Specialised skills differentiate UMAs, says Santam’s Ian Kirk
Ian Kirk, CEO of Santam
Underwriting management agencies (UMAs) have to ‘work smart’ and tightly manage the cost of claims and the cost of servicing clients without sending premium rates too high during the course of the year. This was the message that Ian Kirk, CEO of Santam,
Kirk was outlining the key themes for the year and unpacking the threats and opportunities facing the UMA industry. Financial stability and systemic risk remain pressing issues and Kirk says low growth is likely to continue in the current economic environment, with the rand on the slide and industry challenges growing – the regulatory burden on insurers and UMAs will only continue to escalate. “But we can’t keep adding on fees and premium increases – it is pointless having a knee-jerk reaction to rates because it will alienate our customers. We have to look at long-term sustainability and retaining business.” (“Logically, this should force some UMA consolidation,” Kirk said.)
The right risk at the right price
Kirk says that it is the specialist skills of UMAs that provide their raison d’être. He urged UMAs to make a greater investment in skills training and transformation as both are important in terms of attracting new talent in the industry. “We have an ageing workforce and we know specialist insurance staff members are leaving the industry – the quality of underwriting obviously deteriorates when knowledge transfer isn’t happening,” he said. “The entrepreneurial spirit isn’t always encouraged in many organisations but it’s critical when it comes to building a profitable, sustainable business.”
The fact that general insurers and banks are expanding into the UMA space has obviously made conditions more competitive, particularly for the specialist industry. But Kirk says that UMAs can differentiate themselves here as they have expertise and experience at their disposal, which they should use to their advantage. “UMA’s have the knowledge to write the right risk at the right price – now we need the agility to respond to changing market conditions,” he said.
Ian Kirk’s key messages to UMAs
- Use the flexible, agile UMA model to adapt in a changing environment – even the so-called ‘dinosaurs’ are playing the adaptability game, with more resources at their disposal, so it’s critical to play to one’s strengths.
- UMAs have to attract new specialist skills and leverage off technology to respond quickly to market dynamics. The ‘winner’ will be he who uses technology better than anyone else!
- Complement expertise and knowledge with data to better understand your clients and identify new market opportunities.
- Strengthen existing relationships with strategic partners – especially insurers – to deal with market and regulatory challenges.
- Establish clear value propositions to market segments to gain competitive differentiation.
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Focus on long-term industry sustainability and play an influential role in promoting better risk management on the ground.
- Don’t burn the insurer, because they need to service risk capital.
- Protect brokers, build better relationships with them and make their jobs easier.
- “The more pressure we put on the cost base, the less competitive we become,” Kirk says. Challenge your cost base, and remember – not everyone is capable of funding the technology challenge on their own.
- From next year onwards, Twin Peaks, Treating Customers Fairly (TCF), Protection of Personal Information (POPI), intermediary services and remuneration and Solvency Assessment and Management (SAM) will be key focus areas for the industry.
Editor’s thoughts:
With the lines between UMAs, insurance companies and a host of other players becoming increasingly blurred, UMAs must look to their key value proposition to stand out. Claims innovations, technical competency and the smart use of data should all underscore underwriting expertise. Can UMAs stay ahead of the curve in a highly competitive market? Comment below or email [email protected].
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