Briefing: Brokers want MGA capacity amid Covid crisis, will insurers step up?

Briefing by content director Saxon East 

Is the glass full or glass half empty? That is the dilemma for insurers weighing up whether to back MGAs with capacity amid the Covid crisis. 

Insurance Times 2020 MGA survey asked brokers what their concerns were and how MGAs could help.

Brokers responded in swathes that they have real concerns about a lack of capacity on certain lines.

Brokers really want MGAs to continue servicing niche and specialist lines, and for insurers to keep capacity flowing.

This is even more important following the Lloyd’s capacity review last year, which forced many syndicates to pull back their capacity on MGAs and schemes.

Insurers in difficult spot 

Many insurance bosses blame MGAs and schemes business for their costly-Covid claims.

The natural instinct would be to pull back.

However, as our survey shows, there is a clear desire from brokers for capacity to keep flowing to MGAs.

So what will happen next? 

There will likely be reduced capacity in certain lines. They will pick their spots more carefully, and this will lead to more MGAs closing their doors.

Insurers will also want closer scrutiny of policy wordings and underwriting standards. They may even want to see MGAs put ‘their own skin in the game’ by providing a portion of the capacity.

Rates will have to rise, meaning MGAs having difficult conversations with hard-pressed clients. 

Despite all this, there is still plenty of money to be made for both insurers and MGAs. They will come through these difficult of times.