Underwriters Risk Velocity is the managing general agency (MGA) operation that learned Artemis, the marketplace for homeowners insurance. Underwriters Risk Velocity specializes in providing insurance for properties that are exposed to catastrophic events.
Of course, Velocity Risk is well-known to our readers as the MGA unit that insurance-linked securities (ILS) manager Nephila Capital had established and Velocity was an exclusively source of program business for funds under the management of Nephila.
In 2022, Nephila sold Velocity Risk to funds managed by Oaktree Capital Management, L.P., A global investment specialist, thereby securing a monetization event for Markel, the owner of Nephila.
We have learned that Underwriters Risk Velocity has now ceased writing new homeowners’ insurance business, and the process of exiting its homeowner programs has begun, effective May 26th.
We are informed that in the acknowledged market, Velocity Risk will be required to adhere to the withdrawal guidelines. However, on the non-admitted side, that implies a speedy departure in accordance with the state-specific regulations permitted by the MGA.
“We have been informed that no reason was provided, as Velocity Risk simply stated, ‘After thorough consideration and assessment of multiple aspects, we have taken the challenging step of permanently withdrawing from the homeowner’s market.'”
There are likely numerous reasons to move, of course, but at least to some degree, the performance of homeowners insurance businesses in the regions of the United States has been exposed as a catastrophe in recent years.
The market for homeowners insurance has faced challenges from severe weather conditions like winter storms, heavy rainfall causing flooding, and other secondary perils. Additionally, events such as wildfires and hurricanes have resulted in significant insured losses, including both major catastrophes and attritional losses.
With the challenging loss environment given, homeowners writing business have certainly experienced compressed margins and rising costs, including the increasing costs of reinsurance.
Risk Velocity The does not mention homeowners or residential business anymore on their website. Instead, it only focuses on listing products and speaking about small and middle market businesses, while also providing contact details for agents or servicing agents.
Following the news of Farm State’s exit from the property insurance market in California, it is evident that the rapidly growing catastrophe exposure and the challenging reinsurance market pose significant risks. Additionally, the historic increases in construction costs are being outpaced by inflation, further complicating the situation.
It is worth mentioning, however, that Velocity Risk, a company specializing in underwriting catastrophe-exposed properties, is completely withdrawing from the homeowners insurance industry. This raises the question of who else might follow suit. It truly makes you wonder.
Last week, Risk Velocity explained the reasoning behind their decision to acquire Markel’s Specialty Insurance Company, an independent carrier in the E&S insurance market. This news also highlights the ties between the two companies.
Register today for Artemis London 2023, our upcoming event on insurance-linked securities (ILS) market. Occurring in London on September 5th, 2023.