A mutually beneficial relationship
The Underwriting Management Agency (UMA) model was introduced to South Africa in the late 1980s to cater for the niche insurance needs of both consumers and businesses.
The growing need for specialist insurance has resulted in a rapid increase in the number of UMAs in the country over the past decade, as well as an increase in the number of smaller independent UMAs.
One of the main advantages of the UMA model is the increased availability of niche insurance products, as well as an increase in reinsurance capacity for risks that were previously seen as too high risk to underwrite profitably.
A level playing field
A successful UMA market has also resulted in many benefits for brokers. Most importantly, they now have access to specialised markets that have previously been out of reach. UMAs are naturally suited to doing business with the small and medium independent brokers.
The introduction of the UMA model to the South African market has certainly provided a level playing field for the broking market as it gives the smaller brokers access to markets traditionally reserved for the larger corporate brokerages which could negotiate specialist schemes due to bulk-buying power.
Once a broker has established a good working relationship with a reliable UMA, the benefits are multiple. In the traditional sense, the UMA model was developed to write a line of business that was too high risk or specialised for other general insurers. UMAs are therefore able to provide a high level of skills and expertise to fill a gap in the market.
A personal experience
Dealing with a UMA is also a far more personal experience as brokers are able to deal with the actual decision maker; the broker is able to contact the underwriting manager directly to resolve any technical questions, difficult queries or to receive an urgent immediate response.
Every client’s risk is different and should always be assessed and underwritten individually taking into account their unique risk profile. It is all about understanding the individual needs of the clients and brokers and being able to deliver on those expectations by having a solid relationship with the UMA.
As the number of niche products increases due to the rise of the UMA model, the industry is seeing these niche market products becoming more affordable. In some instances, the benefits of increased skill and understanding of a niche are passed onto the insured by way of premium savings.
Unparalleled specialist service
According to the South African Underwriting Managers Association (SAUMA) underwriting managers are respected as experts in their niche fields, and the minimum criteria to becoming a member of the association includes professional indemnity of R5 million and fidelity cover of R1 million.
If managed correctly, a UMA can offer an unparalleled service to its chosen niche. To run a specific line of business successfully, as a UMA, there needs to be a focus on a particular area to ensure that you have the requisite specialist skills that a broker’s line of business requires.
While there certainly is a place in the market for both general insurers and UMAs in South Africa, general insurers may find it more difficult to offer the same level of service and attention to a specific niche market a reputable UMA can provide. This is mainly due to the UMA’s highly skilled staff and their extensive network of contacts and suppliers, such as loss adjustors, that are specifically suited to the unique needs of their client base.
When brokers need to offer clients cover that is specific to their unique needs, it may be best to consider the services of a UMA that can provide tailor-made solutions and handle the complicated claims processes through their network of contacts.
