Ask an industry colleague to explain MGAs to you and the likely response would be to define them as niche specialist underwriters within a defined sector serving a limited distribution.
Fast forward to 2024 and the MGA community is now the fastest growing insurance sector, both in the UK and globally.
The MGAA’s 230-plus UK & ROI members now place more than £13bn into their respective markets, offering over 250 product lines – predominantly to the broker community. Although there is also a growing number of successful B2C MGAs, who serve consumer needs exceptionally well.
While the original description remains relevant, MGAs have honed their agility and product speed to market, tapped into best-in-class underwriting talent, and delivered unrivalled service, resulting in an increasing share of brokers’ placement wallet.
Ultimately, MGAs remain the jewel in the crown but are now an integral, identified part of the insurance eco-system – hidden no more!
What is driving this profitable growth?
MGAs are asset-light businesses with arguably less regulatory burden than insurance companies. This allows them to forensically focus on underwriting and the needs of customers.
As highlighted in the Insurance DataLab MGA Performance Report 2024, MGAs are a magnet for high-quality underwriting talent. Experts in niche markets, they see the opportunity to create more wealth than would be possible at insurance companies.
Like brokers, they are finely attuned to the needs of customers and can enhance multiple markets from cyber to parametric with speed and agility.
MGAs are experienced and able to successfully navigate dislocated or challenging markets, using enriched data, and therefore can enable cutting-edge risk selection and pricing.
Meanwhile, a lack of legacy systems aligned with cloud-based software provides them with a solid foundation to deliver across many product sectors in an operationally efficient way.
Staying on top of issues
This positive picture is obviously not complete without identifying headwinds.
The need for consistent underwriting discipline through market pricing cycles is critical to retain long term capital support.
Constant review of claims models is paramount to maintaining competitive advantage, both in satisfying customers and, critically, ensuring target loss ratios are achieved.
Delivering fit-for-purpose products with an accompanying excellent level of service has attracted broker loyalty – but any complacency could see this quickly disappear.
Overall, as the results from the report highlight, the MGA community remains an entrepreneurial, exciting, fast-moving environment to work in and will continue to succeed, provided it regularly uses its muscle memory in how it got there!
Download a free copy of the Insurance DataLab MGA Performance Report 2024 here.