At the start of this report series we noted that the MGA market has doubled in size in the last 10 years to over $60B direct written premium. It’s clear from our conversations with MGAs and insurers that the current market for controlled distribution is not part of a cyclical phase, however.
MGAs are here to stay and will continue to play an important, even essential, role in the evolution of specialty insurance coverage.
Several different factors are driving the MGA’s ascendency through cycles. A growing demand by big property & casualty insurers for innovative specialty risk transfer products. The slow response from the industry created a space for nimble niche operators.
At the same time, insurers in search of growth looked to MGAs to respond quickly to the changing market - and outsourced their underwriting accordingly.
This long-lasting synergy, where underwriting focus combined with committed capacity, resulted in the wider availability of new and more relevant products.
With no loss of dynamism in the market, the MGA model of distribution has now reached a level of maturity: AM Best’s Performance Assessment for MGAs is widely seen as an affirmation of the MGA’s role in our industry.
It’s a compelling story that has caught the collective imagination of investors, entrepreneurial talent and InsurTech start-ups. And when new emerging risks seem to be multiplying across the economy, it’s critical that organizations understand how to match risk taking with new sources of capital. This insurance renaissance is happening when it is needed the most.