikTok videos without permission, including Frank Sinatra’s “Fly Me To The Moon” and Ariana Grande’s “7 Rings”. This was the second lawsuit Chili’s faced in three months, as the Beastie Boys had previously sued them for using their song “Sabotage” in a social media ad. (Source: Miami Law Review)

In situations like these, specialist media liability insurance can provide protection, helping to cover legal costs, settlements, and crisis management services.

The power of specialist media liability insurance

Media liability insurance offers a tailored solution for these evolving exposures. Unlike broad commercial policies, specialist media liability coverage is designed specifically for content-related risks. It can provide protection against accidental incidents of:

Infringement of copyright, trademark, or other IP rights
Libel, slander, and defamation in media
Breach of privacy or publicity rights
Negligent publication or misstatements
Breach of licence terms or scope

Optional sub-limited extensions may include:

Regulatory defence costs
Public relations expenses
Mitigation costs (e.g., withdrawing or modifying content)

With media liability insurance in place, organisations can communicate confidently in all media, knowing they have comprehensive protection for the content they create, sponsor or share.

How an expert in media liability insurance can help you

At Costero Brokers, our Cyber, Media and Technology (CMT) team specialises in crafting bespoke media liability insurance programmes for all kinds of organisations. Whether you’re an insurer looking to place complex media risks, a broker working with content-active clients, or a business leader seeking to safeguard your brand, we can help.

We work closely with leading underwriters at Lloyd’s of London and top-tier international reinsurers to offer you:

Broad, fit-for-purpose cover that reflects the specific risks of your sector.
Competitive premiums backed by expert underwriting.
Support for complex, hard-to-place or high-profile risks.

We understand that each organisation is different. That’s why we don’t take a one-size-fits-all approach. Instead, we partner with you to develop solutions that align with your activities, strategy, and operational footprint.

Ready to safeguard your media content and reputation?

Modern media presents endless opportunities for growth and engagement, but it also comes with new liabilities. With the right insurance partner, you can turn risk into resilience. Costero Brokers can help you obtain a media liability insurance programme tailored to your needs – whether you’re an insurer or broker seeking solutions for a client, or you’re from an organisation that creates and shares content.

Get in touch today to discuss how we can protect your reputation, enable bold communication, and empower you to embrace the media landscape with confidence.

To learn more about our cyber, media and technology insurance solutions and discuss your goals, please get in touch with our expert Jonathan Olley at Costero Brokers.

Learn how the growing wave of AI-related law cases is driving the need for specialist insurance coverage that protects business innovators.

As artificial intelligence (AI) becomes an integral part of how organisations operate, so too do the risks associated with its use. From hallucinations and copyright infringement to algorithmic bias and privacy breaches, the potential liabilities are evolving rapidly – and few companies are fully prepared.

In this article, we explore the emerging landscape of AI-related risks, share examples of how these risks are already playing out in real-world scenarios, and explain how Costero Brokers is helping insurers, brokers and businesses globally stay ahead of the curve with custom-built AI liability insurance programmes.

AI business liability in the news

Several recent high-profile cases illustrate the harmful business impacts that AI-related liabilities can cause. A particularly topical example involves Facebook parent company Meta, which is facing legal action for allegedly training its AI models on pirated digital books – effectively breaching the copyrights of thousands of authors. If the case is successful, this could lead to substantial financial penalties and reputational damage. (Source: BBC News)

An important and long-running law case over AI liability is the litigation by Thomson Reuters against AI startup Ross Intelligence, over alleged training of an Ai model with unlicensed content from the Westlaw legal database. Running since 2020, this case has marked an early and significant legal challenge over how AI systems use copyrighted material – and has become a key precursor to today’s broader legal cases brought against companies that develop and use AI systems. (Source: Skadden Legal News)

As AI has moved into the business mainstream over the last few years, dozens of other legal cases have been filed in the US and worldwide over liabilities from the development, training and usage of AI. The outcome of these cases could reshape copyright law, redefine the boundaries of fair use in AI training, and have major implications for the future of AI across all industries and business sectors. (Source: Wired)

The evolving business insurance landscape of AI risk

Whether an organisation today is buying, customising, or developing AI systems, the adoption of AI introduces a new spectrum of risks – some familiar, many entirely unprecedented – requiring a new insurance approach. These risks include:

Performance failures: Where an AI system fails to deliver accurate or reliable outputs, potentially causing financial loss or operational disruption.
Bias and discrimination: Inadvertent algorithmic bias could lead to discriminatory outcomes in hiring, lending, or healthcare decisions, attracting regulatory scrutiny and legal action.
Privacy breaches: AI models trained on sensitive or unprotected data can expose personally identifiable information (PII), creating compliance liabilities.
Intellectual property (IP) infringement: Generative AI models may produce content that closely resembles protected works, risking claims of copyright violation.
Hallucinations and misinformation: Especially in large language models (LLMs), outputs may appear plausible but be factually incorrect—undermining trust and exposing businesses to reputational or legal consequences.

The complexity and uncertainty around these risks can create gaps in traditional insurance coverage, making it essential to work with experts who understand how to navigate and mitigate them.

Insurance solutions built for AI risks

Generic or traditional business insurance policies often fall short of covering AI-related liabilities. This is why new specialist AI liability insurance is increasingly important.

Costero’s AI insurance solutions, developed in partnership with leading global reinsurers, address the unique risk categories associated with AI, including:

Performance guarantees: Ensuring that an AI solution performs as promised. If underperformance occurs, policyholders are compensated based on agreed thresholds.
Own damages insurance: Covers financial loss due to underperformance of internally developed AI systems—protecting against business interruption, reputational damage, or increased operational costs.
Legal liability coverage: Insures against third-party claims arising from biased outputs, IP infringement, data privacy violations, and more.

These covers are carefully crafted to match each client’s specific AI risk profile, with pricing models that evolve alongside exposure.

Finding the right partner for AI liability protection

As a specialist in insurance for technology, cyber and media, Costero offers insurers, brokers and businesses access to expert support in navigating the evolving risks of AI. Our AI liability insurance programmes deliver a range of major benefits and advantages, being:

Custom-built: We don’t deal in standard templates for business cover. Every policy is individually negotiated to ensure it addresses your client’s exact exposure.
Globally connected: Through our access to Lloyd’s of London and international markets, we provide fit-for-purpose and competitively priced cover from leading global reinsurers.
Technically informed: We work with AI-specialist underwriters and actuaries who understand the specific risks associated with different AI model architectures – from foundation models to fine-tuned systems.
Future-ready: As AI regulation and litigation evolve, so too do our coverage options. We continuously update our programmes to reflect the latest risk, legal and technological developments.

Whether you’re an insurer looking to build new AI-focused capacity, a broker looking for a trusted wholesale partner, or an organisation seeking protection for your in-house AI models and usage, we have the expertise to help you stay ahead of the curve.

Let’s talk about your AI liability insurance needs

AI brings immense business potential – but also unprecedented risks. Whether an organisation builds AI, deploys it, or simply relies on it, insurance needs to keep up. Don’t leave your business or clients exposed to liabilities that traditional policies were never designed to handle.

Talk to Costero to create an AI liability insurance programme designed around your unique needs. Our solutions empower organisations to confidently adopt AI and maximise its benefits – without suffering the potential negative impacts.

To learn more about our AI, cyber, media and technology insurance solutions and discuss your goals, please get in touch with our expert Jonathan Olley at Costero Brokers.

Learn why a responsive in-house claims service matters in marine and cargo insurance – and the advantages of a truly integrated broker team.

When it comes to protecting vessels and freight with marine and cargo insurance, a well-crafted policy is only part of the solution. The real test of value comes when you need to make a claim. Whether you’re a shipowner, an organisation moving goods across the globe, or an insurer or broker serving these clients, the speed and quality of claims handling can have a huge impact on operational continuity and financial stability. That’s why finding an expert partner who not only understands the complexities of the marine sector but also offers in-house claims expertise – such as Costero Brokers – is more important than ever.

This article explores why an efficient claims service is mission-critical in today’s marine and cargo environment. We’ll look at recent high-profile incidents, emerging risks in the shipping world, and how Costero’s integrated claims and underwriting team brings clarity, speed and confidence when it’s needed most.

Real-world marine and cargo incidents: The cost impacts

Recent years have shown that shipping incidents aren’t just occasional problems – they’re major, multimillion-dollar disruptions that can send shockwaves through global supply chains.

March 2025 North Sea collision: In one of the most notable marine incidents of this year so far, the container ship Solong collided with the tanker Stena Immaculate off the eastern coast of England. This caused major structural breaches, explosions and fires, spilling some of the tanker’s cargo of jet fuel, and releasing thousands of tiny plastic pellets or ‘nurdles’, resulting in pollution of nearby waters and coasts. Crews from both vessels were rescued, but one crew member is missing, presumed lost. Total insured losses are expected to fall between $100 million and $300 million. As investigations continue, insurers and brokers are closely watching the case to assess how quickly and effectively the claims are resolved. (Sources: Sky News, Offshore Energy News)

March 2024 Baltimore bridge collision: Massive disruption resulted when cargo vessel MV Dali struck and brought down the Francis Scott Key Bridge in Baltimore, USA, killing six bridge maintenance workers. The collapse blocked shipping access to the Port of Baltimore for 11 weeks. Estimates of insured losses have ranged up to $4 billion, raising critical questions about liability, third-party claims, and the global insurance market’s readiness to adapt to high-stakes incidents. (Sources: Lockton Re, Reinsurance News)

March 2021 Suez Canal blockage: The most financially impactful marine and cargo incident so far this decade occurred when the 224,000-ton container ship Ever Given ran aground in the Suez Canal, Egypt. The resulting six-day blockage of one of the world’s busiest trade routes became the most expensive logistical standstill in recent memory. Estimates placed the economic loss at $9.6 billion per day. The fallout included thousands of cargo claims and years of litigation – a harsh reminder of why rapid and expert claims support is indispensable when global trade grinds to a halt. (Source: KSA Insurance)

Understanding today’s risk landscape in marine and cargo

Today’s marine and cargo risk landscape is multifaceted, constantly shifting, and shaped by major drivers such as:

Climate change and extreme weather: Rising sea levels, more frequent hurricanes, and unpredictable storm patterns are increasing the physical risk to vessels, ports, and cargo.

Geopolitical instability: Conflicts like the war in Ukraine and attacks on shipping routes in the Red Sea are disrupting trade and adding volatile layers of risk for ship-owners, cargo businesses and insurers alike.

Cyber attacks: As the maritime sector becomes more digitised, the risk of cyber incidents grows. Whether this involves ransomware attacks on port infrastructure or GPS spoofing of vessels, the potential for loss is significant – and still poorly protected against in many cases.

Together, such factors highlight that having the right insurance cover is only half the battle. When disaster strikes, you need to know that your insurance partner has the ability to act fast, understand the urgency of claims, and stand shoulder to shoulder with you in the complex resolution process ahead.

What Makes a great marine and cargo insurance partner?

In such a high-stakes environment, your insurance partner should be doing more than just offering cover. They should provide:

Bespoke policy structures tailored to the cargo, routes, and vessels involved.
Deep technical expertise in marine underwriting – with direct access to Lloyd’s of London and global reinsurance markets.
A responsive, in-house claims service that understands the urgency of your situation and acts on your behalf to manage surveys, documentation, and settlement from day one.

As Jason Crowhurst, Head of Marine Claims at Costero Brokers, notes:

“Those first few hours or days after a loss incident are the most important. That’s when clients need proactive support, coordination and answers. Whether it’s deploying a surveyor to a port or liaising with underwriters to confirm reserves, we’re hands-on from the start.”

Unlike many brokers that outsource claims handling to third-parties, Costero’s in-house claims team works alongside our underwriting team – ensuring real-time communication, quicker decision-making, and ultimately a smoother claims journey.

Integrating seamless claims with marine and cargo cover

At Costero Brokers, we believe marine and cargo insurance is a dynamic, high-risk space where responsiveness is everything. That’s why our clients benefit from:

A dedicated in-house claims team that handles everything from small cargo losses to major marine liability incidents.

Tight integration with our marine underwriting specialists, allowing for more accurate reserving, quicker settlements, and less friction during renewals.

Global reach via Lloyd’s of London and international reinsurance markets, ensuring comprehensive, competitively priced solutions backed by world-class coverage.

As Costero’s Jason Crowhurst explains:

“When our clients need to make a claim, we don’t hand them off to a third-party. We step up immediately and take action on their behalf. That includes coordinating surveyors, dealing with local brokers, advising underwriters, and reassuring the client every step of the way.”

For cargo owners and ship operators, that means faster return to operations and more confidence in their risk strategy. For brokers and insurers, it means more satisfied clients and better control of exposure.

Peace of mind at all times – and confidence when you need it most

Efficient claims handling isn’t just about ticking boxes – it’s about giving you peace of mind that, when the unexpected happens, your business won’t grind to a halt. A well-handled claim is often what defines your insurance partner’s value, especially when vessels or assets are stuck at sea, delayed in port, or damaged in transit.

Whether you’re a shipowner needing robust cover and true support, an organisation shipping cargo worldwide, an insurer looking to place a complex marine programme, or a broker seeking a reliable wholesale partner, Costero offers more than just policies – we provide a trusted partnership.

Let’s talk about your marine and cargo insurance needs

Ready to create a marine and cargo insurance solution that gives you end-to-end confidence? Speak to the team at Costero Brokers. Our experienced, responsive and in-house claims team works hand-in-hand with our underwriters to deliver cover that works – and support that delivers more for you.

To learn more about our marine and cargo insurance solutions and discuss your goals, please get in touch with our expert Jack Nicholson at Costero Brokers.

In 2025, geopolitical dynamics, economic shifts, and technological advancements are influencing risks and opportunities for insurers and brokers worldwide. As we navigate an ever-evolving insurance landscape, this report provides a concise overview of key trends and developments shaping the global insurance market today.

The UK and Global Economy

UK inflation rose to 3% in January 2025, up from 2.5% in December 2024, marking its highest level in ten months. According to The Guardian, this unexpected increase was driven by rising costs for food, transport, and private education following VAT policy changes. The inflation surge complicates expectations for early interest rate cuts by the Bank of England. Economic pressures, including energy costs and rising household expenses, are expected to sustain inflationary trends, impacting both businesses and consumers in the months ahead.

US inflation also rose to 3% in January 2025, marking its highest level in six months. According to BBC News, the increase was driven by higher costs for essentials like food, energy, car insurance, and transportation. Analysts now predict interest rates may remain elevated for longer.

Globally, the IMF highlights a steady global growth projection of 3.3% for both 2025 and 2026, which remains below the historical average of 3.7% from 2000–2019. While the US has seen an upward revision in growth forecasts, other major economies face downward adjustments due to elevated policy uncertainty. Global inflation is expected to decline to 4.2% in 2025 and 3.5% in 2026, with advanced economies likely to reach inflation targets sooner than emerging markets.

Insurance Industry Developments

The global insurance market began to soften in late 2024, according to a range of industry observers, reports Insurance Business, and this has continued in early 2025. This shift follows several years of hard market conditions characterised by rising premiums, stricter underwriting, and capacity constraints. The insurance industry’s annual renewals for January 1st, 2025 provided fresh evidence, with the latest data highlighting a notable decline in property catastrophe reinsurance rates – the first since the bottom of the previous soft market in 2017. This may lead to lower premiums and increased market capacity – see our recent blog article.

The cyber insurance market is projected to grow steadily in 2025, with global premiums expected to reach $16.6 billion, an 8% increase from 2024, according to Swiss Re. While the rapid double-digit growth seen in previous years has slowed, the market remains far from saturated.

UK insurance regulator the Prudential Regulation Authority (PRA) has released its 2025 Climate Change Adaptation Report, highlighting the increasing physical and transition risks posed by climate change to insurers and financial institutions. The report outlines the PRA’s enhanced supervisory expectations, urging firms to strategically address climate risks through better identification, measurement, and management practices, improving the industry’s readiness for a net-zero transition.

Meanwhile, the other UK insurance industry regulator, the Financial Conduct Authority (FCA), reports that key issues impacting climate change adaptation of insurers include data and modelling, barriers to insurance underwriting for climate risks, and allocating capital to adaptation measures.

Underwriting Performance

In early 2025, Lloyd’s of London reported strong preliminary results for 2024, showcasing growth and resilience in a challenging market. Gross written premiums increased by 6.5% to £55.5 billion, driven by an 8.5% rise in property and reinsurance segments. The combined ratio, a key measure of underwriting profitability, stood at 86.9%, up from 84.0% in 2023, reflecting major claims in the second half of the year. Excluding large losses, the underlying combined ratio improved to 79.1%.

The attritional loss ratio also improved to 47.1%, highlighting disciplined underwriting, while the expense ratio remained steady at 34.4%. Lloyd’s also addressed the California wildfires, estimating a net loss to syndicates of approximately $2.3 billion, though this is not expected to impact capital significantly.

Tech, Cyber and AI Developments

February 2025 saw the biggest ever ‘cyber heist’ – and probably the largest single theft of all time, according to Reuters. Dubai-based cryptocurrency exchange Bybit suffered a massive security breach, resulting in the theft of digital tokens valued at around USD $1.5 billion. The North Korean state-sponsored Lazarus Group is suspected to be behind this attack.

The growing integration of AI in the insurance sector is being met with increasing regulatory complexities in 2025, according to law firm Norton Rose Fulbright. The UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) revealed that 75% of insurers already use AI, with another 10% planning adoption within three years. Key developments include the implementation of the EU AI Act from February 2025, alongside various national regulations, presenting challenges for compliance in a heavily regulated industry.

Reinsurance Market

The global reinsurance market in 2025 is projected to maintain stability, supported by strong operating profits, robust capitalisation, and favourable pricing trends, according to S&P research reported in Insurance Business. Reinsurers are expected to earn their cost of capital, driven by disciplined underwriting and high investment income from elevated bond yields. While property catastrophe reinsurance pricing has softened due to increased capital availability, it remains at favourable levels.

Reinsurance challenges persist, including elevated insured losses from natural catastrophes, economic inflation, and geopolitical uncertainties. The market also sees growing demand for short-tail lines and alternative capital sources, such as catastrophe bonds, which continue to expand capacity. Despite these pressures, reinsurers enter 2025 with strong capital positions, enabling resilience against potential financial stresses.

Natural Catastrophes

The highest-profile natural catastrophe of 2025 so far has been January’s California wildfires, which caused extensive damage, with insured losses estimated at around $30 billion and total economic impact reaching $250 billion, according to Digital Insurance. These fires highlight the increasing strain on insurers operating in climate-volatile regions, as rising claims costs and policy non-renewals become more common. Regulatory and environmental challenges, coupled with escalating construction and housing costs, are expected to impact rebuilding efforts.

In Australia, cyclone Alfred struck Queensland in March 2025. According to Artemis, early estimates suggest insured losses could surpass AUD 1 billion, given the scale of property, auto, and commercial claims.

Geopolitical Risks

Ongoing conflicts in Ukraine and the Middle East, along with rising geopolitical tensions, are reshaping the landscape of conflict-related risks for businesses in 2025, according to Aon. Insurers are responding by reducing geopolitical insurance capacity, increasing premiums, or withdrawing coverage altogether, leaving companies with limited options for protection. The maritime sector is particularly affected, with shipping routes being rerouted to avoid high-risk areas like the Red Sea, leading to higher operational costs and supply chain disruptions.

According to PwC, new steep international trade tariffs between the US and several other nations are expected to have significant implications for the insurance industry. These tariffs are likely to increase costs for auto parts, construction materials, and other goods, potentially driving up the severity of auto and homeowner claims.

Looking ahead…

As we progress through 2025, Costero Brokers remains committed to supporting our clients and partners in navigating their challenges. Our expertise and insights are here to help you make informed decisions and seize opportunities in a rapidly changing market.

For more detailed analysis and resources, visit our website or contact us.

Disclaimer:

This market report was developed for reference only, and any prospective statements about possible future events or performance are based on developing factors regarding economic and business activity relevant to financial and insurance markets. Such prospective statements involve risk as actual results may differ materially from those expressed or implied due to future changes in relevant factors. We are not responsible for the accuracy of the third-party information cited herein and undertake no obligation to update any such data or prospective statements, nor do we in any way intend to provide legal, financial, or insurance advice regarding any existing or future litigation or other matter discussed or projected herein. Please seek the advice of your own professional advisors or counsel regarding your specific circumstances.

Discover why the far-reaching impacts of the latest California fires make it harder for residents and businesses to get fire insurance on their property – and how insurers, retail and wholesale brokers can adapt to meet the challenges of natural catastrophes.

The devastating wildfires that swept through the Los Angeles area in January 2025 have also left an indelible mark on the insurance market. Insurers and brokers across the U.S. and beyond are grappling with the aftermath, reassessing risk models, and adapting coverage strategies. Lloyd’s alone is expecting $2.3B in losses from the California wildfires (Source: The Times). As the sector faces mounting claims and policyholder concerns, working with a specialist like Costero Brokers can provide vital expertise for creating robust and innovative wildfire and catastrophe insurance solutions.

Facing a fire catastrophe of overwhelming scale

From January 7 to January 31, 2025, a series of 17 wildfires raged across Southern California, affecting Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura counties. The fires, driven by drought conditions and hurricane-force Santa Ana winds, scorched an area of over 57,000 acres and resulted in the tragic loss of at least 29 lives, with tens of thousands of residents and local businesses displaced. (Source: The Guardian)

The two most destructive blazes were the Palisades Fire, which engulfed vast areas of Pacific Palisades, and the Eaton Fire in Altadena, both ranking among the most damaging wildfires in California’s history. These infernos collectively destroyed over 18,000 structures, with early loss estimates reaching over USD $250 billion, making it one of the costliest disasters in U.S. history. (Source: Wikipedia)

The evolving insurance landscape for California wildfires

In recent years, California’s wildfire insurance landscape has been fraught with challenges. Following the deadly 2018 Camp Fire, which caused $12.5 billion in insured losses, insurers have steadily withdrawn from the state, citing unsustainable risks. State Farm, Allstate, and other major insurers have either stopped issuing new policies in affected areas or raised rates to account for escalating wildfire threats. (Source: ABC News)

California’s regulatory restrictions on insurance premium increases, combined with rising construction costs and climate change-driven natural catastrophes, have placed immense strain on the market. Many homeowners and businesses are now forced to rely on California’s state-run ‘last-resort’ fire insurance scheme, the FAIR Plan (Fair Access to Insurance Requirements). The FAIR Plan now carries over $450 billion in exposure—far beyond its financial capacity. (Source: Vox)

Immediate and long-term insurance impacts of the 2025 wildfires

The January 2025 wildfires have significantly reshaped the insurance and reinsurance landscape in the following ways:

Soaring insurance loss estimates

Initial insured loss estimates ranged between $30 billion and $45 billion, with potential increases as claims continue to be assessed. Major reinsurers are now reassessing their appetite for wildfire-exposed risks in California, which could lead to even higher reinsurance premiums and reduced capacity. (Source: Harvard Business Review)

California’s FAIR Plan under strain

With its coverage limits capped at $3 million per structure, the FAIR Plan is proving inadequate for homeowners in high-value areas like Pacific Palisades. As claim volumes increase, the plan may be forced to levy assessments on participating insurers, adding financial stress across the market.

Rising rebuild costs and payout challenges

Rebuild costs are surging due to inflation, supply chain disruptions, and skilled labour shortages. Insurers face mounting pressures to balance fair settlements with policy caps that may no longer reflect actual replacement costs. (Source: Claims Journal)

The role of utilities and subrogation

Investigations are ongoing into whether the regional electricity supplier’s equipment played a role in sparking the Eaton Fire. If utility liability is established, subrogation claims may allow insurers to recover some payouts, but the legal battles could take years. (Source: New York Times)

The Additional Living Expenses (ALE) crisis

Many displaced residents now face years of uncertainty. Given the tight housing market, Additional Living Expenses (ALE) claims are expected to rise dramatically, further exacerbating insurers’ financial exposure. (Source: InsTech Catastrophe Risk TV)

Insurers Raising rates and exiting the market

In direct response to wildfire losses, leading California insurer State Farm has applied to state regulators to make a 22% rate increase on California homeowners’ policies, with other insurers likely to follow suit, or exit the region altogether. These rate hikes could push more policyholders toward the FAIR Plan, intensifying the crisis. (Source: The Independent)

Finding an expert partner to navigate wildfire insurance challenges

At Costero Brokers, we understand the complexities of wildfire risk. Our expertise in catastrophe insurance and reinsurance, combined with strong relationships at Lloyd’s of London and across the global reinsurance markets, enables us to develop tailored solutions for insurers and brokers protecting residential and commercial property in catastrophe-prone regions.

We can help you create innovative insurance solutions to meet the challenges, such as:

Parametric insurance: Providing swift, pre-agreed payouts after natural catastrophes, based on measurable triggers, like wildfire-burned acreage or hurricane wind speeds within an agreed-upon area, ultimately helping insurers and policyholders manage losses more efficiently.

Insurance structures: Leveraging structured solutions with multiple carriers to help your clients obtain desired limits, and insurers absorb shock losses while maintaining capacity.

Mitigation-focused products: Encouraging policyholders to adopt fire-resistant materials and preventive measures, reducing claim severity over time. Utilising private fire defence companies, such as Ember is also becoming more and more beneficial when looking to secure property coverage in fire-prone areas.

Customised risk transfer Strategies: Tailoring coverage to balance affordability with adequate protection, ensuring long-term market sustainability.

Discuss your way forward in the insurance landscape

The 2024 Hawaii wildfires, as well as the 2025 Southern California wildfires, serve as a stark reminder of the growing natural catastrophe risks in California and beyond. As insurers and brokers navigate an evolving and increasingly volatile insurance landscape, partnering with a specialist expert is more critical than ever.

Costero Brokers is committed to helping you develop strategic property insurance and reinsurance solutions that safeguard your business and policyholders. To explore how we can help you navigate the challenges ahead, get in touch with our expert, Cordelia Powell at Costero Brokers.

Find out how the softening insurance market presents both challenges and possibilities for wholesale and retail brokers and their business clients, with a particular focus on commercial property and construction.

As we move ahead into 2025, a noticeable softening is occurring within the global insurance market. For retail and wholesale brokers, and their commercial clients, especially in the areas of property and construction insurance, this creates both challenges and opportunities. In this article, we explore what market softening means, why it matters, and how you can position your business to benefit from these changes. Partnering with an expert like Costero Brokers, with our deep expertise and established relationships in the London and European insurance and reinsurance markets, can provide the edge you need to thrive in this evolving landscape.

Why is the insurance market softening?

The insurance market is cyclical, and it is in the phase where we are seeing it ‘soften’. This is being triggered because the capital base is increasing for individual insurance companies due to the profitability of the last year, additionally the Insurance Treaty market at 1/1 have offered lower attachments and lower costs of reinsurance.

In addition to this over the last few years, lower claims and improved risk management has led to insurance companies lowering their premium rates and expanding coverage options with increased competition among insurance providers. It means buyers usually find it easier to get better deals and more favourable terms.

Today’s softening market: an overview

According to a wide range of industry observers, the global insurance market began to soften in late 2024, and this has continued in early 2025. This shift follows several years of hard market conditions characterised by rising premiums, stricter underwriting, and capacity constraints.

In recent months, key market indicators such as property catastrophe reinsurance indices and renewal rates began to show clear declines. (Source: Insurance Business).

The insurance industry’s annual renewals for January 1st, 2025 provided fresh evidence, with the latest data highlighting a notable decline in property catastrophe reinsurance rates – the first since the bottom of the previous soft market in 2017. (Source: Artemis)

Analysts estimate that at the 1/1 renewals, loss-free risk-adjusted rates across a diversified reinsurance portfolio fell by around 6%. They highlight that rate adequacy remains “very attractive” in property classes. (Source: Reinsurance News)

One of the contributing factors that has driven this is the Catastrophe storms of 2024, Hurricane Milton, Hurricane Helene and Hurricane Berryl did not cause the losses expected from the market and compared to the recent years (Source: Insurance Business). Further to this there has been a steady increase in the rates over the last few years in the market due the hard market (Source: Leader’s Edge)

Similarly, recent analysis of the market points to a “new phase of favourable conditions”, suggesting more competitive pricing for insurers in the coming year (source: Insurance Business).

The possible opportunities of a softer market

Lower premiums: Falling rates mean you can potentially secure more competitive premiums for your clients. This is particularly beneficial for large-scale commercial property or construction projects where insurance costs can represent a significant portion of budgets.

Increased market capacity: With insurers and reinsurers willing to take on more risks this advantageous for clients with complex or high-value portfolios that previously faced difficulties in obtaining coverage and limits. We have seen insurers widen their appetite, ie: habitational portfolios, risks in more catastrophe exposed areas and heavier industries such as steel and iron works, are all within target sectors.

Negotiation power: As the market becomes more competitive, you gain leverage to negotiate broader policy terms and more comprehensive coverage on behalf of your clients. Gaining more flexibility to find tailored solutions for your clients.

Benefits of Partnership during a Softening Market:

Client loyalty: It’s vital to ensure the financial stability of carriers you work with, benefit from the price reductions on a long term scale. London wants to partner with their clients for the future and to retain the business, and they will prioritise their long-term clients with the most beneficial pricing.

Long Term Certainty and Continuity: by partnering with Costero Brokers, we can provide stability and continuity in pricing. This allows budgeting for insurance for your clients year on year allowing businesses to plan for the future. Partnering with Costero and the London Market mitigates the extreme peaks and troughs that we have seen some clients suffer from in the last few years.

Long Term Quality: Partner with a Costero who look for the long-term projection and look at the wider priorities and needs of your clients. Always offering comprehensive coverage no matter what the cycle, focusing on quality as well as price for the client.

Finding your expert partner for an evolving insurance market

In a market experiencing significant change, having the right partner is critical. Costero Brokers brings unmatched expertise in all key insurance areas, including commercial property and construction, supported by robust relationships with the London and European reinsurance markets. Here’s how we can help you take advantage of the softening market.

Costero is not restricted to using specific markets, unlike larger brokers who have contingent commission arrangements with key insurers to restrict marketing.

Key Benefits:

Expertise in complex risks

We offer a wide range of insurance solutions to meet the complex needs of retail and wholesaler brokers. For instance, our Property team specialises in securing solutions for commercial property such as office buildings, retail spaces, or industrial facilities, our team can navigate the softening market to deliver competitive and comprehensive coverage tailored to their unique needs. Our team has over 40 years experience, and experience of seeing the market change and experience of how to navigate client needs within the a softening market for the long term.

Similarly, our Construction insurance division has deep experience in managing the intricate risks associated with large-scale projects, from infrastructure developments to residential builds. We offer bespoke Builder’s Risk Insurance solutions, and see growing demand in areas such as Frame and Renovation projects. By leveraging the softening market, we help you secure broad coverage that ensures your clients are protected from start to finish.

By capitalising on the softening market and utilisation of long-term partnerships and showing loyalty to the insurance panel.

Strong market relationships

Our long-standing relationships with leading insurers and reinsurers – at Lloyd’s of London, London, European and worldwide markets – give us access to a wider range of options. This allows us to secure competitive pricing and favourable terms that might not be available through other channels.

Navigating market complexities

While the softening market offers opportunities, it also presents complexities. Our team is skilled at navigating these challenges, ensuring you and your clients receive the right balance of affordability, security and reliability.

Tailored support for brokers and MGAs

We understand the unique pressures faced by retail brokers and MGAs. That’s why we work as an extension of your team, providing personalised support to help you meet your clients’ needs while strengthening your own business relationships. Whether you need assistance with underwriting, claims, or market insights, we’re here to help.

Move ahead to get more from the softening market

In summary, the softening insurance market of 2025 offers exciting opportunities for retail brokers, and their commercial clients, particularly in property and construction. But taking full advantage requires expert guidance, strong connections and market insight. That’s where Costero can make all the difference.

We need to understand your requirements to best capitalise on the softening market, what are your priorities;

Lower price
Better coverage

Clients must think long term and to the future of when the market changes again and what will your compromises be to get the better pricing in the future when we see the market harden in the future.

To learn more about opportunities in the softening insurance market and discuss your goals, get in touch with our expert, Cordelia Powell at Costero Brokers.

Please be advised: This is not a guarantee that the market will continue to soften.

Find out how to approach insurers that are looking for innovative & new insurance products, from our roundtable discussion with leading London market underwriters.

Bringing an innovative insurance product to market involves overcoming a wide range of challenges – not all of them obvious, particularly to tech-focused startups. Perhaps the biggest challenge is finding the capacity to make your idea work in the real world. That’s why connecting from an early stage with brokers and underwriters that specialise in innovation is vital for ambitious new insurance startups, MGAs and InsurTechs.

To discuss these challenges and share practical insights, Costero Brokers recently hosted a roundtable discussion with two of the London market’s leading innovation underwriters.. Our insurance innovation Q&A participants are:

Key highlights of the discussion:

James Gadbury: Thanks to both of you for your time today. To start, can you please tell us a little about your roles?

Hayley Budd: I lead the innovation class at Apollo. We underwrite capacity for new and innovative products that solve real customer problems. Some products we build ourselves, while others involve partnering with startups or MGAs.

Rob Jarvis: At TMK, I run the innovation underwriting team, focusing on novel and unconventional risks. Our job is to trial and grow these ideas until they’re ready for commercial scale.

JG: That’s great. Looking over your recent career, what would you say is your biggest achievement to date, or a piece of business you’re most proud of?

HB: Launching the Apollo Innovation ICX Consortium in 2023 was a big moment. Many doubted it could be done, but we created a fully delegated consortium that supports innovative insurance products. It’s still the only consortium of its kind, to my knowledge.

RJ: At TMK, we centralise new ideas in one place to de-risk them for other underwriting teams. It’s satisfying to see people now coming to us with ideas they’re not quite ready to take on themselves. I’m also proud of enabling socially impactful products – one recent example is Sola’s Wind & Hail Insurance, which provides rapid payouts and genuinely helps people.

JG: What are you looking for in the startups, MGAs, or InsurTechs that you partner with? And what common traits have you seen in the ones that are most successful?

HB: First, we’re looking for products that close real protection gaps. Tech is also vital, especially for parametric or usage-based insurance. Startups need scalable technology and a solid understanding of the regulatory environment. It’s important to respect the rules we work within.

RJ: I’d add that focus is key. Successful founders often pick one idea and execute it well rather than spreading themselves too thin. Startups should also bring us something we lack—be it technology, distribution, or data.

JG: Where do you see the big opportunities for innovation in insurance? Are there specific areas or markets you’d like to see new offerings in?

HB: We’re interested in innovative structures like parametric insurance with novel triggers such as non-damage business interruption, and embedded insurance solutions. Emerging technologies like AI and products supporting the carbon transition or addressing supply chain disruptions are also key areas.

RJ: Optimising existing products with technology is a significant opportunity and pays the bills today. However, entirely new solutions create fresh market opportunities for the future. Areas like battery technology, autonomous vehicles, and carbon initiatives are particularly exciting.

JG: Do you prefer MGAs improving existing markets or startups creating entirely new products?

RJ: Both have value. Enhanced products can scale quickly and generate immediate income, while new products take longer but create fresh markets. It’s important to balance the two.

HB: I agree. Both approaches have their merits, but new ideas addressing gaps, such as in emerging tech or environmental needs, are crucial.

JG: What makes the London market a good place for new MGAs or startups looking for capacity?

RJ: The sheer scale and concentration of insurance talent and capital in the London market are unmatched. With more than 60,000 insurance industry people, 350 major insurance and reinsurance companies, and 200 broker firms in such a small area, the resources here are incredible.

HB: Lloyd’s of London is built for hard-to-place business. Programs like the Lloyd’s Lab accelerator and the ICX Innovation Class allowance offer startups unique opportunities to test ideas and access mentorship. The collaborative culture also fosters innovation.

JG: What are the common mistakes startups make, and what should they try to avoid?

HB: Many startups try to move into insurance without addressing a real problem. Others underestimate the regulatory environment or overestimate how much of the premium is available for technology.

RJ: Startups often misjudge the economics of insurance and the thin margins involved. Taking venture capital (VC) can also lead to unrealistic growth expectations, misaligned with what insurers prioritise.

JG: In your view, how can an expert broker like Costero assist insurance startups, MGAs and InsurTechs in securing capacity and bringing innovative products to market?

HB: The right broker can unlock distribution opportunities, ensure operational basics are in place, and help startups navigate regulatory complexities. They play a vital role in getting the foundation right.

RJ: A good broker provides valuable commercial validation. If a product reaches us via a broker, it’s likely been vetted for market demand. They’re also helpful mediators between risk-averse underwriters and ambitious startups.

JG: Thanks so much to both of you for your time and insights. This has been an incredibly valuable discussion.

If you’d like to discuss your idea for a new insurance product with us, or learn more about what capacity is available, , please get in touch with our expert James Gadbury at Costero Brokers.

Learn how to address emerging cyber threats of property damage to industry and critical infrastructure with an expert cyber insurance partner.

In today’s hyper-connected world, the boundary between digital and physical realms has never been thinner. The convergence of cyber and physical systems has created new vulnerabilities for businesses across various sectors.

Cyber-physical incidents, where cyberattacks lead to tangible property damage, are becoming more prevalent . These emerging risks pose significant challenges to businesses and insurance brokers worldwide who need to navigate this increasingly complex landscape.

This article explores the concept of “cyber-physical” risks, particularly focusing on how cyber attacks can lead to property damage in sectors such as energy, construction and manufacturing. We’ll also discuss how partnering with a cyber insurance expert like Costero Brokers can help you navigate these complex risks with tailor-made insurance solutions.

The growing threat of cyber-physical risks

Cyber-physical incidents exploit vulnerabilities in the integration of digital and physical systems. They can cause significant physical damage and operational disruptions.

These risks are particularly relevant for businesses in sectors such as energy, construction and manufacturing – which increasingly rely on interconnected systems, autonomous machinery, robotics, drones, and other operational technology (OT). Here, cyber-physical incidents can have devastating consequences for businesses and the wider public environment.

In the energy sector, cyber incidents can lead to widespread power outages, significant economic losses, damage to physical infrastructure, and even catastrophic events like explosions. The interconnected nature of energy systems makes them particularly vulnerable to cyberattacks, which can compromise the safety of workers and the public.

In the construction and manufacturing sectors, the use of autonomous machinery and robots is on the rise. Today’s connected smart industrial machines are far more advanced, intelligent and mobile than the ‘robot arms’ introduced on production lines in the 1970s. These technologies offer numerous benefits, such as increasing productivity and reducing workplace accidents.

However, as these technologies become integral to industries, their cybersecurity weaknesses are a growing concern. they have expanded the attack surface for cybercriminals, and increased exposure to cyber-led physical damage. Rapid technology adoption without adequate cybersecurity measures is exposing these industries to significant risks.

For example, hacked inspection robots or compromised 3D printing systems could lead to operational disruptions, production delays, financial loss, property damage and even physical injury.

The rapid digitalisation of these industries has outpaced security improvements, making them prime targets for cybercriminals. The cyber-physical risks are amplified by factors such as:

The growing use of Internet of Things (IoT) devices, often with weak security measures.

Legacy systems that are poorly integrated with modern cybersecurity protocols.

Increasing criminal sophistication, geopolitical tensions and cyber-warfare attacks that target critical infrastructure.

The financial and reputational costs of these incidents can be immense, impacting not only the affected businesses but also their customers, supply chains, regulators and insurers. As technology evolves, so do the tactics of cybercriminals, making it imperative for businesses to understand these threats and implement robust risk management strategies.

Cyber-physical incidents in the headlines

Several high-profile incidents worldwide in recent years have highlighted the potential for cyber attacks to cause physical damage:

The Stuxnet incident, revealed in 2010, marked the first known use of a cyber weapon to cause physical destruction, highlighting the potential for cyber-physical attacks. It was a sophisticated cyber-physical attack that targeted Iran’s nuclear enrichment facilities. Developed by U.S. and Israeli intelligence, Stuxnet was a computer worm designed to sabotage industrial control systems (ICS) used in Iran’s nuclear program. The worm caused centrifuges to spin out of control, leading to significant physical damage. (Source: CSO)

In 2014, hackers caused massive damage to a German steel mill by remotely manipulating control systems, resulting in a significant explosion and massive damage to the plant. (Source: BBC News)

The Colonial Pipeline attack in 2021 was a significant cyber-physical incident that disrupted fuel supply across the eastern United States. The attack, carried out by the hacker group DarkSide, forced Colonial Pipeline to shut down its operations, leading to fuel shortages and price spikes. (Source: US Cybersecurity and Infrastructure Security Agency)

Recent cyber-physical attacks allegedly backed by Russia have targeted overseas energy plants and power grids. In 2022, the Sandworm hacker group executed disruptive cyber-physical attacks on Ukrainian power plants, leveraging novel techniques to impact industrial control systems (ICS) and operational technology (OT). The attacks involved tripping substation circuit breakers, causing power outages affecting two million people. (Source: Google Cloud Blog)

These incidents highlight the vulnerability of industries and critical infrastructure to cyber-physical attacks, and the growing capability of cyber actors in executing such sophisticated attacks globally. They underscore the critical need for businesses in these industries to have robust cybersecurity measures and appropriate cyber insurance solutions.

Finding the right cyber-physical insurance coverage

To mitigate the financial fallout from cyber-physical incidents, businesses must consider comprehensive cyber insurance solutions. Traditional insurance policies often exclude damages stemming from cyber-physical events, leaving significant gaps in coverage. However, the insurance market is evolving to address these challenges, offering products to meet changing needs.

An expert in cyber-physical insurance can help companies and insurance brokers bridge the gap, with tailored solutions designed to address the unique challenges of cyber-physical risks, such as:

Standalone cyber property damage policies: These provide dedicated coverage for physical damage caused by cyber incidents.

Integrated coverage options: policies blending property and cyber coverage to mitigate exclusions found in standard offerings.

Customised endorsements: Affirmative property damage endorsements that ensure clarity and protection against specific cyber-physical risks.

Business interruption coverage: This protects against income loss due to downtime caused by cyber incidents, ensuring that businesses can recover financially after an attack.

As well as protection for property damage, such solutions can include coverage for:

Loss of income and extra expenses during downtime.

Costs associated with regulatory compliance and crisis management.

Liability arising from third-party claims due to system breaches.

For an in-depth exploration of cyber-physical risks and their insurance implications, download this Lloyd’s of London report: ‘Shifting powers: physical cyber risk in a changing geopolitical landscape’.

How Costero Brokers can help with your cyber-physical risk challenges

Working with a cyber insurance expert like Costero Brokers can significantly enhance your ability to manage cyber-physical risks. Our Cyber, Media, and Technology (CMT) division specialises in creating tailor-made cyber insurance solutions designed around your specific needs. Our team of experts understands the unique challenges faced by businesses in sectors such as energy, construction and manufacturing, and can help you navigate the complexities of cyber-physical risks. By working with Costero, you can find the right protection against the evolving cyber threat landscape.

We understand that no two businesses are alike. That’s why our approach is never “off-the-shelf.” Our team collaborates closely with you to assess your risks and develop a bespoke insurance strategy that aligns with your operational needs and regulatory requirements. Here’s how we ensure companies are protected:

Expert negotiation: Leveraging our deep connections in the Lloyd’s of London market and beyond, we negotiate comprehensive and competitively priced policies tailored to each client’s needs.

Holistic risk assessment: Our team works with you to identify vulnerabilities and craft insurance programmes that address both current and emerging risks.

Dedicated support: From the initial consultation to policy placement and claims management, we provide end-to-end service to ensure seamless support.

Whether you are a wholesale insurance broker seeking bespoke solutions for your clients or a business leader looking to secure your operations, partnering with Costero can give you the competitive edge.

Take the next step to cyber-physical coverage

Don’t leave your business or clients exposed to the growing risks of cyber-physical incidents. Talk to Costero today to secure a tailor-made cyber insurance programme that aligns with each client’s unique needs and risk appetite.

To learn more about our commercial cyber insurance solutions and discuss your goals, please get in touch with our expert Jonathan Olley at Costero Brokers.

Costero Brokers Ltd., a privately held London-based brokerage, is thrilled to announce the launch of its newly redesigned website. This significant update reflects Costero Brokers’ commitment to providing exceptional service and accessibility to its clients across the globe.

As a committed independent insurance brokerage, Costero Brokers continues to focus on providing personalized insurance solutions that cater to the unique needs of your clients across various industries. The revamped website highlights this dedication by making it easier for visitors to find the exact insurance coverage they need in today’s dynamic and rapidly evolving market.

The website’s intuitive layout and streamlined navigation make it easier for clients to find the information they need quickly and efficiently. Clients can access a wealth of resources, including detailed service offerings, industry insights, and the latest news in the insurance sector. A secure client portal provides personalized access to policy information, claims processing, and account management, enhancing transparency and convenience. The site features interactive tools designed to assist clients in understanding their insurance options and making informed choices.

“We are excited to unveil our new website, which represents our dedication to innovation and client satisfaction,” said John Tallarida, CEO of Costero Brokers. “Our goal is to provide an online platform that not only meets but exceeds our clients’ expectations, offering them the tools and information they need to navigate the complex world of insurance with confidence.”

To see the site’s refreshed and streamlined look and connect with a member of the Heffernan team, visit the new website at costerobrokers.com.

About Costero Brokers Ltd.

Costero Brokers Ltd., formed in 2017, is an independent, dynamic, and entrepreneurial insurance and reinsurance Lloyd’s of London wholesale broker specializing in finding capacity for hard-to-place or emerging risks. Costero focuses on open market facultative, binding authority, reinsurance, and alternative risk transfer business placed into Lloyd’s of London, European, and international company markets. Whether clients are brokers, coverholders (MGAs), captives, or insurers, the team draws upon steadfast relationships with underwriters and is passionate about delivering tailor-made solutions to their insurance and reinsurance needs. Costero Brokers is an approved Lloyd’s coverholder, which it uses strategically to support clients’ business.

For more information, visit costerobrokers.com.

Find out how an LPT can help an insurer clean up their balance sheet, achieve capital relief, and remove historical liabilities.

For insurance carriers and underwriters, managing capital efficiently while mitigating risk is more critical than ever. One effective strategy to achieve this is through a loss portfolio transfer (LPT), a solution that enables carriers to remove liabilities from their balance sheets, freeing up capital and resources. In this article, we’ll explore the related challenges you face as an insurance carrier or underwriter, why an LPT is such a valuable tool, and how Costero Brokers, with our deep expertise and connections within the reinsurance market, can guide you through a successful LPT.

Financial challenges facing insurance companies today

As an insurance carrier or underwriter, you are no stranger to the pressures of balancing profitability with regulatory requirements and capital management. Your key challenges in this will include:

Cleaning up the balance sheet: One of your main concerns is likely to be cleaning up your balance sheet, particularly when legacy liabilities linger. Old claims or underperforming portfolios not only tie up capital but also cloud the true financial health of your company. This challenge is particularly acute when you need to present a clear, robust financial position, such as ahead of a merger, acquisition, or restructuring.
Capital relief: In addition, capital relief is a crucial driver in your operations. With Solvency II and other regulatory frameworks demanding ever-increasing capital reserves, freeing up locked capital is essential to maintain competitiveness and invest in new opportunities. However, without the right strategies, this process can be slow and fraught with complications.
Removing historical liabilities: Many insurance portfolios contain “long-tail” liabilities, where claims take years, or even decades, to fully settle. These historical liabilities not only present an unpredictable future financial burden but can also consume resources that could be better utilised elsewhere. Removing such liabilities can significantly reduce your risk exposure and provide peace of mind.

What Is a loss portfolio transfer (LPT)?

A loss portfolio transfer (LPT) is a financial transaction that allows you, as an insurance carrier, to transfer the liabilities of a specific portfolio to a reinsurer. This includes all future claims arising from the portfolio’s historical policies. In return, you pay a premium to the reinsurer, who then assumes the responsibility for managing and settling the claims.

Simply put, a loss portfolio transfer acts as a “reset button,” enabling you to offload your exposure to legacy liabilities, free up capital, and focus on more profitable aspects of your business.

Why should insurers consider a loss portfolio transfer?

As an insurer, if you’re looking at strategies to optimise your financial position, an LPT with a specialist reinsurer can provide several distinct benefits. Here’s why you should consider an LPT:

Capital optimisation: By transferring liabilities to a reinsurer, you can immediately release capital that was previously locked up to cover those future liabilities. This can offer significant relief under regulatory frameworks like Solvency II, helping you meet capital requirements without having to raise additional funds.
Removing volatility and risk: Old portfolios, particularly those with long-tail exposures, can introduce significant volatility to your financials. A sudden surge in claims can disrupt even the most carefully planned financial strategies. By transferring this risk to a reinsurer, you can mitigate the impact of unexpected claims and better stabilise your company’s future.
Reduced administrative burden: Handling legacy claims can be resource-intensive, draining both your operational efficiency and financial performance. A successful LPT not only offloads the financial risk but also shifts the administrative burden of managing these claims to the reinsurer, freeing up your team to focus on more productive activities.
Enhanced financial position for strategic moves: If your company is preparing for a sale, merger, or acquisition, cleaning up the balance sheet through an LPT can make you more attractive to potential buyers, partners or investors. It simplifies your financial picture and removes the uncertainty of legacy liabilities, which could otherwise hinder a successful deal.

How Costero can support you with your LPT

Working with an expert like Costero Brokers can make all the difference in executing a successful LPT. Here are some of the reasons why we’re your natural partner in this area:

Expertise in loss portfolio transfers: Costero Brokers’ extensive experience with LPTs ensures that we can help you navigate the complexities of these transactions. We understand the intricacies involved, from negotiating with reinsurers to structuring deals that align with your specific financial goals.
Strong relationships with reinsurers: We have close, established relationships with specialist reinsurers, including those at Lloyd’s of London and other key markets. These connections allow us to access the most competitive terms for your LPT, ensuring you achieve a solution that meets your objectives in terms of both cost and risk transfer.
Tailored solutions: Every insurance carrier’s needs are different, which is why we take a bespoke approach to each LPT. We work closely with you to assess your portfolio, evaluate the risks, and present a range of potential solutions. Our goal is to help you find the right LPT structure that delivers both capital relief and operational simplicity.

How to start thinking and discussion about your LPT

If an LPT sounds like it could be beneficial, here are a couple of practical steps you can start with:

Identify potential portfolios for transfer: Begin by reviewing your current portfolios and identifying blocks of business that could benefit from an LPT. These are typically older portfolios with long-tail claims or those with a history of volatility.
Consider your company’s financial objectives: If your company is preparing for a sale, merger, or significant restructuring, an LPT could be a strategic solution. Your leadership team may not be aware of the advantages an LPT could offer, so starting a conversation around this can add real value.

Let’s talk about how an LPT can help you

Your company’s legacy liabilities don’t have to define your future, so let us help you clear the path forward. At Costero Brokers, we’re ready to support you towards a successful loss portfolio transfer. Whether you’re looking to clean up your balance sheet, optimise capital, or remove long-standing liabilities, we have the expertise and market access to deliver the right solution for you.

To learn more about LPTs and our services for global facultative and treaty insurance, and discuss your goals, please get in touch with our experts Mark Jesson and David Pratt at Costero Brokers.