Underwriting agencies have to concentrate on profitability more than the large insurers with which they often compete, according to Specialist Underwriting Agencies director John Iles.

Speaking at an Australia and New Zealand Institute of Insurance and Finance regional conference in Albury last week, Mr Iles – who is also a director of the Underwriting Agencies Council – said underwriters’ expertise allows their principal insurers “to enter markets they may not otherwise have the skills or experience to write”.

“Because of this, agencies tend to be market leaders in their chosen field,” he said.

But he says the fact that agencies use different insurers on different product lines means they “don’t have the luxury of hedging poorer-performing products against products that are running better”.

“So we must be more disciplined in our underwriting focus.

“Without this ability to balance one portfolio against another, there is a strong impetus on agencies to maintain profitability – regardless of the market fluctuations for which our industry is renowned.”

Mr Iles says underwriting agents must therefore maintain a “fine balancing act” to maintain diligence over every aspect of their businesses.

“In today’s market, the underwriting agency sector is running in parallel with insurance companies, but offering specialist alternatives that broaden the options for the broking fraternity and insureds.”