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What is the difference between an underwriting agent and an insurer?

Ksenia Stepanova from Insurance Business interviews Delta CEO Craig Kirk

Craig Kirk,
CEO Delta Insurance (NZ)

New Zealand’s insurance market is overwhelmingly served by major corporates, but several local underwriters have made a splash over the past few years – and according to them, their smaller size and niche approach often enables them to get a significant edge on their competition.

Delta Insurance is a New Zealand underwriting agent with expertise in technology and cyber cover, and according to CEO Craig Kirk, such companies are often founded by insurance professionals who find themselves disillusioned by working for major corporates. He says founders are usually looking to establish themselves in a niche space, and to be nimble and agile – something larger insurers often struggle to do.

“From a customer point of view, we look, feel and taste like an insurance company,” Kirk said. “We do everything that an insurance company would do, and we handle the full life cycle of insurance transactions from underwriting a risk through to issuing policy documentation, dealing with enquiries, and claims management. The only difference is that we aren’t actually the ones paying the claim, as that’s done by our underwriter.”

“One term for us is ‘MGA’, which stands for a Managing General Agent, and that term is used quite interchangeably in the market with ‘coverholder’,” Kirk explained. “This means we’re able to act on behalf of certain underwriters and syndicates at Lloyd’s, which is our underwriter. Another term is ‘underwriting agent’, which probably best describes what we do – we act as an agent of our underwriters or insurers.”

Kirk says that from an underwriter’s perspective, the benefits of partnering with a local agent centres around local knowledge and expertise. He says that Lloyd’s knowledge of the New Zealand insurance market is fairly limited, and so an agent such as Delta can provide a strong foundation on which Lloyd’s can distribute its capital.

“Quite simply, it’s about access to market, and that’s particularly valuable from an overseas insurer’s point of view,” Kirk said. “In the case of Lloyd’s, who support Delta – they don’t have a footprint in New Zealand, and they don’t have a team on the ground. Frankly, they don’t have a significant local knowledge of the market here either. In us partnering with them, we can bring all of that to the table – the local knowledge, the expertise and the relationships.

“If you turn around and look at an insurance provider’s point of view, it’s also worth looking at how underwriting agencies start. Some of us perhaps work for your large corporates, get disillusioned and decide to go out on our own. The founders typically have a deep market knowledge around certain products, and that’s the kind of capability an MGA tends to focus on.

“They’re usually quite niche and specialist, and in the case of Delta, we’re able to provide some very niche and tailored solutions. We’re also a bit quicker and nimbler, we’re able invest in technology and do things that our larger competitors might struggle with.”

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