Why a UMA?
As an agent of the insurer, an underwriting management agency (UMA) allows for entrepreneurial, skilled, short-term insurance underwriters to provide brokers with exceptional service, specialist knowledge and tailored products at the right price.
UMAs are generally established by individuals who are specialists in a certain sector of the insurance industry and who are in a position to design, price and deliver appropriate products more effectively than general insurance companies.
Becoming an effective employer
Since UMAs are effectively outsourced agents of the risk carrier, the UMA relies on staff to run their operations. This allows the UMA manager the unique opportunity to build a business in the insurance industry, and in the process create employment, as opposed to being employed by an insurer or in a broker environment.
UMAs thrive on skilled and motivated staff in the fields of claims handling, underwriting, call centres, information technology, finance and administration. Entrepreneurially minded individuals that prefer to work in smaller companies, with its own culture that do not have the hierarchical structure and complexities of a large corporate company, will fit right in and enjoy a UMA environment.
Due to the relatively flat structure of the UMA model, its employees are more directly involved with decision making and execution, and therefore, experience higher levels of job satisfaction.
Sharing in the responsibilities
Most UMA owner managers are equity partners in their respective business with either a specialist investment company or with their respective risk carriers. This shareholding allows the entrepreneur to also succeed financially when they share the profits with their investment partners and/or risk carriers.
Although shareholding in UMAs can create significant returns for shareholders involved, a word of caution is that it is only possible if the UMA is profitable and sustainable over the long term.
This financial success does not come easy, and is only achieved through careful management of the business which entails critical factors such as growing the client base and premium whilst keeping a careful watch an and control on profits. As the UMA is usually an independent business entity, the founder has an opportunity to build a legacy that he can hand over to the next generation of underwriters. If this is correctly executed, good succession ensures that the company will exist beyond the original founders.
Succession planning is crucial
It is very important that the shareholders and management focus on succession to achieve continuity and longevity of the business. This is achieved by employing the right staff and ensuring on-going training and up skilling of staff through the transfer of knowledge.
The UMA model generally provides flexibility and agility for the business owner with regards to the location and where its operations are based. This might be a consideration of an area or from a strategic point of view such as untapped markets or access to brokers or even on more personal considerations that satisfy lifestyle and personal requirements.
Management of UMAs are uniquely exposed as leaders to a variety of fields of expertise and in turn are well placed to produce and develop well-rounded leaders in the short-term insurance industry.
Knowledge is power
As a result of the independence of an UMA and the delegated authority on underwriting, administration and claims handling, management are required to have a much wider knowledge than the average insurance person. As business drivers, UMA owners participate in every aspect of running a business, and learn and gain experience in a variety of disciplines with the key focus being on the insurance components of the business.
However, it is also important for them to have an in depth understanding of key functional areas such as regulations, information technology, advertising and marketing, human resources, general business management and finances as these are critical in the direction and success of their businesses.
