May 8, 2021 by Greg Meckbach
With some commercial coverages becoming harder to place in the hard market, reinsurers are looking to distribute through managing general agents, Virtual Symposium B.C. attendees heard Thursday.
“I had two meetings today with two separate reinsurers who are very interested in expanding their dealings and their trading with MGAs,” said Steve Masnyk, managing director of the Canadian Association of Managing General Agents, during Virtual Symposium B.C.
Observing that MGAs often use a combination of domestic and London capacity, one audience member asked speakers whether they anticipate whether capital from outside the domestic Canadian carriers (and from outside the London market) will be used as the market grows.
In 2018, the Corporation of Lloyd’s told its syndicates to conduct in-depth reviews of the worst performing 10% of their portfolios, and of all lines that are losing money, and to submit remediation plans for approval as part of the business planning process. The London market saw more than 70 different announcements of exit or significant reductions in various lines in 2018, Axis Capital CEO Albert Benchimol said in one of his firm’s earlier earnings calls.
“Over this hard market, Lloyd’s has really limited their capacity,” Cansure president Cameron Copeland said Thursday during The Rise of MGAs, the final panel held May 6 at Virtual Symposium B.C. The limited Lloyd’s capacity has pulled some domestic insurers – who tend to be more willing now than before to write on a subscription basis – into the MGA market, suggested Copeland.
Copeland predicts the Lloyd’s market will later increase its capacity in Canada.
“I think you see an ebb and flow between Lloyd’s and the domestic market as they feed the MGAs,” he said. “We are kind of that rubber band in the marketplace. It swung from Lloyds to domestics over the last three years. It will, to a degree, swing back, but I think it will always be a combination of both.”
But reinsurers are also active in the MGA channel, Copeland observed.
“There is [a need for Canadian] licencing and [reinsurers] need fronts, but a lot of [reinsurers] now own their own primary insurance companies and can use those to support MGAs and brokers in new ways.”
For its part, CAMGA is in discussions with Canadian mutual insurers, “who are a little bit of a less-known quantity to the MGA sector,” Masnyk said, about providing some capacity to MGAs. “We have also begun discussions with the Bermuda market.”
The event was produced by the Insurance Institute of B.C.
Feature photo courtesy of iStock.ca/SIphotography