July 25, 2016 by Canadian Underwriter
The Managing General Agent (MGA) market has continued to grow at a rate exceeding that of the property-casualty market overall, according to a new study by Conning, Inc., a Hartford, Conn.-based global investment management firm.
“In our analysis of the MGA and program market, we found continued strong growth in excess of the overall property-casualty market, along with the natural ebb and flow of relationships and players in this dynamic market,” said Matt Sternat, vice president of insurance research at Conning, in a press release issued on Monday. “The MGA market is becoming more material to the overall market as well, representing 14% of all commercial lines business. However, with year after year of high growth rates relative to the rest of the industry, a cautionary note should be sounded about the underwriting profitability associated with growth in this market. The MGA market has experienced difficulties in the past, and certainly could again in the future,” Sternat cautioned.
The study, titled Managing General Agents: Continued Growth, but at What Cost?, presents the MGA marketplace dynamics, trends, players and outlook. Conning’s proprietary MGA database was expanded and includes information on more than 600 unique MGAs and more than 200 insurers that actively use this distribution channel. The report includes analysis of full-year 2015 results and cumulative results from four years of compiled statutory data on the MGA market.
It also summarizes product lines and programs, insurer relationships, mergers and acquisitions, top challenges and outlook, among other items.
“MGAs face the same challenging market conditions as the rest of the property-casualty industry, and there are some signs that these market impacts are starting to take effect,” said Steve Webersen, head of insurance research at Conning. “In our surveys and discussion with MGA executives, it was noted that competition is intensifying, and new entrants, not having as deep an expertise in a class of business, are pricing irrationally. However, experienced MGAs and insurers should be well-suited to adapt to changing environments by maintaining focus and underwriting discipline.”