23 November 2022
The rise of the MGA – the ‘sexy side of insurance’?

Earlier this month, Insurance Times published an article about the increasing relevance of Managing General Agents (MGAs) in the UK insurance market. As an MGA ourselves, we were rather flattered by the title’s portrayal of this kind of insurance business as the ‘sexy side of insurance’! While the sexiness of any aspect of the insurance industry is perhaps open to debate, it is undoubtedly true that in a hardening market, MGAs offer a vital pathway to those niche and less accessible areas of the market that traditional brokerages may struggle to reach.

A recent report from AM Best, a credit rating agency specialising in the insurance industry, highlighted the increasing importance and growth of MGAs. It found that global MGA premiums hit a staggering $60bn in 2021, up from $51bn in 2020.

The role of MGAs

Essentially, MGAs like Focus are intermediaries – we offer brokers like yourselves access to the big guns – globally renowned insurers like Zurich, Allianz and NIG. And this goes the other way – we also offer our Insurer Partners access to smaller, more niche markets that their distribution doesn’t currently reach.

Often, MGAs are also given the go-ahead by the insurers they work with to quote and bind policies on their behalf, meaning less time is wasted negotiating and policies can be turned around much more quickly for brokers. Typically, Focus can quote, bind and issue policy documentation on our Delegated Authority lines of business in less than 24 hours.

Why now?

MGAs have been on the scene for decades – so why are they taking up quite so many column inches in the insurance press in 2022?

Well, to put it mildly, there has been a lot going on in the world over the past few years. Pandemic, the increasing urgency of climate change and, more recently, rampant inflation are just some of the challenges that individuals and businesses have faced.

Due to their size and specialist expertise, MGAs are usually able to adapt more quickly to new trends and circumstances and develop innovative new products to address new requirements in the marketplace. Mike Keating, chief executive of the Managing General Agents’ Association, commented in a recent interview: “If insurers want to access a specialist, niche market that their distribution can’t get to, then MGAs provide a level of competency to actually access that market.”

In-depth expertise

As well as the ability to react quickly to new market trends, insurers and brokers alike turn to MGAs because they usually have expertise in a niche area of the market. For Focus, it has always been construction. We have 25 years of expertise and in-depth industry knowledge in this specialist area, allowing us to develop competitive new products that meet our brokers’ current needs. As one article from Insurance Business UK explained it: “MGAs have been there throughout the ongoing hard market, responding to brokers’ needs when insurers were less responsive.”

In IBUK’s 2022 5-Star MGAs survey, brokers across the UK were asked why they use MGAs. For 28% of brokers, MGAs offer coverage or markets that they don’t have access to. Twenty-two percent use MGAs for a very specific coverage need. For 16%, it’s all about getting the most competitive pricing. While 7% use their MGA for industry expertise they don’t themselves have.