Howden Secures £500 Million Deal to Transform Start-ups into Underwriters
Howden Secures £500 Million Deal to Transform Start-ups into Underwriters
Howden, the prominent UK insurance broker, has successfully secured £500 million in insurance capacity from a consortium of Lloyd’s of London firms.
Howden Group Holdings

According to a new report by the Financial Times, the funding is earmarked for a newly launched division that is set to revolutionise the landscape by transforming technology start-ups into miniature underwriters.

The London-based brokerage, spearheaded by founder David Howden and boasting a workforce of 15,000 following strategic acquisitions and hires, is venturing into uncharted territory with its latest move. The newly established arm, named Howden Ventures, has already sealed its maiden investment in CetoAI, a maritime technology start-up.

Key players in the Lloyd’s insurance realm, including Tokio Marine Kiln, Chaucer, and Liberty Specialty Markets, have pledged their support by underwriting a total of £500 million in insurance coverage through Howden’s underwriting arm, Dual. This collaboration marks a unique approach, as the coverage spans a diverse array of risks, signaling an unprecedented level of delegation.

Tom Hoad, the head of the groundbreaking division, said the comprehensive nature of the coverage, saying that the coverage, “is to be deployed across pretty much any type of risk that comes in that we think we want to support. That I don’t think has ever been achieved before.”

The main aim of the division is to drive start-ups like CetoAI towards becoming managing general agents (MGAs), granting them the authority to underwrite on behalf of insurers. CetoAI, for instance, aims to integrate its live data analytics services for ships with an insurance policy covering the vessel, paving the way for innovative solutions in specialty lines of insurance.

It is hoped the initiative will bridge the gap between established insurers and the innovations by insurtechs. Notably, the delegated underwriting models, which separate insurance risk holders from policy signatories, have faced challenges in the past. However, Hoad said that Howden’s platform incorporates multiple safeguards, including exposure limits and governance checks.

In a bid to address concerns about the sluggish pace of introducing new insurance products in London, Hoad said the goal of creating an “open” platform for collaboration. “What we’re really trying to do is bring forward the speed to market for entrepreneurs with great ideas,” he stated.

David Howden, CEO, Howden commented, saying: “MGAs are the innovation dynamite of the insurance industry.  Cyber insurance, insurance for renewables, D&O insurance… they were all born in the MGA marketplace where capital meets innovative and entrepreneurial talent and capacity providers can be part of critical R&D that clients are crying out for by sharing the risk.  I always say that the insurance industry needs to remain relevant to its clients and that is Howden Ventures’ job: to supercharge innovation by bringing great talent and quality capacity together with a turnkey platform to solve the big problems.”

Dawn Miller, Commercial Director, Lloyd’s, added: “Howden’s new commercial mechanism is a great example of industry collaboration which leverages the Lloyd’s market’s ecosystem of innovation and the MGA model to fast track new solutions. We’re proud to be able to bring people together through the Lloyd’s Lab to solve complex problems and find solutions to help our customers tackle critical risk management challenges and become braver, smarter and more resilient.”

Howden will also assume minority ownership stakes in the partnering groups and has committed £10 million in funding to this transformative effort. Hoad envisions the platform engaging with tens of start-ups over the long term, building on its initial set of deals.

Pictured: David Howden, CEO

Author: Joanna England

Share this article:

Insurtech Insights USA 2024

Join us at USA's leading insurtech conference at Javits Center on June 5-6th, uniting over 5,000 senior insurance professionals!