MGAs: A growing role in multinational insurance
Managing general agents have become firmly established in the insurance market, especially in Europe, providing specialty, non-standard coverage. Tony Dowding talks to Mike Keating, CEO of the Managing General Agents’ Association
How important a role in large corporate/multinational insurance do MGAs, MGUs, coverholders etc play?
Mike Keating (MK): MGAs are playing an increasingly important role within large corporate and multinational insurance programmes, in particular through enabling brokers and risk managers to place cover for specialist, complex or unusual risks. And that is because MGAs provide the specialist underwriting expertise, knowledge and products that are outside of the normal conventional offerings of the insurance market. MGAs are unlikely to provide a whole multinational programme but will help make up the complex non-standard and niche covers within one.
Has this role grown in recent years? What has driven this?
MK: The role of MGAs in large corporate and multinational lines has grown exponentially in recent times. This growth is being driven by a mixture of factors, including a contraction in risk appetite from the conventional insurance market, with capacity being channelled instead towards specialist underwriters within the MGA sector. Another major factor in the attraction of the MGA market has been the improvement in understanding and knowledge by risk managers, financial directors and their brokers of their operations’ own risks and the need for those to be covered and mitigated.
In what areas do MGAs provide solutions for large corporates/multinationals?
MK: The range of non-standard solutions available to large corporates and multinationals is constantly growing and includes cover for risks outside of run-of-the-mill, traditional insurance cover. These covers range from the likes of cyber through to specialist financial lines and difficult, unusual or challenging manufacturing processes.
How do the large global insurers work with these companies? What advantages do they have for insurers?
MK: Global insurers are increasingly investing in the delegated authority market and deploying capital to those MGAs that are able to demonstrate clear underwriting expertise in particular market segments or product lines, excellent risk selection and forensic pricing, underpinned by quality data and management information. The model enables global insurers to play, and operate, in areas of the insurance and risk market they would not be able to without investing heavily in their own infrastructure – from underwriting expertise, through to systems and resources. A good MGA that really knows its market can provide a great return for a carrier’s capital and help it fill gaps in the cover it can provide to the market.
Are MGAs and insurtechs the future for innovation?
MK: Innovation sits at the heart of the MGA model and is part of its DNA, something that holds true for both established players and new startups. And that is because MGAs are not hindered by legacy systems or slow corporate structures, and are nimble and flexible by nature. A good MGA will be continually looking to the future, working closely with the market and brokers to identify and deliver new solutions for clients. And while some MGAs may be insurtechs themselves, a lot of MGAs also work closely with other non-MGA insurtechs, such as for third-party data and other services.
