May 10, 2021 by Greg Meckbach
The hard market in commercial lines has caused some managing general agents to lose some products, yet more insurance is still being placed through MGAs, panelists told brokers listening to a recent webinar.
“I think it’s a perfect way for insurance companies to put back capital into the marketplace … without having to invest in too many bodies to underwrite,” Stéphane Lespérance, president of commercial risk and health solutions at Aon Canada, said of the MGA channel. He was speaking during Commercial lines post-COVID: What the future holds, a webinar hosted Apr. 12 by Canadian Underwriter.
“We have also seen various MGAs being challenged this year because they were not doing proper underwriting and even some got their capital being pulled away. We’ve seen that happening in 2020, too. So, although they’re important, we’ve seen also some players kind of shifting their appetite and losing certain products or programs,” Lespérance said.
The panelists were asked how their company’s dealings with MGAs will change going forward.
“We’ve started working with MGAs over the past two or three years and that definitely allows us to take some exposure on that we would not otherwise underwrite,” said Richard Grant, chief operating officer of Trisura Guarantee Insurance Company.
Sovereign Insurance also writes some risks through MGAs.
“We see [MGAs] valuable in all market cycles, although absolutely you’re seeing more volume [now] going through [MGAs],” said Steve Phillips, chief operating officer of Sovereign Insurance, during the Apr. 12 webinar.
“We really like them because they can be very specialized in the services they’re providing,” added Phillips. “A lot of these MGA are just very good at what they do. They’re not just clever on how they’re providing the right product, the right solution, but they can do it very efficiently, which helps.”
Feature image courtesy of iStock.ca/sarayut