The emergence of underwriting agencies is helping to counter the “top-heavy” nature of the Australian general insurance market, according to Lloyd’s Asia-Pacific Regional Manager Keith Stern.

“The market would be more competitive if there were more players, each of them with less market share,” he told insuranceNEWS.com.au.

Mr Stern, who is relocating to the UK later this week after a 10-year stint in Lloyd’s Sydney office to take up a new role centred on the UK and Irish markets, says the dominance of the market by six insurers holding 87% between them “could be seen as a weakness and sometimes as a positive”.

While he sees some advantages in competing managers knowing each other socially, the dominance of the market by six companies “also means any one of the larger companies could affect the market at any time”.

Mr Stern says Lloyd’s – which is itself one of the “top six” insurers – has chosen to work more closely with the Underwriting Agencies Council (UAC) to help foster the development of the sector.

“We’re seeing the emergence of a strong, well-regulated, highly professional group of 150 or so companies growing in importance as a rising force in the industry,” he said. “UAC members collect about $2.5 billion in premium each year, and Lloyd’s coverholders are responsible for about $500 million of that.

“Even while many underwriting agencies have relationships with large local insurers, they still take a little power away from them.”

Mr Stern says the agencies’ continuing growth should be welcomed “because the market shouldn’t be dominated by a few big players”.