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Underwriters are more important than ever
Business is booming, and for the first time in two years the Underwriting Agencies Council may hold most of its events in person. UAC leaders William Legge and Kurt Nilsen say 2022 is shaping up nicely as underwriters look to capitalise on their role as a trusted market for brokers
YOU COULD say William Legge and Kurt Nilsen are raring to go.
“Member feedback is overwhelmingly positive about 2022 and what the year is going to bring,” says Nilsen, chair of the Underwriting Agencies Council.
As COVID-19 restrictions finally lift, Legge, UAC’s general manager, is eagerly anticipating visiting members in person, many for the first time in two years. There are also UAC Expos planned for every state capital.
“We’ve planned for nine expos this year, which is quite a considerable number – more than we normally do,” says Legge.
UAC is also staging more seminars and webinars. Legge says they were “enormously popular” last year, with 600 sign-ups for the first one. The seminars will be hybrid events, so simultaneously in-person and via video conferencing.
“We’re going to do hybrids because I think the market likes these to get the information, because it’s not always easy to come into the CBDs,” says Legge.
The move to hybrid accommodates the flexible work arrangements of many members, as well as the possibility of more pandemic restrictions.
Whatever is ahead in 2022, both Nilsen and Legge are confident that they have a punchy program that will bring together underwriting members with their broker customers.
That’s not to say 2021 was a flop – far
from it. Despite the pandemic, events were staged, including seminars and webinars and some expos.
“I think all up it was disappointing around the expos, but we still had a good year despite the challenges,” says Nilsen.
Legge says the support UAC received from both its own members and brokers increased last year partly because these industry professionals were unable to attend their own offices and were eager for ways to engage.
Nilsen agrees. “Ironically, we probably actually got to talk more than in a nonCOVID environment,” he says.
Business is booming Legge says there’s another reason for UAC’s surprisingly successful 2021: “Business is booming”.
The UAC general manager says this growth has defied the pandemic restrictions that severely impacted other parts of Australia’s economy.
Kurt Nilsen, Underwriting Agencies Council
From left: UAC board members Kurt Nilsen, chair; William Legge, general manager; Anthony Porter, director; Emily Walker, deputy chair; Heath Amber, company secretary and public officer; Mike Edmonds, director; Trent Brown, treasurer
William Legge, Underwriting Agencies Council
“It’s been going for the last four years, and bluntly, we can’t see an end at this stage. So, during 2021, even though we were locked at home so to speak, it did not affect the business,” he says.
Legge says his organisation spent the year “besieged with broker enquiries”.
His members are still reaping the benefits of the widespread portfolio stabilisation and capacity shrinkage that has occurred in recent years across the insurance industry. The most famous example of that process was the Lloyd’s ‘Decile 10’ initiative launched in 2018.
“That meant a lot of business was being let go by carriers who had kept it for quite a few years, so brokers had to find a new home quickly, and that’s when they really turned to our industry,” says Legge.
When brokers turned to his members for answers, they got them, he adds. “It might not have always been the answer they wanted, but it was near enough; they got the thing placed. That’s a very important thing from the broker’s point of view and from the client’s point of view.”
The result today is that underwriters are now a trusted and reliable market for brokers.
“Brokers are now used to dealing with underwriting agencies. Five or six years ago I think their preference would have been to deal directly with an insurance company, because in their minds it was better to deal with the principal than an agent,” he says.
That approach has been turned on its head, says Legge, because over the last few years brokers have found that dealing with an underwriting agency often results in more responsive service and quicker turnaround times than with an insurer.
“Eight out of 10 times, if they ring somebody in an underwriting agency’s o ce, they’re going to get the person who’s going to be giving them an answer,” he says.
Legge says that when a broker calls a UAC member’s o ce, the person who picks up the phone is usually someone who can provide a direct ‘yes’, ‘no’ or ‘let’s negotiate’ answer to their agency, Lion Underwriting. Over the next 12 months he sees the insurance industry market remaining much the same.
“People talk about the next soft market, but in all honesty I think the market that we’re reading now is the normal market. It’s not a hard market any more. This is just the norm,” he says.
question. “That’s really what the broker wants. They want to be moving forward all the time rather than to be told someone will get back.”
Nilsen adds: “I think the insurers have realised, and rightfully so, that the agencies can deliver to the market a lot quicker and probably a lot more cost-e ectively than they can.”
So, what does the future hold for UAC members?
Nilsen is also managing director of his own
The capacity that has eased up a little he credits to Lloyd’s syndicates. Nilsen says the big insurers in Australia aren’t showing much sign right now of writing new business.
“Recent weather events are certainly not going to make that easy either. With their cost of capital, there’s no investment returns,” says Nilsen.
But despite being competitors, underwriters and insurers are also partners.
“We’re close to insurers,” says Nilsen. “We’ve got Lloyd’s, and we have QBE as sponsors, and they are there for a reason. They understand our model,” he says.
Technology challenges Both underwriters and insurers are facing technology challenges as the entire industry goes through a digital transformation. Some underwriters, says Nilsen, are unwilling to embrace the new world.
“I think there are underwriting agencies that are certainly not taking on board the change. Either they specialise where they feel they don’t need it, or they’re just ignoring the fact, to be honest,” he says.
Nilsen says there’s broad awareness among underwriters that insurance is becoming more transactional.
He says it’s important that underwriting agencies invest in this transactional piece, especially now that their businesses are playing in it more and more.
“I think every agency, bar a few, has discussed technology quite openly amongst other members,” he says.
In fact, some agencies even have their own in-house developers. He says the results can be “mind boggling”.
Legge says UAC has moved with the times and can help members fi nd the right technology partner. In years past, UAC’s Business Service Memberships were filled by lawyers, loss adjusters and loss assessors. Today, many of those memberships are taken up by technology providers.
Regulatory changes Legge expects more regulatory actions from ASIC (the Australian Securities and Investments Commission) and APRA (the Australian Prudential Regulation Authority). He says much of this activity is the ongoing impact of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
He describes the regulatory load in 2021 as “enormous”.
Nilsen says that despite the warnings, there was too much to implement in a short period. “We were all scrambling around. It felt like it was deadline after deadline after deadline.”
Part of the problem, he says, was how pandemic restrictions meant that discussions with consultants about implementation of the changes had to be conducted virtually.
“It’s a necessary evil, there’s no doubt about it, but it’s a costly and very time-consuming part of every single business now,” he says.
ABSENT BOARD MEMBERS (ASSOCIATE DIRECTOR AND DIRECTORS)
Chris Mackinnon Jeanene Hill Simon Lightbody
Despite its moving parts, from regulatory hurdles to technology transformations, Legge and Nilsen are both confident about the year ahead. Business is good, the relationship with brokers has never been stronger, and the role of underwriters in the industry is more important than ever.
Meanwhile, UAC’s event calendar is filling up. “We want to get back to doing business, that’s the bottom line. So putting on the expos and creating training platforms – that’s absolutely vital; that’s critical,” says Nilsen.
