What is an Underwriting Agency?

If you’ve ever dealt with an insurance broker for your business cover, you may have heard of the term ‘underwriting agency’.

So what is an underwriting agency, and what do they have to do with your public liability and other forms of business insurance?

In this guide we won’t go into all the boring details, but instead we’ll give business owners a quick overview of what these agencies are and what they do.

What are they?

An underwriting agency is not an insurance company. They are instead organisations which sit in between the insurance companies and insurance brokers to help businesses get the cover they need.

Generally an underwriting agency will specialise in a smaller number of areas and industries than a traditional insurance company, however this allows them to have a deeper knowledge and understanding of those selected industries.

Why are they used?

If you operate a fairly mainstream type of business you will generally have no problem in obtaining public liability insurance through one of the big insurers.

But if you run a business which operates in areas considered by the insurers to be high risk, then you may find that none of the big insurers will want to deal with you.

This is where the underwriting agencies come in. They work with the big (and small) insurance companies to put together packages to suit some of these ‘hard to insure’ businesses.

For example most of the mainstream insurers will not cover businesses working at heights exceeding 10 or 15m, but a number of underwriting agencies have been able to put together policies to suit these businesses.

Are They Safe?

The insurance policies issues by underwriting agencies should always be backed by an APRA regulated insurance company. This means that they have met the requirements set by the Government authority responsible for insurance and financial institutions.

If your broker recommends a policy which has been written via an underwriting agency, you should ask your insurer who the policy is ultimately with. In many cases you may not have heard of the underwriting agency, but you will have heard of the ultimate insurer.

There is generally no reason whatsoever to think that a policy provided by an underwriting agency will not be safe.

Should You Use an Underwriting Agency?

There is no good reason why you shouldn’t take out public liability or other forms of insurance through an underwriting agency, and in some cases it may be your only choice.

In some cases underwriting agencies will charge additional fees, but if you cannot obtain cover through a mainstream insurance company it is generally the best alternative.

For more information about using an underwriting agency for your business insurance needs speak to your broker or adviser. You can also check out the Underwriting Agencies Council website which contains some useful info.