CLS: the £350m MGA looking to ‘grow by 40% in two years’ through broker partnerships

If you were to say that you haven’t heard much about CLS Risk Solutions, you wouldn’t be the only one.

The company itself admits that it hasn’t made much of a shout about itself, but that is changing. This year was the first year the company had a stand at Biba.

The property transaction specialist has big ambitions to grow, and by shouting louder about what it can offer brokers, it hopes to grow by ”at least 40% over the next two years,” according to group chief executive, Tom O’Connor.

Rights of light

The Munich Re-backed MGA, which has £350m of capacity behind it - £250m from Ergo and a further £100m from AmTrust - has made its name in the ’rights of light’ insurance market, where it believed it was very innovative in the early days.

Dean Bedford, director of underwriting for CLS said: “Right of light is an easement that a building is able to acquire. The role of rights of light surveyors is to advise developers and parties who are going to suffer, how much loss there could be.”

As a building is being built, it could affect the amount of light another building is subject to. This would then be called an ’injured’ building.

If the loss of light is enough to be deemed ‘actionable,’ then that project could have an injunction taken out, stunting the project and losing the funders and developers money.

But Bedford said insurance is the key to getting those projects over the line.

“Funders of the build are very nervous about releasing development funds, because they are aware of the risks around an injunction. But developers have put some of their own money into it also. They all want to make sure it is managed.

“Insurance can unlock that transaction, so it will allow funders to release that money and ensure the build can go ahead. They have that financial certainty that they are covered for when the worst that can happen (injunction) happens.”

O’Connor said: “We released a very innovative product in those early days. Our product allowed the property developers to talk to the adjoining property owners. And they would often find a compromise regarding that building. That was completely new and never had been done before.”

Bedford claims it was a very “either/or” scenario beforehand.

“Developers would either negotiate with property owners and try to release the issue and settle, or you would consider insurance. But no one ever had a solution of using the two,” he said.

Other products

The other products CLS offers include environmental, structural, legal indemnity, and public and planning law.

While it recognises the size of the other markets and that it is a relatively small player, O’Connor hopes the name CLS has made for itself in rights of light grows the business in other sectors.

He said: “We estimate that we have a leading position in rights of light. For environmental and structural, those markets are enormous, so at the moment we are quite a small player there, and that is what gives me confidence that we can grow quite quickly.

“It is a very active market, but we believe we have a great product, so I don’t see why we cannot grow in that space.

“Those two products for example (environmental and structural), I don’t see why we cannot double the size of those businesses quite quickly because we have a superb product, and that is great because it fits our development model.”

Tech offering

So what can CLS offer?

O’Connor claims the business has been involved in over eight million property transactions in the past 10 years, and the data it has gathered over that period of time has allowed it to make the underwriting process quicker and more efficient.

“By taking some of the administrative burden away, and giving all the information an underwriter would need at the click of a button, rather than them spending a lot of time finding it for themselves, we have made the process so much quicker,” O’Connor said.

Bedford added: “Say a significant tower block is being proposed and it needs right of light insurance in place. We would be able to map that site and map the injured buildings then provide all possible relevant information needed on those buildings, land registry etc.”

And O’Connor claims CLS an do this in a fraction of the time any other company can, even giving an example.

“We know of a large industrial structure project currently underway in London where the project touched around 3,000 properties, and we know the surveying firm took nine months to find out all the owners of all those properties, to track them down.

“We believe we could have done that in two days.”

Broker partnerships key to growth

O’Connor believes that informing potential clients how far the business and its products go, could prove to be key, which is why it felt a presence at Biba this year was essential.

He said: “We are interested in working with any brokers willing to work in the property development lifecycle. A lot of brokers do but we feel that a lot haven’t grasped how far this product can go.

“It was our first Biba. We had never been before but we decided it was long overdue that we attend.”

Bedford then finished: “We have worked with a finite number of brokers for some time and we have benefitted a lot from that, but soon you start to realise all the different sectors the policy can apply to.”