Broker CEO Forum 2024: Insurers ‘heart’ MGAs as they seek to place risks in ‘fragmented’ world

Insurers attending Insurance Times’ exclusive Broker CEO Forum event on 14 November 2024 told attending broker bosses that they “heart MGAs” – in part because these businesses are “much quicker from a service perspective” and “add masses of value” through demonstrating niche market specialisms.

Addressing delegates at Winchester’s Lainston House, a panel of insurers spoke enthusiastically about “insightful partnerships” with MGAs that “add masses of value to us as a business”.

Although the panel applauded MGAs’ agility, use of data and technology, distribution models, innovative thinking and specialist expertise in selected markets, they additionally noted that they typically “gravitate” towards these firms because they are “much quicker from a service perspective”.

One insurer said: “The things that are attractive in the MGA space is where they have deep knowledge of different areas of the market. You can work with some real specialists and you can learn from those specialists – it’s a real pleasure to dig in.

“Most of our strategic partnerships in the broker space have an MGA attached to them and that works super well.

“Almost always, there’s something slightly unique about the MGAs that we work with because it’s not run of the mill and it doesn’t interfere with any of our existing distribution.

“Overall, there’s a level of capability and expertise in the MGA space. They really are insightful partnerships.”

‘Running in the same direction’

In terms of what insurers are looking for in their MGA partners, it boils down to bringing “something unique” and “additive” to the table, contributing products and knowledge that are “not what we would really do day in, day out”.

Aside from offering “deep insight” into particular market segments, MGAs could also provide exclusive data or claims insight for their insurer partners, the panel said.

“It’s all about getting alignment of interest, [so] we’re all running in the same direction,” one insurer added. “It’s not about top line, bottom line – it’s about contribution growth.”

Collaboration between insurers and MGAs will only become more pivotal in UK general insurance moving forward, the panel agreed, as the MGA “model will develop over time” to address a world that is becoming more “fragmented”.

A panellist continued: “The world’s becoming more fragmented. There are more subgroups and subareas now. [The MGA] model will develop over time because with technology, very small companies [can] do quite large amounts of business. The tech and the scalability enables their knowledge to be applied and get out there and find those segments.”

‘Different roles’ to play

The panel additionally responded to sector-wide question marks debating whether MGAs could, in fact, replace insurers, with carriers instead adopting more of a capacity distribution role.

Unsurprisingly, the insurer panel did not believe a “complete flip” was on the cards or that MGAs would “entirely take over” underwriting.

One panellist noted: “The capital risk [of an insurer] is enormous, but there are some creative solutions out there now, with MGAs partnering directly with reinsurers, [for example], so they are certainly making themselves known and being relevant, which is really important.

“I don’t think we’d ever see a complete flip, but there’s certainly space for both [business types].”

A fellow panellist added: “Most MGAs I know have quite tight capital and balance sheets and their shareholders are on them for returns. So, I think [insurers and MGAs] play different roles, but it’s [about] finding that harmony.”