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BLOG: What’s next for MGAs?

We all know the MGA market is in great shape at the moment.  Brokers continue to be drawn to the business model that allows them quick access to decision-makers and exceptional service, and capacity providers enjoy the ability to hand the pen to technical experts who can write profitable business and broaden their distribution channels.  But what’s next?

CEO Tim Quayle joined Carbon Underwriting’s Mark Oldroyd on stage at last week’s InsTech evening event to discuss what lies ahead for managing agents.

Challengers and Innovators

A huge positive for the market is the number of new and innovative MGAs looking to launch and expand; armed with data, flexible systems, high-quality technical expertise and market knowledge.

The proliferation of new entrants is a real positive, particularly for businesses like ours. But how easy is it for some of these challengers to secure capacity?

Though MGAs are still very popular with capacity it’s really tough for new innovative entrants to get backing. This is either due to a lack of proven claims history, data or even just uncertainty over how innovative approaches might develop over time. There is a new type of capacity solutions that are trying to address this.

We’re seeing the next wave of cyber MGAs now, with businesses like OneAdvent-supported Cowbell making a triumphant entrance to the UK market after success in the US. We’re also seeing real interest from carriers in the renewables market, something we will be keeping a very close eye on…

Although parametric products have been in the market for several years now, and there are many successful use cases, we’re still seeing a lot of capacity providers “sitting around the edges, watching to see how they develop”.

Starting from Scratch

One of the biggest hurdles facing new businesses is the difficulty in communicating their new concept and proposition, this is where businesses like us (OneAdvent) can help.  We have a strong understanding of early-stage businesses, and how to help them to build on their foundations with the services and support they need to make their mark.  We also have the flexibility to grow with them and adapt our support, depending on their journey.

We’re starting to see a change in the market, where carriers are more open to working with businesses who can demonstrate a well-researched, thorough plan for success.

What’s Next for Underwriters?

But what may be next for underwriters themselves?  Mark explained that Carbon is starting to move into augmented underwriting, and using algorithmic frameworks to take a lot of manual processes away from underwriters.  Instech said they were seeing more MGAs start to adopt an algorithmic approach to underwriting, so is this the future for underwriters?

Our view, is that in reality, the approach, when adopted correctly and supported by data, is a strong one and can increase efficiencies, however, capacity and MGAs must work together to make it a success.  We’ve seen the algorithmic approach work well in personal lines, but it is predicated on data standards and an agreed protocol – something we don’t have yet in the Lloyd’s and London markets.

So what’s next for MGAs? 

We believe that the future is bright for would-be MGAs who come to market with a bold idea, a robust plan and the support of experts, who can provide the wrap-around services they need to embed themselves quickly in the market.  OneAdvent is here to support these businesses with the regulatory, compliance and technology support they need.

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