The rise and rise of underwriting agencies Demand for bespoke solutions for increasingly complex risks is growing. Combined with a hard market, that puts agencies in a great spot By Bernice Han Upbeat: UAC Chairman Kurt Nilsen
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here’s a good reason why David McEwan, who runs a boutique broking firm in Sydney, turns to underwriting agencies just about every time he has clients in need of cover for a niche or difficult-to-place risk. The agencies, he says, have the technical specialists and guidelines in place for arranging insurance contracts involving complex risks. Underwriting agencies typically specialise in niche fields of coverage, which Mr McEwan says gives them high levels of knowhow on what it takes to assess, price and insure such risks. Not that his brokerage, Galvaniize Insurance, doesn’t work directly with mainstream insurance companies. It’s just that when it comes to risks that do not fall under the so-called “vanilla” category, underwriting agencies have very often emerged as the go-to providers. At the moment about half of his business is conducted with underwriting agencies, and he works only with those who have security arrangements from capacity providers that have a minimum A-plus rating. In insurance parlance, an A-plus rating is an indication of strong financial strength. “A broker’s role is to help clients and solve problems that they may have,” Mr McEwan tells Insurance News. “There is a massive need, especially with boutique brokers like myself, where we get hard-to-place business and clients need solutions. Often it’s underwriting agencies which provide those solutions for us. “Underwriting agencies fill the gaps and voids in the
April/May 2021
market that traditional insurers can’t offer us. That’s why we will use the agencies, because they have the skills and personnel to deliver what we need for our clients. “They can solve problems that some of the big insurers can’t or don’t cater for.” There are other benefits that Mr McEwan sees in working with underwriting agencies. Like many other brokers, he likes the fact that the agencies are “very clear” if they are unable to take on a particular risk. When agencies are not keen, they arrive at a decision quickly most of the time, giving brokers enough notice to look for other alternatives. It is no mere coincidence that the profile of underwriting agencies in Australia, as in most industrialised economies, is so high right now. Once referred to by Insurance News as “the third force” in insurance, an increasingly complex world and a global hard market has enabled the agencies to showcase the value to brokers – and insurers. The ingredient that makes them so useful in placing specialised risks is expertise. In many cases, only bespoke solutions can fulfil a client’s needs, and it’s often only an underwriting agency that has the experts who can understand what’s needed. That’s why underwriting agencies are often the place for brokers to go in their quest for alternative remedies on risks ranging from cyber to marine cargo, professional liability, energy infrastructure and even
