Getting back to normal: brokers and agencies interact at the Sydney expo
The unstoppable third force They bonded with brokers during the pandemic. Now underwriting agencies aim to grow the relationship By Bernice Han
T
ight underwriting in the insurance market over the past few years has meant frustration and hard work for brokers as they tried to wrangle reasonable rates and conditions for clients with risks best described as non-vanilla. While they’ve had their own capacity problems, underwriting agencies have stepped up to the challenges of hard-to-place risks. The agencies are seldom in the spotlight, and their role as the “third force” in insurance isn’t well understood by most outside the industry –like brokers’ clients. They might initially find the concept confusing when their broker raises the option, but the agencies’ specialist focus has been a godsend for many. Think about unusual risks like vintage wine collections, museum artefacts or even covid vaccine shipments. Or hard-to-place risks like entertainment or amusement parks. It’s not only their willingness to work on hard-to-place or unusual risks that encouraged brokers to turn to underwriting agencies for relief when the going got tough. Specialist underwriters bring to the equation niche skills that are not easily available in the broader market.
Each agency is a specialist, arranging insurance for risks in which they have considerable expertise. What sets them apart is their pricing acumen and knowhow in tailoring bespoke solutions. As one broker put it to Insurance News, clients struggling to obtain insurance have come to regard agency underwriters as “problem solvers” for complex and hard-toplace risks – a category that isn’t getting any smaller. Not all risks have been covered by the agencies because many have capacity issues. But business has nevertheless boomed. Underwriting Agencies Council (UAC) Chairman Kurt Nilsen estimates underwriting agencies wrote around $8-9 billion in gross written premium last year. While some have no doubt found the past few years tough, he says that “overall, UAC member agencies have all seen an increase in business and growth”. And the agencies are continuing to find capacity to build business. Mr Nilsen’s own company Lion Underwriting is an example. In 2019 he accused Lloyd’s of lacking “consistency and enthusiasm” in covering Australian marine-related risks, but found
ready support with Hong Kong-listed China Taiping Insurance. Another that found capacity when the chips were down is Coversure, an underwriting agency “that went above and beyond” for the beleaguered amusement, leisure and entertainment industry – a higher-risk group which has had ongoing problems obtaining affordable, or even available, public liability insurance. Many theme park operators or associated businesses were pushed to the brink by the insurance crunch. Some closed down. Premiums increased by as much as 200% in some cases, with the situation exacerbated by a scarcity of willing insurance providers. Coversure set out to find a new partner after its previous binder with Lloyd’s ended in February 2020. It returned to the market in August last year, offering public liability insurance for the industry again after securing a line slip facility with a new capacity provider – Aviva, the UK’s largest general insurer. The agency’s General Manager, Adrian Gamble, says the agreement with Aviva initially allowed for the placement of up to $10 million for each policy that is
insuranceNEWS
April/May 2022
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