Underwriting agencies on the rise in Australia

Asia/Pacific

Underwriting agencies (writing specialist, niche lines of business often on behalf of other domestic insurers, the Lloyd’s of London market or other international insurers) are becoming a real alternative source of capacity in the Australian insurance market, according to Bob Lee, chairman of the Underwriting Agencies Council (UAC). Underwriting agencies now account for A$1.6bn in annual premium income, or 8% of the commercial insurance market. Of that premium income, $320mn represented Lloyd’s of London security. Mr Lee was speaking at an Australian & New Zealand Institute of Insurance & Finance regional conference at Coffs Harbour in New South Wales. Consolidation among Australian insurers had also fuelled growth in the agencies sector. The market had dropped from 170 general insurers in 1998 to 133 by the end of 2005. Mr Lee said further consolidation was likely. “With the top five insurers writing 80% of the business, that provides opportunities for niche, specialist players,” he said. There are around 150 agencies based in Australia, of which about 70 are independent.