Heavy competition for new business and growth is forcing carriers to rethink where their business is coming from, and according to some commentators at least, MGAs are definitely flavor of the month, if not the whole year.
“Large lines such as aviation, marine and property are under pressure, but the niche classes do not appear to be facing the same pressures, so insurers are looking to use their capital more effectively and are looking to provide more capacity for MGAs,” John Holm, executive director at Capita Insurance Services, told Intelligent Insurer
Insurers are excited by MGAs’ favorable loss ratios, which are often lower than those of many mainstream carriers – and the fact that many MGAs operate in niches outside traditional insurance classes pleases industry players looking to expand their markets.
“Those who don’t provide binders to MGAs and rely on the mainstream classes of business that are under pressure, are missing out on profits and an opportunity to diversify” Holm continued.
And what may make MGAs even busier over the coming months is a number of reinsurers who are looking closely at offering some of their capacity to the wholesale market, given the constant rate decreases their regular business is offering.
“Reinsurers are suffering heavily; the reinsurance rates appear to decrease at every renewal. However, the claims side hasn’t been too badly affected recently, so they generally have strong levels of capital, which they are now thinking about using in the MGA market,” Holm told reporters.
Holm was commenting on the annual UK MGA survey carried out by Intelligent Insurer, which can be accessed here: http://www.intelligentinsurer.com/article/a-bespoke-alternative.
A recent industry survey has some good news for wholesalers and managing general agents: both regular carriers and reinsurers are ramping up their efforts to use these important intermediaries.