The broker assisted rise of the agencies
“We always will be a broker-driven market and that’s because complex risk requires a broker and I think it requires a broker who likes to deal with an underwriter on understanding the risk profile,” said Porteous.
The underwriting boss said the rise of the underwriting agencies is a global phenomenon.
“I think it is. If you look at some of the agencies in America, the UK and particularly Canada, the landscape that we’re seeing here in Australia is mirrored in those markets,” he said.
The hard market has played a role in speeding up this process, said Porteous. However, he said agencies have been on the rise for much longer.
“There have been so many strides taken over 10 or 15 years to create that space for agencies. I think the hard market has perhaps cemented that space and you can’t see it doing a U-turn from here to be honest,” said Porteous.
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He’s confident that underwriting agencies will continue to fill the void that major carriers either don’t want to be in, or where they prefer to find another vehicle to write coverage in partnership.
“I hope that’s the case anyway!” he said with a laugh.
Porteous’ underwriting agency, like many others, focuses on offering speciality insurance to particular industries that can find it hard to get coverage.
According to the website, The Barn’s focus tends to be on property and general liability exposures within the agribusiness, food & beverage, manufacturing, and accommodation industries. Market Lane also recently launched G.O.A.T. Insurance to offer coverage for the sports, hospitality and leisure Industries.
“We find that general commercial insurance is done really well by the big carriers and it’s online and it’s slick and it’s not what we do. But if it is a polystyrene manufacturer then that’s different. That’s sort of what we like to get our hands dirty with,” said Porteous.
The managing director agreed that, in recent years, underwriting agencies have taken on an increasing number of specialty areas and become more involved with brokers.
“I think the agencies are becoming more and more accepted as a genuine alternative market by the broking community and by the commercial business owners,” said Porteous.
He added that only ten years ago, the industry probably viewed agencies as “obscure, funny little businesses that did weird and wonderful things.”
Today, Porteous said some Australian agencies are larger than some sizable insurance companies.
“CHU is probably a perfect example, it’s a strata agency backed by a QBE. They’re a good example of where a very large company like QBE will identify a space and say: ‘Right, there’s an agency that just does that well and we’ll get behind them rather than try and reinvent the wheel,’” he said.
Today, the industry at large, he said, better understands the value of agencies and their place in the market.
“We’ve become more commonplace for brokers. Agencies are great at developing new products and they’re great at identifying a space and going: ‘Right! We can get in there and we can do these things,’” he said.
Porteous added that agencies can bring an agility and speed to market that “the big carriers, just by their very nature, struggle with.”
He said brokers also appreciate that unlike some insurers who jump in and out of markets, most agencies are in it for the long term.
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“We don’t want to be a general insurance company offering everything from home to business interruption and aviation insurance. That’s not what we do but underwriting agencies are very good at specializing and sticking to what they do,” said Porteous.
In an interview with Insurance Business for the Underwriting Agencies Council (UAC) Underwriters Guide 2022, William Legge, UAC’s general manager echoed the view of Porteous.
“I think that the insurers have realized – and rightfully so – that the agencies can deliver to the market a lot quicker and probably a lot more cost effectively than they can,” he said.
