January 22, 2021

Guest article by Mike Keating, Managing Director, Managing General Agents’ Association (MGAA).

With over 35 years experience in the industry Mike Keating has worked for insurers, brokers and MGAs in both the commercial and personal lines markets. He has held executive positions at AXA, UK General and most recently Qlaims before becoming Managing Director at the MGAA in September 2020. His personal interests include supporting Manchester United, a keen interest in music and trying to keep pace with his grandchildren.

Our profession has had to weather a tough year. We’ve had to navigate the challenges of a mass shift to home-working and the consequential impact  on an industry that thrives on interpersonal relationships. There’s been a sudden (but some may say long overdue) acceleration in digitisation and the need to quickly adapt and move certain processes online, hardening rates across most lines of business, but particularly financial lines and, a contraction – or should we say revisiting of – the available capacity.

From many conversations with our members so far, I’m pleased to report that by and large, MGAs have been responding exceptionally well to the challenges posed by the pandemic. Across the board we’re seeing improved retention rates, a significant increase in new business production and expanded distribution. However, the restriction, or rather revision, of capacity across the market is undoubtedly an issue that cannot be ignored.

The capacity challenge has been well documented. We’ve seen several key players reviewing their risk appetite to focus on more profitable lines and reduce their exposure to the more volatile, or less familiar ones.  We’re seeing this particularly in Directors & Officers (D&O) and Professional Indemnity (PI), areas that have the potential to attract significant risk as businesses navigate their way through unchartered waters and have to make decisions which ultimately impact the livelihoods of their employees and shareholders.

In light of the BI test case, we’re also seeing many providers taking a much closer look at their arrangements with MGAs, reviewing policy wordings with laser-like focus to assess whether there are any areas of ambiguity that could leave them exposed.

It’s an uncertain time for many, but it is also a time where MGAs have an opportunity to come to the fore and demonstrate the strength, agility and expertise that makes them the ideal partner.

One of the biggest areas in which MGAs can add significant value is in the data and customer insight they are able to provide to insurers.

MGAs are incredibly agile and quick to explore and adopt a data-driven approached to underwriting. With a forensic focus on data, MGAs can use these tools to better inform risk selection and pricing decisions, ultimately leading to improved underwriting returns, more informed and cost-effective decisions.

As experts in their field, MGAs have the knowledge and technical understanding to evaluate the market and quickly react to changes that may impact on the policies they write, especially in programme design. Many MGAs specialise in niche areas where their expertise adds real in-depth insight to provide their insurer partners with the confidence that the portfolio is managed and governed to the highest level.

The speed at which an MGA can adapt its offering to match market requirements is also a huge benefit to its partners.  MGAs are typically highly entrepreneurial and agile enough to make large-scale changes in their business much more quickly than large insurers, this gives them a competitive edge in being at the front of evolving customer needs.

Communication is also key, and one thing that MGAs have shown themselves to excel at in these challenging times is communicating with their broker partners to help them to understand any changes in appetite and policy wordings.

Despite the obvious challenges, I believe that going into 2021 we have an opportunity for many MGAs to truly demonstrate the value and unique expertise they add to the distribution chain.  It is this value I hope to showcase when the MGAA holds its next Meet the MGA Market event on 2 March 2021. We’ve previously taken this event out to the regions, Bristol and Leeds but this year we’re going virtual, giving brokers across the UK a unique opportunity to meet MGAs who can showcase their expertise and the value they can add to businesses.

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