JLT is the latest broker to develop an underwriting facility
JLT’s move to create an underwriting division is almost as unsurprising as it was a long time in the making.
While it is tempting to see the move in the context of illustrious rivals developing underwriting in the form of managing general agents, this move has much wider implications.
Indeed, a year’s strategic analysis is likely to have produced something more than the revelation that there are efficiencies to be derived from signing binding agreements with capacity providers on low-end, highly commoditised business.
Marsh’s new global chief has said he “believes in segmentation.” It would be a safe bet to assume that the ongoing strategic review at the broker will be including all manner of revenue-generating possibilities. In the same way, it is likely that only a small chunk of the £30m-50m that Willis has pledged to spend on developing its international business will involve the MGA proposition.
But neither necessarily means that they will create their own independent underwiting divisions.
The move should instead be seen, as JLT chief executive Dominic Burke says, as a “considered response to substantial and fundamental changes in the industry.”
This includes the impact of technology which, Burke says, is allowing companies to “eradicate duplication.” JLT’s purchase of specialist online provider Pavilion in April was a step in that direction.
More significant is the report recently released by Ernst & Young and the CII, which underlined the critical importance of underwriting. Brokers, who in many cases are defacto underwriters anyway, must seek greater control of the manufacturing chain.
Thistle, however, is going a step further. It will not be limited to assisting the work of its broker parent, and will pursue business independently on a global scale.
There will be question marks over independence, but that is clearly a price worth paying.
For that tune is getting a little old. The landscape has changed, and the instruments either must change with it, or else fade into silence.
