You can watch the session in full below or read on for a quick summary of some of the main talking points.
MGAA chief executive Mike Keating said he was excited for the future of the MGA market, arguing that professionalism and expertise in the sector has “never been so high”.
And that has been demonstrated by another strong performance in Insurance DataLab’s MGA Performance Report 2024, with MGAs continuing to grow at pace despite a slight drop in profitability.
The market will also be encouraged by an improving Productivity Rating, which increased by 0.6 percentage points to 55.4% – the highest level since 2021.
But that doesn’t mean the market isn’t presenting any challenges, and Insurance DataLab co-founder Matt Scott said that one of the biggest centres around continued economic uncertainty and a softening market.
“MGAs have been used to a hardening market in recent years, but rates are starting to come down now in many business lines and that’s going to apply pressure on profitability at a time when profits have already dropped slightly,” he said. “But MGAs are continuing to grow – and that’s a great thing – but with continued high claims inflation and the cost of regulation having increased recently, there needs to be a real focus on keeping costs down.”
Keating agreed, and warned MGAs against striving for too much growth at a time when they should be focused on their cost base.
“The worst thing an MGA can do when rate adequacy is reducing is to effectively try and grow their way out of it,” he said. “The market is littered historically with MGAs that have tried to do that and effectively delivered very poor investment returns.
"That’s probably because their P&L models don't have the flexibility to absorb those soft market impacts. If that happens, then capital will withdraw.”
Bspoke Group chief executive Tim Smyth said this means that MGAs must carefully choose who they partner with if they are going to succeed over the long-term.
“Shareholders need to understand that we're in a secular market where profitability ebbs and flows depending on the availability of capital to underwrite risk,” he said. "If you've got the wrong shareholder partner that's only interested in a return for the MGA without any care about what happens to the underwriting capital, then it is going to be a pretty short venture.”
Kate Albert, chief executive of MGA startup Kova Professions, started her business with MGA incubator Mission Underwriting, and secured a five-year rolling capacity deal. She said her launch's success had been built on careful planning and a steadfast commitment to her business plan.
“I had to go [to Mission] with a strong robust business plan, underwriting guidelines and a clear focus of what I wanted to do,” she said. "You have to be very strong and robust in what you're doing and have that clear message, and also have the expertise to be able to deliver that message and to work with them.
“We’re quite well-positioned [as a startup] to leverage some of the opportunities that come with a soft market, but that doesn’t mean deviating from your business plan or your underwriting standards.”
“Stick to what you’re good at, because that’s how growth works,” she added.
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