The managing general agent (MGA) model of distribution is resurgent. Incumbent MGAs are expanding their share of business across the property & casualty market, while start-ups keep growing in number.
It is not hard to see why MGAs are ‘on the move’. Specialty risk classes are a growth story and compared to their big insurer counterparts, nimble MGAs can develop and roll-out smart solutions quickly.
Their speed to market capability also makes MGAs an attractive platform for the most innovative InsurTech risk transfer concepts, and for this reason entrepreneurial talent is frequently drawn to the MGA model. The MGA model refers to specialized insurance agents or brokers who underwrite on behalf of insurers or other capital providers with delegated authority.
MGAs as a Source of New Business
Far from seeing them as an unnecessary link in the distribution chain, well-capitalized (re)insurers recognize that MGAs are a source of new business they may struggle to obtain through their existing channels. Private equity firms also see the MGA model as an efficient route into the (re)insurance market - one typically that can deliver a consistent growth of earnings.
However, insurers, reinsurers, PE players – and MGAs themselves – all need to tread carefully before partnering up. That’s where Aon comes in: helping our clients to make better business decisions. We are the professional services firm and capital advisor that connects stakeholders across the value chain to create a profitable match for all parties.
The following insights and analysis – from an array of Aon experts – endeavors to turn your needs into opportunities and make better decisions to drive profitable growth. Based on Aon’s 2021 research and individual interviews with MGAs and insurers, the report is divided into five chapters that will be released sequentially:
Turning your needs into opportunities
As a firm we are focusing on four major identified areas of client need to address market challenges:
Rethinking access to new forms of capital: MGAs are attracting a greater number of diverse and new pools of investor capital, enabling clients to diversify their risk transfer programs and benefit from an increasing number of specialized products.
Navigating new forms of volatility: MGAs provide custom solutions to clients' emerging threats, long tail risks and under-supported exposures.
Addressing the underserved: In their ability to bring new solutions to niche, underserved or emerging markets, the dynamism and flexibility of MGAs can enhance clients' business growth.
Building a resilient workforce: MGAs lure some of the top underwriting and analytics talent, leading to the development of profitable business insurance solutions.
We trust you will find these insights useful and would encourage you to reach out to your Aon representative to discuss the MGA landscape and opportunities available.
– Andy Marcell, CEO, Reinsurance Solutions, Aon