Mike Keating: MGAs must ‘maintain rating discipline and not chase market share in a softening rate environment’

Insurance Times’ 2024 MGA Survey is now open, exploring the service MGAs have provided to their broker partners – what are brokers’ service expectations from their MGA partners?

Both widespread market evidence and feedback from this year’s Managing General Agents’ Association (MGAA) Conference in July 2024 shows that MGAs now reside as a permanent fixture in nearly all broker placement strategies.

This has been achieved by MGAs providing underwriting expertise, access to decision-makers and – critically – offering consistent service, which gives brokers confidence in managing their clients’ expectations.

Brokers expect MGAs to continue to deliver this same level of service and, where possible, to improve further as relationships deepen and mature.

How can MGAs deepen their relationship with broker partners?

Brokers want to deepen their understanding and knowledge of MGAs’ capabilities and risk appetite, while MGAs seek a greater understanding of brokers’ portfolios.

Other areas where collaboration can be developed includes risk management packages, analysis of where operational transaction costs could be removed and the sharing of management information.

Brokers are still concerned about the potential removal of capacity. Do you think there has been greater transparency around this subject?

As part of a deepening partnership, I believe it is very important that MGAs share certain details of their capacity arrangements – as a starting point, this should include the name of the insurer, length of arrangement and any termination clause. Proactive transparency will build even greater confidence.

At 2024’s MGAA Conference, there was an interesting debate between fronting insurers versus traditional insurers – what is your view on this?

This was a fantastic conference debate with the outcome being that there is space for both models.

Fronting insurers are bringing innovation in capacity management, including reinsurance and expense metrics, which traditional insurers are reacting to by remaining attractive.

Overall, this is excellent news for MGAs because it provides choice of which organisation they feel their business is best to partner with for the long term.

The mutual exchange of data is being explored in the 2024 MGA Survey. What is your view on data sharing between MGAs and broker partners?

The exchange of data can only deepen the partnership between brokers and MGAs and will ultimately deliver better customer outcomes. It will further improve the speed of service and act as a precursor to new product and services.

I’m a strong advocate of this.

What are the major challenges facing the MGA market this year?

With signs across nearly all product lines of reductions in rate adequacy, it is critical that MGAs maintain rating discipline and do not chase market share in a softening rate environment.

I’m confident that the MGA community has sufficient muscle memory not to go down this path.

What technological developments have you been impressed with that have been implemented at MGAs to improve customer outcomes?

Technological developments which are removing frictional operational costs are particularly impressive and create the time for underwriters to focus on risk selection and pricing.

I believe there will be considerably more investment in this area over the next 12 to 18 months.

Is insuring artificial intelligence (AI) going to be the next biggest market exposure?

Another well debated topic at our recent conference, with the clear message that AI is still in relative infancy. Organisations need to understand what they want to achieve prior to any investment and if they do not have the data, then they are likely to fail.

Insuring AI will be critical – whether it is the next biggest exposure is yet to be proven.

What topics stood out for you at the recent MGAA Conference?

I was really pleased with the conference content.

We covered areas that are timely, relevant and address traditional and fronting insurer models. Senior broker executives also shared what they think is next for MGA partnerships and we dispelled some myths around AI.