Kings of the jungle — Nimble underwriting agencies capitalise on market conditions

By Anna Game-Lopata — ANZIIF Writer | 4 Feb 2019
  • General Insurance
  • Insurance Broking
  • Risk Management
Kurt Niesen

Kurt Nilsen calls Australia home, but he says that South Africa will always be where his heart is.

Currently Managing Director, Lion Underwriting and Deputy Chair of the Underwriting Agencies Council Board, Nilsen was born and raised in Cape Town, where riots were a part of everyday life.

He got his start in insurance within the South African Special Risks Insurance Association (SASRIA), a riot and terrorism fund administered by the Mutual & Federal Insurance company on behalf of the government.

He recalls his ninth-floor office building had bullet holes in the windows.

‘My dad ran a really large textile factory and he often couldn’t get home at night because there was rioting going on,’ he relates.

'I’ve got a work colleague who lost his mum due to crime — she was caught in an armed hold-up, unfortunately, and passed away.

‘We got burgled; everybody in South Africa is used to having their house broken into. That’s part and parcel of life there, but we never had any injuries, thankfully, within our immediate family.’

Unique exposures

Nilsen is nevertheless very matter-of-fact about the products he oversaw.

‘I think insurance is generally much the same around the world, the principles of underwriting certainly. Policy coverage obviously changes from country to country and so does the requirement for different forms of insurance.

‘When I started, at SASRIA, all property risks had a compulsory follow form riot policy issued, which generated a premium pool to cover losses initially arising from politically motivated riots.'

The cover was extended over time to include losses in respect to mortgage loans as well as terrorism.

‘The experience was unique to South Africa, and I believe it made me aware of thinking outside the box so to speak, as each country has its own unique exposures.’

Learning the ropes

Unsure of his career path in his early twenties, a friend of Nilsen’s in the banking industry introduced him to some contacts.

But when his co-brother-in-law, an insurance broker at a large firm found out, he wouldn’t have it.

‘He said, “No way am I going to let you go into banking. Insurance is a far better career.”’

Within a week, he had organised Nilsen’s first job with Mutual & Federal which, at the time, was the largest insurer in South Africa.

‘I had no idea what I was going to be doing, I had no idea what my salary was going to be — all I got told was that I had to be at work on Monday and who I had to go and see — and I went.’

Some time after he started his insurance career, Nilsen asked his co-brother-in-law the reason he had sent him to an insurer rather than giving him a job at the broking company.

‘And he said, “Well, you need to go and learn the ropes, understand where it all starts, how the industry ticks and what risk is all about.”’

Nilsen worked his way up the ladder, from riot insurance to domestic and then commercial, becoming one of the Mutual & Federal’s youngest BDMs.

A new start in business

Despite the violence and crime, Nilsen says South Africa is a ‘unique country with a magnificent culture’, but when his girlfriend and her family emigrated to Australia, he followed.

‘Australia’s is also a beautiful country — it’s home for me now, but I miss South Africa a lot. I don’t know one Australian who’s been there on holiday who hasn’t said that they can’t wait to go back.

‘There are a lot of insurance conferences held (in South Africa) and many industry people call me before they go to ask what they should do and see.

'Every single one of them has come back saying going, “Wow, it’s just incredible and I’ve got to go back.”’

After moving to Australia in 2001, Nilsen established Australian Professional Underwriting Agency, and later, Lion Underwriting, which became a Lloyd’s coverholder.

‘I was driven to have my own business, and maybe that’s a bit of my South African background coming out,’ he says.

‘I was tired of working for other people and decided that I could do it myself, equally as well or better.’

The personal touch

The name ‘Lion’ symbolises Nilsen’s South African heritage as well as being a strong symbol to reflect the brand, which Nilsen says he’d like to see evolve further.

‘The other thing that goes along with the lion is its pride,’ he says.

‘[At Lion Underwriting] it’s not about top line growth, we have a great team (our pride) and we want to continue to develop by looking after our staff and, at the same time, achieving underwriting profit for our capacity partners.’

The company has grown year-on-year and has virtually no staff turnover.

‘We’d like to think we’ve got an enjoyable working environment and that we put back into our staff what they give to us,’ Nilsen explains.

‘We use the catchphrase (pride) a lot, but it’s not just because of the name (Lion), but because we’re truly proud of our business.’

In addition, while not ignoring technology, Nilsen aims to keep the ‘personal touch’ so that Lion’s broking clients can always call for a chat about new opportunities.

Worthy of pride

He adds that for him, being a Lloyd’s coverholder and holding an Australian Financial Service Licence are big achievements.

‘The fact that Lloyd’s has trust in all our underwriting staff is a big feather in our cap,’ he says. ‘It means that we’ve got the capital, that we’re secure and that we’ve got a very stringent reporting structure.

‘In today’s terms, you’ve got to meet a lot of requirements to get a Financial Services Licence and maintain it.

‘Having insurers that support us and see that we can produce a return for them is definitely another big thing (for us).'

Pulse of the market

Elected to the Underwriting Agencies Council Board in 2013 after ten years of involvement with the organisation, is well placed to gauge the pulse of the insurance market.

He says without doubt, the biggest challenge for the next year or two will be the cost of capacity.

‘We all appreciate that we are now in a hard market and, if the latter end of 2018 was anything to go by, then it will continue to harden even further, especially within certain classes.

‘The cost of property insurance in certain sectors and regions are going to make it prohibitive for some businesses to sustain cover, which tends to drive under insurance, and of course, claims.’

Within this environment, the underwriting agency sector is flourishing.

‘There is a greater demand from brokers for results or capacity, and unlike the big insurers, (underwriting agencies) are nimble and can deliver distribution at a much lower acquisition cost,’ Nilsen says.

‘Underwriting agencies traditionally have a lower cost base, so we can operate a lot more efficiently than a big insurer can.'

Opportunities arise from industry movement

Nilsen says big insurers ‘have got a lot of catching up to do in terms of their brand damage’.

‘When we talk to brokers, they generally they say they can’t get hold of the same person twice [at an insurer], there are too many changes, all the big guys are cutting costs and staffing levels.

‘That creates another opportunity for us to bring people leaving the big insurers into the agency space.

‘Such people come with a lot of expertise and experience, which gives brokers the confidence that they can call an underwriting agency and talk to qualified people.

‘They’re talking to an underwriter who’s a decision maker.’

Nilsen says the introduction of regulation has helped the industry become more professional.

‘I believe with education and training, our industry can be on par with other professions such as law, accounting, engineering and the like.

‘There is no reason why insurance underwriters and brokers should not be deemed as professionals.

‘We need to make insurance more attractive to school leavers and younger people, as it offers an excellent career.’

No time like the present

Nilsen will tell the 2019 Queensland Business Breakfast that given changes to regulation and a hardening market, there’s no time like the present to gain as much valuable information from leaders in the industry as possible.

‘I’ve got to say that in my twenty-five-odd years in the industry, I’ve never seen it as tough as this, but it’s the kind of tough that produces opportunity,’ he confirms.

‘The upside comes from a lot more people going to market looking for solutions, but you’ve got to find a home for that business, and that’s where the challenge is now.’

Nilsen asserts that ‘There is no such thing as a silly question’.

‘Many younger people have never experienced a market like this, so come along and join in the dialogue.’

Meet Kurt Nilsen at the 2019 Queensland Business Breakfast.

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