Mike Keating: MGAs are 'part of the fabric of the industry'

As MGAs continue to increase their share of waller with brokers a virtuous circle is created, in turn creating more confidence in the ability of MGAs to serve their broker partners effectively. 

That was according to Managing General Agents Association’s (MGAA) chief executive Mike Keating, who told Insurance Times that the MGA market was in robust shape and had proved itself across the insurance cycle.

He says: “As an association, we are now approaching 230 MGAA members and they place close to £11bn of written premiums in the UK and Ireland. 

“It is a significant amount in the market and our members continue to deliver underwriting excellence, while they are also increasing both capacity and distribution.”

The reasons for the continued growth of – and optimism in – the MGA market are numerous adds Keating.

He explains: “MGAs deliver high levels of service and brokers have a great deal of confidence in terms of what they will receive from their MGA partners.

“MGAs are taking a greater share of the brokers’ wallet and brokers have always been keen to establish long term and loyal relationships with their capacity providers, so it is a significant positive.”

And from an insurer perspective, Keating explains that insurers now understand the benefits of providing capacity to an MGA. 

He says: ”They enable insurers to look at new classes, new product innovation and new distribution with a more efficient use of capital. MGAs can deliver speed to market, expertise and forensic insight into specialist classes and risks.”

Drawing in talent

Outside of underwriting expertise, Keating added that the working environment of an MGA – which often emphasised entrepreneurship and initiative – was a significant draw for talented staff. 

“Staff can see the opportunity to deploy their skills and training in an agile and entrepreneurial environment within the MGA,” he explains.

”Sometimes, that ability is not obviously apparent in a larger organisation.”

Underwriters working at MGAs can also more easily achieve “skin the game at an MGA, in terms of the business itself,” according to Keating.

Underwriting cycle

In recent years, Keatings says that the insurance market has has undergone significant change in terms of the risk environment and underwriting cycle. These changes have allowed MGAs to provide their capabilities across every part of the underwriting and pricing cycle.

“For MGAs, it is quite clear,” Keating explained. “If you are effectively dealing with your capacity partners, in terms of what that partnership entails around the delivery of returns, products and distribution, then the cycle itself in not the problem.

“MGAs remain the agent of the partner’s capital and as such you have to manage and protect that capital. When pricing is soft, then decisions need to be taken around the need to adjust growth to protect the capital

“We have had a hard market for the past three years and we have seen significant price increases. As such, MGAs have been required to ensure their ratings are in line with market conditions.

Keating says that, in these market conditions, the ability of MGAs to be agile is an advantage they have over broker facilities, which often find the nuances of the market more difficult to adapt to because their “primary duty” is to their clients. 

Looking to the upcoming annual Biba conference, Keating says he expects to see MGAs have a bigger profile in Manchester than in previous years.

“One of the key takeaways from last year’s event was the number MGAs that had stands in the exhibition hall,” he notes.

“I firmly believe that the figure is likely to be higher this year and it speaks to the growing importance that brokers play for MGAs.”