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Agencies, brokers in ‘strong position’ amid growing complexity

Brokers and underwriting agencies have momentum on their side as demand for specialist risk services grows, according to Macquarie Bank.

The upbeat assessment is based on the bank’s latest report on the intermediary sector, which found nine out of 10 businesses reported revenue growth in 2022-23 despite an economic slowdown.

“Intermediaries are approaching the next few years from a position of strength,” Macquarie Business Banking national head of insurance Andrew Knowles told today.

“As risks become increasingly more nuanced and complex, the role intermediaries play within the distribution chain will only become more pronounced. However, so too will the need to demonstrate strong relationships, expertise and value to clients.”

Asked if underwriting agencies will take on a bigger role providing complex risk solutions, Mr Knowles said: “There is strong momentum and demand for agencies. What is really resonating with brokers is just how responsive and nimble agencies are, leveraging their expertise and technology to provide strong client outcomes and customised solutions.”

Favourable pricing conditions are not the only tailwind for intermediaries. 

“Direct insurers are currently facing labour market constraints, which is impacting their ability to efficiently manage expanding workloads,” Mr Knowles said. 

“In some cases, we’re seeing outdated software systems not able to keep pace with recent rates of policy underwriting and claims handling demands. We believe these hurdles faced by direct insurers have only contributed to a strengthened position among intermediary businesses.” 

Mr Knowles says the mergers and acquisitions landscape has become competitive for intermediaries in the past few years. 

“We’ve seen continued momentum with the network groups for mergers or roll-ups to drive efficiencies and scalability, and further opportunities for staff,” he said. 

Macquarie’s insurance industry benchmarking report examines the full array of intermediaries, spanning self-licensed brokers, authorised representatives and underwriting agencies. 

Click here for the report. 

See Analysis