Managing general agents (MGAs) inhabit a special place in today's insurance ecosystem. With growth outpacing carrier metrics, outsized influence in the number of merger and acquisition deals, and a thriving international community, some cite MGAs as the spearhead of innovation and the future of the industry. A visit to one of the many global MGA insurance events will reveal communities brimming with energy, growth and pace.
But this MGA-centric view certainly isn’t universal, and in many ways it’s a significant shift from the recent past. MGAs don’t have the regulatory permissions of carriers, nor do they have the breadth and fleet-footed customer alignment of brokers. They’re a type of hybrid, with delegated authority to innovate, build and service a limited number of products on behalf of a carrier that must sit behind them and take ultimate responsibility.
This paper includes research from interviews with leaders across the MGA value chain. The article, published on the website of the International Insurance Society, addresses a simple but fundamental question: Why do MGAs exist, and will they exist tomorrow? The paper argues that MGAs will endure because they are a neat solution to a structural problem for insurance carriers: how to enable specialised focus and nimble experimentation whilst also creating strong, long-term risk management across multiple lines of business. MGAs can provide an efficient and low-risk avenue for carriers to access niche underwriting, customer proximity, specific technologies and execution speed. The specific focus of MGAs engenders entrepreneurial and specialist cultures which are hard to replicate in a generalist organisation with multiple competing priorities with long-term horizons.
The article covers the following key topics.
- MGAs: Definition and their global position today.
- Naysayers: Arguments against MGAs.
- The X factor: Why the MGA world is thriving.
- Challenges and beautiful relationships: How the model works best when incentives, governance and expectations are clearly aligned.
- Artificial intelligence adoption in insurance: What does it mean for the future of MGAs?
- Outlook: Winners will prove they are worth their place in the value chain.