The Briefing: MGA market – MGA startups multiply to fill innovation gap

The managing general agent (MGA) arena appears to have whet the appetite of industry veterans, with many deciding to take a bite out of the market by launching their own MGA startup.

Take Jacqueline McNamee, for example. The former AIG UK chief executive introduced her MGA C-Quence to market in January 2019, while Michael Keating, who has experience at AXA, One Commercial and Residents Insurance Services, launched Qlaims last November.

Rival startup Coverly has also enjoyed success since it opened its doors in January 2019. Managing director Jodi Cartwright can reel off past tenures at Tock, Brokerbility and Aviva.

The appeal of the MGA market lies in its innovation opportunities, said McNamee, now chief executive at C-Quence. “MGAs tend to bring an entrepreneurial and innovative spirit,” she said. “We are not trapped by corporate politics.”

For Keating, Qlaims chief development officer, MGAs are the solution to changing buying habits and patterns. He said: “Those demands are driving the need for greater agility, different propositions [and] a way to shape and knead the proposition which the customer is demanding – the ability for MGAs and startups to meet that need is far quicker than an [insurer].

“Brokers need to respond quickly to customers’ needs, so they want to deal with MGAs and insurers who can meet their demands and customers’ demands.”

None of those now entering the MGA ring are newcomers to insurance; Keating et al are well known within the industry. But why are they changing horses?

“The fact that myself and my peers have the opportunity to shape businesses, to work in partnership with our friends and our brokers in the market, to really have that ability to innovate, to be masters of your own destiny – we just see it as an exciting opportunity to use our experience in a different field and be successful,” Keating said.

Alongside the yearning for a more agile environment, a startup MGA also presents the opportunity to rectify broker bugbears and challenges they have faced in past roles. “Having the experience of that, you’d want to shape an MGA that doesn’t repeat that and actually counters it with something extremely positive,” he added.

“We’ve got a blank piece of paper; we’ve got no legacy to deal with. By having a clear horizon, you can shape the MGA as you see fit and what you think is going to be successful in the future.”

For McNamee, launching an MGA was about innovation. “I was motivated by the desire to be more innovative and help lead overdue change,” she said. “For me, an MGA was simply a vehicle to achieve our goals. It gives us agility and speed of decision-making that you simply do not see in large organisations.

“It’s very compelling and energising to work in that sort of environment.”

Overpopulated?

But, is there room for everyone? Surely an influx of MGA startups could lead to an overcrowded marketplace and cries for consolidation?

“I think time will tell,” Keating said. “It’s important that new startups, their proposition, continues to evolve. They need to listen to their target market, brokers, brokers’ customers [and] make sure that they’re ahead of the curve in terms of listening and anticipating what the next need is.

“It’s fair to say that some will fail and some won’t. Those that retain important aspects of an MGA – being agile, quick on decision-making, being able to move quicker [than the] competition and to have good data and good research – they are the key pillars [that] gives an MGA a great opportunity to survive.”

MGA appetite

Startups within the MGA market seem to have an opportunistic buzz about them. Keating agreed: “There’s always been an appetite or an encouragement for MGAs to flourish.”

McNamee added that this is because MGAs offer something different, something “their backers and capacity providers want”. That can range from new market opportunities to new ways of transacting and conducting business,” she continued.

This could include, for example, insurers investing in an MGA so as to access a new market promptly, without having to build a new, time-consuming proposition from scratch, or if an MGA has a particular area of expertise outside the insurer’s normal business remit that the firm wants to capitalise on.

Keating said: “The ability to create something quite quickly and bring it to market quickly and to be able to shape that from the need of the customer is attractive for insurers.”