Reinsurers must lead push for claims discipline and better data: Specialty Risk Re CEO

According to Jonathan Collura, CEO and President of Specialty Risk Re, the firm’s underwriting strategy, distinguished by its integration of both traditional P&C and credit perspectives, is a key differentiator in how it supports clients.

In an interview, Collura, appointed CEO of Specialty Risk Re in 2024 and also a member of the firm’s board of directors and underwriting committee, discussed a range of topics, including the key factors behind the recent rise in casualty rates.

Sharing five key points on this, Collura said, “First, we’re seeing a reduction in capacity, primarily due to heavy losses over the past five years. What I’m also noticing is that commission expectations haven’t adjusted to reflect these losses, which has caused reinsurers to pull back from the space.

“Second is the rising cost of claims and the impact of social inflation. A lot of carriers are allowing their TPAs to settle claims quickly to avoid litigation, especially in light of some of the massive jury awards we’ve seen recently. The issue here is that it takes control away from reinsurers and drives up overall costs.

“Third, underwriting results have been poor, which ties directly into the previous point. The loss trends over the past five years are climbing fast, largely due to unrealistic commission structures and reinsurers shouldering too much of the risk. We’re also seeing pushback against ‘pass-through’ carriers that don’t retain risk. With new capacity coming online, we’re requiring both MGAs and carriers to retain more of the risk themselves.

“Fourth is inflation and rising interest rates. This is affecting everything across the board: replacement costs, cost of capital, and overall operating expenses. It’s dragging the entire system along with it.

“Fifth, there’s the MGA boom. We saw a flood of capital come into the space through acquisitions and the launch of new fronting carriers

“But now, with disappointing results, scrutiny is increasing. Some programs claim they’re fixing things by raising rates and tightening underwriting, but the issue is that these are actual past losses. You can’t just change loss picks and assume the problem is solved. We’re asking: when will we see that improvement materialise?

“The common answer tends to be, ‘We’ll just raise rates.’ But in my view, we need deeper scrutiny on both underwriting and claims management. These ‘atomic’ jury awards can be managed, but only with disciplined underwriting.”

Collura added, “So, those are the five drivers I see. There is a significant lack of capacity today, and a notable pullback in capital. I’m very close to the capital markets, and I haven’t seen much new investment flowing into reinsurers lately. The focus had shifted to fronting carriers and MGA acquisitions, but now investors are taking a step back and reassessing the entire space.”

Commenting on how Specialty Risk Re is positioning itself to manage this volatility and support its clients effectively, Collura observed, “First and foremost, we’re focused on whole-account quota share programs, where we can partner closely with a carrier and truly act as a standby partner.

“This approach serves two key purposes: one, it provides us with diversification; and two, it creates alignment with the carrier. That alignment encourages stronger underwriting and better claims management, which is critically important in today’s environment.

“In the programs we’re writing, we’re willing to take up to 20% of a full account quota share. That’s significant, especially in a market with limited capital. It also creates a competitive advantage for the fronting carrier.

“For example, if the carrier is retaining 20% and we bring another 20%, they’re now at 40% retention. That level of skin in the game positions them to attract best-in-class programs, since much of the panel is already complete.

“The second part of our strategy is how we underwrite. We don’t just underwrite from a traditional P&C standpoint; we also bring a credit lens to the table. With my background in credit, we place a strong emphasis on past performance. We underwrite the MGA and the carrier first, before even getting to the actuarial loss picks. We believe that strong historical results are the best indicator of quality.”

For context, Collura began his career in financial services in 1999, working as a financial advisor and banker at firms such as Ameritrade, Morgan Stanley, and Wells Fargo Bank.

In 2011, he founded a boutique corporate advisory firm specialising in structured finance, debt, and management solutions. During this time, he was also active in the Oil & Gas sector, completing acquisitions involving both public and private companies.

He continued, “We understand there have been challenges over the past five years, but there are still effective ways to create alignment. One example, as I mentioned earlier, is ensuring that commission structures are in line with our interests. That kind of alignment is essential to building sustainable, high-quality partnerships.”

Elsewhere in the interview, Collura addressed recent reports from major industry players noting that cedents who can clearly demonstrate how they’re managing casualty risks tend to achieve more favourable outcomes at renewal.

“Data is everything in this industry. Since around 2020, there’s been a noticeable lack of quality data. The first thing we do when underwriting is gather as much data as possible; without it, we simply can’t make informed decisions,” he explained.

Collura continued, “As I mentioned earlier, past performance is critical. We need to see the actual data points behind the results. Over the last 24 months, I’ve seen many submissions where the past underwriting results don’t look great, but we’re told: “Here are the changes we’ve made.” That might sound good, but without data to back it up, how can we know those changes will actually lead to better outcomes?

“One of the advantages of the whole-account quota share model we use is that it allows us to partner with carriers who are truly best-in-class when it comes to data. It’s then up to those carriers to hold MGAs accountable for delivering timely and accurate information, how often they receive the data, what they do with it, and how they manage claims. Because if claims are mishandled and data is missing, things can spiral out of control quickly.

“With AI now playing a bigger role, we’re using a proprietary tool I developed that gives us fantastic insights, entirely data-driven. Without that level of detail, we have no visibility into where things stand at any given time.

“That said, I believe it’s reinsurers like us who are now really pushing for better data. Just this past week, I’ve had multiple conversations where we were being asked to consider deals without receiving key data. And the reality is, you can’t make informed underwriting decisions based on someone simply saying, ‘Trust us, these are the expected losses.’ That just doesn’t cut it anymore.”

Closing the interview, Collura shared what to expect from Specialty Risk Re in the near future as it works to help insurers and reinsurers navigate the evolving casualty market.

“We aim to be a highly respected reinsurer, built on a strong capital base and entering a market that is in real need of capacity,” Collura said.

He continued, “Our approach is fundamentally relationship-driven; we’re here to be the patient partner, not one that jumps in and out of programs. That mindset is reflected in the structure we’ve built, which puts a strong emphasis on underwriting the carrier first.

“We ask: Do they have exceptional claims management? Do they have the data we need? If the answer is yes, then we’re ready to step in and fill the capacity gap for them, because that’s where we see true long-term value.

“Right now, we have several active partners, and I expect that number will grow to about four core carrier relationships. We’re already working with a couple, and we’ve identified others we plan to bring on. These are fronting carriers that prioritise the fundamentals I’ve been talking about: strong data, strong underwriting, and alignment on structure.

“Ultimately, I believe we’ll be a key driver in promoting quality across the space: quality business, quality data, and quality underwriting, above everything else.”

Collura concluded, “There are still challenges, of course. Underwriting remains difficult due to a lack of data and commission structures that are often misaligned. We’re also seeing some large, multiline MGAs undergoing major financial events, sales, IPOs, etc. and that raises concerns about whether risks are being offloaded in ways that could negatively affect new shareholders. That’s something we’re watching closely.

“But overall, what we’re bringing is a fresh perspective, partnering with best-in-class carriers and brokers, and applying a disciplined, finance and credit-informed approach to underwriting. For us, it’s all about information, data, and strong management.”

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