Technological Advancements and Talent Drive MGA Growth: AM Best

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

Fueled by premium growth, delegated underwriting authority (DUAE) companies are gaining prominence with insurers when it comes to meeting more specialized coverage needs.

The experience and specialized expertise have enabled the DUAEs to broaden the scope of the responsibilities they assume for their insurers/partners.

In today’s global insurance market, some of the most important growth areas are construction, energy, health, environment, professional liability and cyber liability.

At the same time, inflation, changing climate-related risks and exposure to cyberattacks have combined to necessitate specialized coverage to address inherent risks.

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Additionally, advancements in technology have also enabled DUAEs to add accretive value to new and established relationships.

Additionally, the report notes that MGA premiums rose to a record $60 billion, or 19%, in 2021, a significant increase from $51 billion, up 6%, in 2020.

However, the actual premium produced by GAs is over $60 billion since insurers only report GAs that generate premiums above the 5% excess, so there may be a number of GAs whose bonuses were not captured due to the 5% threshold.

Overall, according to AM Best estimates, the premium generated by the GA 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 GAs has increased. Specialty brokers have turned to MGA operations, offering insurers a more profitable conduit to new markets.

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