MGAs’ value to insurance risk carriers has recently been called into doubt, but the blanket characterisation of all MGAs as a bad bet is far too simplistic.
Without a doubt, handing the pen to a third party under a delegated authority agreement cedes a measure of frontline underwriting control. However, a great many MGAs deliver tangible value, which has made them an important part of the chain. Risk carriers simply have to identify and back the right runners.
MGAs can deliver a solid and reliable stream of well-priced risk to carriers. Provided they add value to the transaction, they are an important link in the value chain and are worth the additional points they charge from the premium.
UK MGAs that belong to the Managing General Agents Association reported GWP of around $25 billion in 2025 across more than 300 product lines. The annual total premium income for MGAs in the European Union was about $21 billion in 2024, led by the Benelux countries and Italy but strong elsewhere too. That suggests a UK & Europe MGA sector of over $50 billion last year, especially since Europe has seen five-year annual growth of 23%.
Yet without a doubt not all MGAs will grow. As markets soften, it becomes ever more important for MGAs to be able to demonstrate the value they add to the equation. To prosper and possibly even to survive, each MGA needs to present a unique offering to clients, to brokers, and most importantly to markets.
Exceptional underwriting is table stakes. No matter what other difference the MGA brings to the game, one that doesn’t contribute to carriers’ bottom line will quickly be removed from the chain. Very little that can be done cannot be copied, so without profitability, markets will abandon an MGA and seek access to the relevant business through other channels.
Yet high quality underwriting alone is rarely enough. MGAs must deliver a value added. That could be one of at least four abilities.
- The most common of these is distribution. An MGA with access to a specific group of insureds, for example, can add value to a carrier which is unable to reach that group themselves, or to reach it with equal efficiency, or with the same level of trust. Geographical reach may be part of the equation, too. A carrier in the Mediterranean region may seek UK exposures in the same class through an MGA which has market access there, allowing them to diversify their exposure without the expense of establishing new and distant offices.
- Technology can deliver the differentiator, but it must do more than just implement process improvement. Tech which grants the ability to monitor risk of one type which an MGA can be built around. For example, the ability to track cloud outage and the real-time seaworthiness and location of vessels have all proved sufficient foundation for the formation of successful MGAs.
- Capital access is an ability that MGAs can utilise to create value for carriers. Add an excellent underwriter to an entity which already has access to and the trust of a specific group of institutional investors, and a sustainable MGA can be formed.
- Another common winning formula for MGAs has been an insurance mechanism which allows a coverage gap to be closed. Many such successes have been fostered on the back of parametric structures, where claims are triggered by a measurable event, rather than a financial loss. Without the uncertainty of indemnity to complicate exceedance curves, many carriers are willing to issue parametric coverage for areas ranging from wildfire to lost luggage. Very often coverage innovations are coupled with a technological differentiator.
Independence is a valuable characteristic of many successful MGAs, but alone it is not enough. The difference between the US and UK perception of MGAs shows why. In the US, MGAs tend to be thought of as an extension of broking. In the UK and Europe, they are seen more as an extension of insuring.
As above, their key strength can be either of those. Independence from broking or risk-carrying parent companies puts their speciality into focus. It allows them to benefit completely from their advantage, and from those inherent in the MGA structure: flexibility, agility, and specialisation. For these reasons it has been common for carriers and brokers to push their MGA subsidiaries out to arm’s length. That said, many strong MGAs are owned by companies of each type.
Despite the recently broadcast concerns of a couple of major carriers, plenty of appetite exists among insurers in every market to back quality MGAs. They see that the opportunity for diversification of risk outweighs the challenge of maintaining underwriting controls. Willis Re has extensive reach into this market. We can help new MGAs structure a book, existing agents to optimise or reinvigorate their panel, and any MGA to ensure they are getting the best of what the market has to offer. Please get in touch with our broker team if you’d like to discuss your requirements in more detail.
