15 minutes with... Castel Underwriting's Mark Birrell

What do you look for when considering investing in an MGA?

The main aspects we consider are; whether the business case makes sense, the ability to deliver profitable underwriting, and whether there is a good distribution structure. We also focus on individuals and teams of underwriters that target niche and specialty classes of business.

We will initially spend time reviewing the business plan and meeting with the prospective MGA. If the plan makes sense and fits our investment and underwriting criterion, then we will commence with detailed financial and underwriting due diligence. The financial element will focus on whether the proposed numbers ‘add up’ and what it would look like as a standalone business.

On the underwriting side, we focus on their methodology and the criteria they use along with the potential underwriting profitability of the business. We also perform due diligence on the prospect and confirm whether we believe capacity providers will back it.

What does the future of the MGA market look like? What innovation will we see coming through?

The market should continue to thrive as long as MGAs can provide value, distribution and access to profitable books of niche business for their capacity. Technology will play an increasingly important role, not just for the processing of transactions including quote and bind solutions but also for the many day to day business processes.

The next five years should represent a very exciting time for the insurance industry where technology will become mainstream. We are already seeing changes in personal lines product offerings and we can expect to see technology driving change in the commercial lines distribution chain.

Many insurers have been pulling away from the MGA model, why do you think insurers would benefit from working with an MGA?

We represent many insurers with an appetite to support MGAs and we treat them as partners. Where an MGA can provide economically viable access to business and distribution that capacity could not directly trade in themselves, then the MGA is adding value and is one of the key distribution partners for the insurer. At the end of the day the MGA has to add value and provide access to profitable business.