At the end of July, specialist marine underwriting agency RedSky Insurance became part of Epsilon Underwriting, a much larger firm with locations across Australia. One big motivation for RedSky deciding to integrate into Epsilon is likely the reason behind many agency moves of this kind into bigger firms. Increasing numbers of small underwriters simply don't have the capacity to handle all the new compliance burdens coming their way - and at the same time carry out their underwriting profession.
That could be a growing problem for the industry and its brokers but there can be a silver lining as well. When RedSky's founder and underwriter Jill Murphy (pictured left) and Epsilon CEO Morgan Long (pictured right) spoke with Insurance Business, they presented their alliance as a win-win.
Epsilon announced the integration last month and from August 1 2026 RedSky policies, renewals and related transactions have been administered by Epsilon. Epsilon said the move combines RedSky's cargo, stock throughput, commercial hull and marine liabilities expertise with its own national platform. Epsilon states it writes more than $150 million in gross written premium across four locations, with more than 50 staff and over 25 years in the market. Both agencies were already within the Envest network, part of The Ardonagh Group, the London-headquartered broking organisation that runs Envest as its Asia-Pacific platform.
Murphy is unambiguous about what made the status quo untenable. Resourcing, "critical admin issues" and underwriting support were all factors driving the decision.
"The challenges are always compliance, which in Australia is probably more prominent than anywhere else in the world," she said.
Many would likely agree with the international comparison and the local compliance trajectory is not in dispute. The Australian Prudential Regulation Authority's (APRA) cross-industry standard on operational risk management, Prudential Standard CPS 230, started on July 1 2025, replacing the previous outsourcing and business continuity standards. Its transitional relief for pre-existing arrangements with material service providers expired in July this year. APRA's final targeted amendments to CPS 230 and its accompanying practice guide, released on April 30 2026, took effect the same day. Nor is it the only prudential change agencies have absorbed this year, with APRA also having finalised its reinsurance framework reforms for general insurers.
Agencies are not APRA-regulated entities themselves. But as delegated underwriters they sit inside insurers' critical operations, which pushes the obligations down the distribution chain. The Underwriting Agencies Council (UAC) maintains a standing resource hub on CPS 230 - an industry peak body running a permanent page on a single prudential standard is a fair proxy for how much attention it absorbs.
"When RedSky started, there were three founding partners back in 2019 - at one stage we were five or six people - but since June 2024 there have only been two of us," Murphy said. "It's hard to keep pressing forward with that lack of resources."
Whether compliance was the proximate cause or simply the load that made a two-person team unsustainable, the outcome is the same. UAC has over 130 underwriting agency members responsible for more than $10.5 billion of premiums spent annually by Australian businesses and consumers. Many of its smaller agencies are now likely carrying compliance obligations calibrated for far larger firms.
Long's pitch is not scale for its own sake. It is a threshold – the point at which a firm can carry dedicated functions.
"Epsilon is not a massive company, but we're at a size where we have general counsel, compliance, operations, and all those pieces that should surround and support Jill," he said. “As Jill mentioned - we should be able to help Jill not only grow but also take some of the pressure off the back-end tasks that are challenging for every agency.”
He said from a broker perspective, the integration means little or no change.
“From a service standpoint, it should only improve - hopefully we can take some of the day-to-day admin off Jill to help her build a bigger book of business with stronger connections and better turnaround times.”
For brokers, the near-term question is whether service slips. Long's answer is that the panel widens instead.
"There's also technology Epsilon is working on that will enhance Jill's offering and market spread - brokers who've only been looking at Marine with Jill now have the opportunity to tap into property and casualty and everything else Epsilon offers," he said.
That is the upside, if it lands. What is lost is narrower than in a straight consolidation because RedSky was never a standalone independent, having been Envest-backed from its founding in 2019. What does go is a distinct name on the panel and an agency brokers approached in its own right.
