Reinsurance News

Technological advancements and talent driving MGA growth: AM Best

26th September 2022 - Author: Jack Willard

A new report from AM Best highlights that premium growth attributable to managing general agents (MGAs) has increased significantly over the last decade.

am-best-logoFuelled by premium growth, delegated underwriting authority enterprises (DUAE) are gaining a more prominent role with insurers when it comes to addressing more specialized coverage needs.

Both experience and specialty expertise have helped DUAEs widen the scope of responsibilities they handle for their insurer/partners.

In the current global insurance market, some of the biggest growth areas include construction, energy, healthcare, environmental, professional, and cyber liability.

At the same time, inflation, changes in climate-related risks, and exposure to cyber-attacks have combined to necessitate specialized coverage to address inherent risks.

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Additionally, technological advancements have also allowed for DUAEs to add accretive value to both new and established relationships.

Furthermore, the report notes that MGA premiums stood at a record $60 billion, or 19%, in 2021, a major increase from $51 billion, up 6%, in 2020.

However, the actual premium produced by MGAs is more than $60 billion since insurers report only MGAs that generate premiums greater than the 5% surplus, therefore there may be a number of MGAs whose premiums have not been captured because of the 5% threshold.

Overall, by AM Best’s estimates, the premium generated through the MGA market has doubled over the past decade.

Best concludes, that while, acquisitions and consolidations of insurance distributors have led to a decline in the number of brokers, the number of MGAs has grown. Specialized brokers have shifted to MGA operations, providing insurers with a more cost-effective conduit to new markets.

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