Rhodian is set to help new underwriting agencies enter the market, with support from key US backer Amwins

By Wendy Pugh

Timing is everything in forming a new venture, and the pieces fell into place for Rhodian and US investor Amwins in launching an underwriting agency incubator that will help start-ups enter the market.

Rhodian Chief Executive Simon Lightbody, who is also co-founder with Chief Underwriting Officer Peter Takos and Chief Operating Officer Tessa Chirnside, says while market conditions have become more favourable for new agencies, regulatory, technology and financial barriers are higher compared to when the previous generation of firms began.

“We haven’t had a large number of agencies started in the past five or six years,” Mr Lightbody tells Insurance News. “But I think the environment is becoming more conducive for people to think about it – if you can provide a vehicle that allows them to step from an employment environment into a self-employment environment.”

By offering support services such as legal and compliance, finance, data analytics, capacity management and marketing, Rhodian will offer entrants a leg up in overcoming the hurdles and speed the process for new agencies.

Mr Lightbody has worked in the insurance industry for more than three decades, including at Lloyd’s in London. He was Steadfast Underwriting Agencies chief executive for 10 years and also formed his own agency, Miramar.

“The premise of Rhodian is to create a pathway for people to be able to start an agency like I did 18 years ago, when it was an easier process,” he says. “These days it’s a lot more complicated and a lot more expensive.”

North Carolina-headquartered Amwins, which has 155 offices globally, has completed the picture, coming on board with a 40% stake and providing broking services into London to bring capacity as required.

Amwins Global Risks Managing Director Mark Cody says the company’s Australian investment is an expansion opportunity in a mature and sophisticated market. It also offers the international group diversification in territory and class of business and fits its wholesale positioning.

“The point that Simon and his colleagues decided they wanted to do something differently timed perfectly with the fact that we wanted to look at doing more in Australia,” Mr Cody told Insurance News during a recent visit to Sydney.

Amwins bought London-based wholesale specialty broking arm THB in 2012, rebranding it as Amwins Global Risks. The division places $US2.4 billion in annual premium into London and overseas markets and has more than 600 employees in the UK.

In the current environment capacity providers are wary of increasing US property catastrophe exposures and Mr Cody, who joined Amwins through the THB deal, says diversification is important in capacity discussions.

“We are able to say, ‘Well we’ve now got the opportunity to give you some good Australian business to help balance a lot of that catastrophe business that you have in the US’,” he says.

Amwins is owned by institutional investors and employee shareholders. It has a flat organisational structure, aims to maintain an entrepreneurial spirit and says it strategises for success “today, tomorrow and 150 years from now”.

Mr Cody learned of the Australians’ agency support plans after a colleague at Amwins, who knew Mr Lightbody from his time at Lloyd’s, made introductions in London. After a subsequent visit by the Australians to Charlotte, North Carolina, the deal was sealed.

“I think that’s again the power of Amwins – you can get decisions made quickly,” Mr Cody says. “That was back in, I think, October, and here we are now as a minority shareholder in Rhodian.”

Under the incubator model, which has some similarities to broking’s authorised representative model, agencies will have their own branding while operating under Rhodian’s Australian Financial Services Licence. They will also have the backing of support services. The systems in place aim to ensure agencies can continue to innovate.

Rhodian will have a majority equity stake in agencies in return for the funding and services, with the size of the partner entrepreneur’s holding dependent on factors such as experience, standing in the market and other attributes that they bring to the ventures.