The competition that comes with a soft market can create problems for insurance brokers as clients look elsewhere for cheaper coverages. Four underwriters explain how they see the current market’s challenges and what brokers can do about it.
“Obviously, we're going to a soft cycle of the market with increased competition and lower rates,” said Matt Ziegler (main picture, far left).
Ziegler is head of pacific agencies for Underwriting Agencies of New Zealand (UANZ). The firm specialises in heavy plant and equipment including coverages for cranes, excavators, forestry equipment and agricultural equipment.
He said, in the current market, it’s all about providing a service to match the insurance offering. “Being a niche underwriter, we really think we do that from a claims, wording and value perspective,” said Auckland-based Ziegler.
He advised brokers to do the same: focus on customer service. “It’s 100% the service game at the moment,” said Ziegler. “It's all about price out there - so if you can differentiate yourself with service and the ability to constantly be in touch with your client, I think you'll not only retain but get more customers and increase your business.”
Matthew Porteous (main picture, second from left) is head of partnerships and engagement at Market Lane Insurance Group. Porteous’ agency - that operates in New Zealand and Australia - covers complex, high hazard property and liability risks.
“In New Zealand when we entered the market, we were very much in a hard market,” said the Sydney-based underwriter. “That's fallen away very, very quickly with the major carriers diving back into our space, especially in property, so that's challenging.”
He said his Lloyd’s backed firm’s response is to focus on its core offerings that provide alternatives for brokers. Porteous said co-lining is a “huge opportunity.”
Co-lining is where two or more insurers share a portion of the risk and premium.
“If you have a look at Australia at the moment, co line is very popular - and that's about diversifying the offering on a slip,” he said. “I think there's a huge opportunity for other agencies to come into the New Zealand market who are currently in the Australian market and hopefully we can get a few more property divisions over here to really help with that co-lining.”
He suggested that market awareness about this option and other ways of tackling the soft market “is really important at the moment.”
Ron Curin (main picture, second from right) is corporate account and crisis product manager for Delta Insurance New Zealand. His agency focuses on SME businesses through brokers and also offers coverages to corporations, exporters and industrial clients.
“The overall challenge right now is the softening insurance market, with a lot of capacity coming in, particularly from overseas,” said Auckland-based Curin. “It's particularly affected the property and liability lines of business.”
“There can be [cyber] threats to organizations, including our own,” said Curin. “We just need to be a bit more vigilant in that technical space to make sure we've got everything right and can protect our own IP.”
Curin also mentioned the industry’s ongoing issues around attracting young talent.
“Most of us fell into our jobs as underwriters, claims handlers or brokers,” he said.
However, he suggested that today the industry needs to make explicit and direct efforts to bring in new hires.
“This involves getting together and going to places like schools and universities and telling them about the opportunities in the industry,” said Curin.
For brokers, he also acknowledged that it can be a “particularly difficult” market.
“It's really about selling themselves as risk advisors that can go beyond insurance and offering clients different ways of insuring new business as well,” said Curin. “So looking at different deductible levels, splitting up policies between different insurers and things like that.”
Andrew McFetridge (main picture, right) is executive director in New Zealand for NM Insurance and president of the New Zealand Underwriting Agencies Council (NZUAC).
The insurance focus areas of Auckland-based NM include specialist firms in the marine space and pleasure craft. McFetridge said two contrasting trends are driving some of his firm’s current insurance challenges.
“On the pleasure craft side, we've seen a large increase in boat ownership across New Zealand and Australia,” he said.
However, the underwriter said he’s also seeing a large number of older boats that are proving problematic to insure.
“Boats that are possibly over 30 years old that have had no maintenance and servicing and they [the owners] expect insurance to be picking up some of the cost of that maintenance,” said McFetridge.
The response from firms like his, he said, is tighter underwriting to ensure correct pricing.
He encouraged brokers to seek competitive coverage terms “outside the large insurers.” In the marine space, McFetridge said firms exporting goods overseas could be good candidates.
“My advice is to canvas the [marine] market and look to re-market with specialist marine underwriting agencies,” he said.
Ziegler, Porteous, Curin and McFetridge spoke to Insurance Business at the recent New Zealand Underwriting Agencies Council’s (NZUAC) Expo in Christchurch.
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