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Jul 2021

The importance of staying relevant

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Source: Asia Insurance Review | May 2021

For Nexus Asia, 2020 was a mixed bag. On one hand, the relationship-driven business that is (re)insurance meant that a lot of its ‘normal’ day-to-day activity ceased. However, Nexus Asia’s Mr Anthony Egerton said that existing relationships having been built on years of trust have proceeded normally, despite some tough market conditions.
By Ahmad Zaki
 
 
“The markets have been tough, at least in North America and Europe, and while there has been some spill over in Asia, I hesitate to call it a hard market. In the backdrop of a tougher market, these existing relationships have proved their worth and have delivered for everybody,” said Nexus Asia CEO and principal officer Anthony Egerton.
 
Nexus Asia describes itself as ‘an international, multi-class, virtual insurance company’. Nexus Underwriting Asia is based in Hong Kong.
 
MGAs in Asia
The success and prevalence of MGAs in Asia varies from country to country, with places like Hong Kong and Singapore having very strong Lloyd’s markets, and some others have little to no presence of underwriting agents.
 
“One of the issues has been regulatory uncertainty in some jurisdictions. I do not like that, and I do not think the regulators like that, and it really is not good for the industry. However, we do need clarity in certain markets about the regulation of underwriting agencies,” said Mr Egerton.
 
“In Labuan, we are licensed as an underwriting manager, but there is some interest in the industry and indeed with the regulator to look at a broader MGA-style licence. I think that it would be a very good thing if we can come up with a model that works for the industry, but also for the regulator, and we want it to be brought into the 21st century.”
 
In other jurisdictions, he said, underwriting agents such as MGAs are licenced the same way as insurance agencies. The concern he has is that there is not enough of a distinction in the roles of a standard insurance agents and an underwriting agency, where one clearly exists.
 
Clarifying this uncertainty will be challenging, as insurance is one of the most regulated industries in the whole world and many jurisdictions employ acts of parliament in the regulations. “Getting changes through to acts of parliament take time and effort and initiative on behalf of lots of different people,” he said.
 
“This is the most catastrophe-prone area of the world and we, as an industry, need to provide more cover. And I believe that MGAs have a huge role to play in increasing insurance penetration across Asia,” he said.
 
New workplace realities
The ability of brokers and (re)insurers to continue their business with their clients is a testament to the depths of the relationships they have formed, but the flipside is the difficulty in forming new relationships and starting new ventures.
 
“For us in Asia, it has been the year where our investments have paid off. In 2019 we talked about growth ambitions, investments in the business and in people and in new lines of business – and frankly, I am pleased, but surprised to see that they paid off and it has gone very well,” he said.
 
Nexus saw very strong organic growth in 2020, with some of the new business it was working on pre-pandemic giving good returns. The company also went on a hiring spree, adding a third cohort of trainees in its Labuan operations.
 
Virtual HR
“In 2019, the applicants we met face-to-face, but last year, all of our hiring was done totally over the wire,” he said of the new hires that the company brought on. “We have had to work with people who are operating from home and we had to train them virtually. And I think everyone had just got used to it.”
 
Nexus also employed some new virtual HR platforms to support employees in their training, maintaining their wellbeing and to assess their overall sense of happiness and state of mind.
 
“Further down the road, as we think about the brave new world once everyone is vaccinated and we begin to re-engage with the travel and physical encounters we used to do, we have to ask how much of that was absolutely necessary,” he said.
 
A managing general agent (MGA) is unlike a big broker in that many still have an entrepreneurial mind-set, with a great focus on staying efficient and relevant to the industry. “That might mean embracing online HR tools, or looking at agile working patterns, we are doing everything in our power to be better, more efficient and more productive. That is part of the value we bring,” he said.
 
“Our business model and I think just about every other long-term viable MGA or underwriting agency is driven by profit commission. We have to remain relevant, and we do so by delivering to our capacity providers an underwriting profit. And the way that is recognised is through profit commission.” A 
 
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