Types of UMA business models
When entering into a UMA agreement with an insurer, UMAs typically have two business models to choose from. One business model is that the UMA can underwrite business purely for a pre-
negotiated underwriting fee. The other business model is that the UMA can participate in the performance of the business they underwrite via a cell captive or other type of profit share model.
Depending on the type of UMA and its appointment, the UMA will usually perform more than one binder activity on behalf of the insurer. In fact, in most instances, the UMA’s activities include:
Naturally, the insurer also requires the UMA to report on and account for all the activities above. It is important to note that a UMA does not deal directly with the public or end-consumer and that all the UMA’s business is sourced via the independent intermediary.
UMAs in the making
UMAs are typically owned and run by business individuals and entrepreneurs who are experienced in the insurance industry, including the specific lines of business they underwrite.
Generally, a UMA will be formed after spotting a gap for a niche or specialist product in the insurance industry.
UMAs have contributed greatly to the growth and product innovation in the insurance market place. UMAs are often known for the niche, specialist skills and abilities they have and the superior service they provide, although one does not have to offer a niche product to become a UMA.
Advantages of partnering with a UMA
For insurers and brokers, there are many advantages that arise from partnering with a UMA. These include:
Sometimes, the only reason why insurers have capacity in certain lines of business, is because they have a specialist UMA underwriter that is responsible for that specific business segment; and
By Subashini Kallan, client manager at Centriq Insurance
Centriq Insurance Company Limited and Centriq Life Insurance Company Limited are authorised financial services providers and licensed insurers conducting non-life and life insurance business.
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