View from the top: Mark Moitoso, ICW Group

ICW Group’s president, as of January, Mark Moitoso, most recently was Lockton’s executive vice president, risk practices. Before his tenure at the broker, he spent 25 years with Liberty Mutual, serving in various leadership roles. Mr. Moitoso, who is based at ICW’s headquarters in San Diego, spoke with Business Insurance Assistant Editor Louise Esola about the company’s current stake in the workers compensation and reinsurance markets and plans to expand into other areas of property and casualty. Edited excerpts follow.

Q: On your career trajectory, you went from insurer to broker and then back to insurer. What have you learned along the way that helps you now? 

A: Our industry is full of complexity, which is what’s kept me attracted to it for 35 years. The change from carrier, which is where I got a lot of my technical background, to going to the brokerage was the benefit of actually seeing insurance through the eyes of the customer. When you grow up only in an underwriting environment, you don’t get to see how people buy and what goes into decision-making. Learning how a broker wins business was really eye-opening for me in my first two months at Lockton in 2015. And then looking back at underwriting, about how saying ‘no’ sounds easy, but saying ‘no’ with empathy, with care, or with alternatives just gives you a different perspective. Then I came back to the underwriting side again, where you have to manage a balance sheet, manage risk, and risk aggregations. I’ve learned that how you approach your partner is really important. That was the biggest thing I learned: seeing it from the lens of the customer versus just the lens of the balance sheet, which is what I spent 25 years at Liberty Mutual doing.

Q: From a retail perspective, ICW’s biggest product is workers comp, the most steady line. What are some challenges looking ahead? 

A: For workers comp, it’s been a 10-year trajectory of good profits for the industry and a good buying environment for the vast majority of customers. Frequency of claims has continued to drop, but severity is starting to increase. And again, we’ve seen a higher level of catastrophic claims. We see extended disabilities. We’ve seen increased cumulative traumas, and we see more litigation as an industry. A lot of companies have relished in great workers comp performance over the last decade, but you are starting to see some signs where there is some movement. Will we see a hard market in workers compensation? It depends on how you define hard, and the answer is probably no. We’re going to still see this moderate environment for another year to two to come. But I also think it’s important what happened in the state of California, where the commissioner just approved a loss-cost increase of (8.7%). It was very well justified, as the combined ratio in California is over 120. Obviously, that necessitates a need for some price firming in the state. So those are small data points that show you that the marketplace, while still performing well, has some pain points.

Q: Regarding those uncertainties, especially in California, how will this affect competition?

A: Workers compensation is still a very attractive product for most underwriting companies and in most geographies. While California prices are going to go up, it doesn’t mean we’re still not incredibly interested in growing in the state of California. It’s just a question of whether you’re getting the right price. And so we’re very willing to continue to put capacity in the marketplace to write workers comp. I don’t think that’s going to change necessarily much for the industry, but what you’ve seen over the last five to seven years is how people leverage other products to write workers compensation. Certainly, the pressures in casualty insurance has underwriters saying, ‘I’ll write the casualty products, but I need to write the workers comp to help make the deal work.’ That’s a real trend that’s happened in the marketplace in last five to seven years, and I don’t think that’s going to change anytime soon.

Q: Has this changed the trajectory for ICW Group? 

A: Workers compensation is a profitable line of business that is obviously coveted by liability or property underwriters to round up the portfolio. Part of our strategic imperative for the company is to have a whole stack of commercial products available to our customers. So, we are in the process of putting in commercial auto, general liability, inland marine property and lead umbrella products. We’re filing and we’re building the underwriting systems, the rating processes, the tools for underwriters to be in the market at the end of the next calendar year. By 2027, our plan is to have that full set of complementary products to serve the broader marketplace. That was part of my personal thesis for joining the company. It’s an area that I feel very passionate about.

Q: Regarding the reinsurance business, which is also one of your current lines, what are some of the challenges there? 

A: Post-Hurricane Ian in 2022, the reinsurance marketplace took on some pretty incredible changes. A lot of reinsurance was, unfortunately, attaching very low and ceded in towers. The change was probably necessary for the reinsurance marketplace, specifically in property, as it was not profitable for a decade. But what that did is it put more primary risk on the cedents right where they were; if their retention, their attachments are twice as high, then they’re taking on that much more volatility. All that compounded a massive increase in the overall property retail marketplace. What we’ve seen now over the last eight months or so is that that marketplace has not reverted to a wide-open soft market. The reinsurance marketplace has taken a step backward in terms of the rates online, but the terms and conditions are staying put. Attachment points are not dropping back down to where they were pre-2023; the attachments are staying firm. What we’ve seen is some degradation in the overall price adequacy. But overall, reinsurers specifically are very comfortable with the price.