The narrative is familiar: big insurers versus nimble underwriting agencies. For years, one trending story in Australia’s insurance industry is how agencies have poached more and more business from established giants IAG, QBE, Suncorp and Allianz. It's competition, pure and simple, with agencies claiming victory, often based on what has been deemed superior service or technology.
But Markel is quietly challenging that script — and it's not alone.
"I suppose traditionally big insurers and underwriting agencies have often been in competition, or at least that's the simplified view - that underwriting agencies have been emerging in Australia and stealing business from big insurers,” said Rory Morison (pictured above, right), Markel International’s managing director in Australia.
The simplified turf war view doesn’t represent the whole picture, however. The big insurers have clawed back business in recent years and do form alliances with agencies. The soft market is also playing a role in this trend; insurers’ rising costs and intense competition for specialty lines can make efficiency and scale critical. Selective partnerships, it turns out, might just be the smarter play.
However, Scott Luxford (main picture, left), Markel’s newly appointed head of distribution and managing general agent (MGA) strategy, could be implementing a significant gear change. Markel and other insurers often talk about their broker partnerships but - generally speaking - agency partners, as fellow back-room boys and girls, don’t get the same focus, or attention. However, Markel could be adopting a different playbook. Luxford articulates the shift.
"We're not in the business of coming up with a great idea in a dark room with all of our Markel polo shirts on and saying it's fantastic and hoping people buy it,” he said.
He suggests a collaborative strategy closely involving agencies from its inception. For Markel and other big insurers, the concept of a broker partner is changing. This term no longer seems to mean just brokers and has extended to include agencies.
"It's really being curious with our broker partners and saying, what do you want? What's challenging for you right now?" Luxford said.
Morison, in somewhat typical insurer speak, said the agency strategy is “selective, strategic - and collaborative.”
In other forms, the insurer-agency partnership model already has significant traction across the Australian insurance sector. For example, Blue Zebra Insurance has its motor book underwritten by QBE. Similarly, Underwriting Agencies of Australia (UAA) is also backed by this giant insurer.
The big insurers have also founded or bought ownership in smaller insurers or agencies to run some of their business. In 2006, Allianz Australia became the major shareholder in transport industry insurer, GT.
However, Markel’s strategy could be indicative of how some giant insurers are starting to cultivate deeper, more hands-on relationships with agencies.
"We will partner with MGAs that have a vision as well,” said Luxford. “We want to be part of that, it's really a partnership.”
With some global insurers, a partnership with an Australian agency could be tricky because decisions, including on claims, often need to be made at an overseas head office. This could undermine the agility and speedy response times that the locals often pride themselves on.
Markel’s leaders say that will not be a problem.
“One of the founding principles we've had at Markel Australia is long-term decision-making,” said Morison. This means decisions, including on claims, are made locally.
This operational autonomy can matter in an increasingly pressurized market. The ability to move fast, to make decisions independently and to align with broker and agency partners on their terms - rather than by corporate decree - is likely a competitive advantage.
