Many underwriting agencies are “going on the offensive” to combat soft market conditions, collaborating more with insurers and brokers, according to Underwriting Agencies Council (UAC) GM William Legge.

His comments follow this year’s Underwriting Agencies CEO Survey, which shows the performance and loyalty of broker channels is considered a major challenge.

It is now a concern for 71.1% of respondents, compared with 48.9% last year.

“This shift shows a clear market movement, with more competition driving the need for stronger differentiation,” the report says.

Improved collaboration with insurance partners is considered a key business enabler by 42.1% of respondents, up from 23.4%.

“Underwriting agencies are focused on better co-operation with both brokers and insurers, because they feel less challenged by insurers’ direct sales models,” the report says.

Mr Legge says collaboration with insurers has allowed underwriting agencies to broaden the scope of their cover.

“It is pleasing to see many agencies going on the offensive to combat soft market conditions. We are increasingly seeing agencies working together with their security partners to broaden the scope of policies without increasing premiums, to bring clients better-value products.”

Competition from new entrants is a concern for 71.1% of survey respondents, up from 68.1% last year.

Fewer underwriting agencies can identify clear opportunities for operational cost reduction this year, down to 15.8% from 27.7% last year.

Overall, only 84% of respondents feel “very optimistic” this year, compared with 89% last year.

The report was compiled by technology provider Gratex International and UAC following a survey of senior executives at underwriting agencies in Australia and New Zealand.

Gratex MD Milan Neklapil says agencies must increase the effectiveness of highly skilled staff through systems that automate and speed business processes in a transparent and scalable way.

“Like never before, we have seen new entrants, as well as portfolio diversification with specialist products for niche markets, such as bicycles, cyber threats and drones.

“The ability to anticipate future trends and design new, complex products for emerging markets seems to come to the forefront of competitive strategy, to retain customers and capture new demand to grow business volume.”