Property-Casualty Managing General Agents (MGAs) have shown continued growth so far this year, exceeding the segment’s general market growth by over one-third despite adverse soft market conditions – but rates have softened as performance comes under increasing pressure, according to Conning’s latest strategic study on the MGA market segment.
The study is based on Connings 2017 survey of MGA executives as well as its proprietary MGA database, made up of almost 650 MGAs and 200 insurers using the MGA channel.
Overall Conning found that the MGA market grew at levels still far above the total property-casualty market, with MGA firms increasing last year by 4.9% compared to the 3.7% general property-casualty market growth.
Matt Sternat, Vice President, Insurance Research at Conning said this year, however, the MGA market had become more competitive with new entrants to the market exacerbating the issue, “as they are aggressively pricing business and competing for attractive programs,” and this together with the soft market affecting the property-casualty industry especially in commercial lines, has led to MGA growth slowing down from last year.
Commenting on MGA trends revealed in Conning’s study, Steve Webersen, Head of Insurance Research at Conning, said; “In the past year we have seen insurer exits from the market and reduced risk appetites primarily due to the poor performance in certain lines, led by commercial auto.
“However, we have also seen the emergence of significant new insurer-MGA partnerships, new programs, and continued strong MGA mergers and acquisitions activity.”
Weberson added that seasoned MGA’s and programme market insurers that have managed through cycles in the past will be best positioned to navigate the challenging soft market environment, and warned, however, that the MGA market’s future showed no signs of easing with the market still characterised by overcapacity and soft pricing.
