Underwriting Agencies continue to play an important role in the Australian GI market.
Underwriting Agencies (UA) provide specialist skills & services, often filling gaps with niche products. By nature, UA are agile & provide a mechanism for the industry to innovate through technology. UA can also assist in the growth & development of people competencies & skill-sets
𝘾𝙤𝙢𝙥𝙡𝙞𝙖𝙣𝙘𝙚 𝙘𝙤𝙣𝙨𝙞𝙙𝙚𝙧𝙖𝙩𝙞𝙤𝙣𝙨
UA are a core client segment for me. I provide AFS Licensing, risk & compliance frameworks, training & education together with general compliance advice.
There are some unique compliance considerations for UA:
1. A UA may initially focus on underwriting & defer claims to their insurer partner or TPA. This brings benefits by being able to tap into wider expertise however it’s important that dedicated claims staff are appointed to manage the UA claims so that the UA market proposition & brand values are not compromised
2. Complaints. It’s important to triage new complaints to understand whose licence(s) the complaint falls under. If the UA has all AFSL authorisations (advice, issuing & claims) the complaint will be against the UA, & any referral to insurers, claim managers or Lloyds Australia (to tap into their skill-set) is done so on an outsourced basis.
3. Insurers have various obligations to monitor a UA (under AFSL, Code & CPS 230). This should be through initial due-diligence & the ongoing provision of data rather than constantly looking over the shoulder of the UA.
4. UA should push back when insurers try to implement an APRA regulated risk management system on the UA. UA compliance arrangements must be tailored & based on the nature, scale & complexity of the UA.
5. A UA should be a member of Underwriting Agencies Council (UAC), ensuring that they have a strong voice at the table to provide input for regulatory change & GI Code issues.
6. Excel spreadsheets & word docs are more than adequate to manage compliance at smaller UA. Automation & complex risk management practices are a factor of size & should be considered as the UA grows.
7. UA should adopt 3 lines of defence, risk maturity matrix & risk appetite statements to enable management to better manage risks. However, adopt the principle & tailor to the size of the UA
8. Unless large, most UA will default compliance to the COO or similar. It’s critical that business leaders manage compliance, with the COO providing support. Usually the COO will tap into someone like myself for more specialised compliance expertise
𝑼𝒏𝒊𝒒𝒖𝒆 𝒄𝒐𝒎𝒑𝒍𝒊𝒂𝒏𝒄𝒆 𝒄𝒉𝒂𝒍𝒍𝒆𝒏𝒈𝒆𝒔 𝒇𝒐𝒓 𝑼𝒏𝒅𝒆𝒓𝒘𝒓𝒊𝒕𝒊𝒏𝒈 𝑨𝒈𝒆𝒏𝒄𝒊𝒆𝒔
Underwriting Agencies are a critical part of our General Insurance industry & are very exciting to be part of. However, they present unique compliance challenges that must be understood & managed.