The Evolution of MGAs: Strong Relationships Are No Longer Enough

New SMA Blog by Heather Turner, Lead Research Analyst, Strategy Meets Action —

Today’s Managing General Agencies (MGAs) and Managing General Underwriters (MGUs) look vastly different than they did ten years ago. The InsurTech boom brought new tech capabilities to the space, including digital and analytics platforms, that have evolved the services MGAs/MGUs are able to offer. As a result, new business models have also emerged. Suffice it to say that there is no cookie-cutter way to establish an MGA these days.

SMA has spent the past decade tracking over 100 startup MGA/MGU entities, in addition to observing the developments at incumbent MGAs that are taking their offerings to the next level amid increased competition. New SMA research uncovers the six different InsurTech MGA business models that new entrants are pursuing today. Each model’s focus ranges from MGAs that deploy line-or segment-focused businesses to serve niche markets, such as cyber or flood specialists, to MGAs designed to enable carriers to offer new, innovative products through digital channels.

In addition to the InsurTech models, SMA’s market analysis also sheds light on incumbent and traditional MGAs that have served the market for many years. Faced with new challenges, including changing customer expectations and increased competition, incumbent MGAs realize that relationships are no longer enough to stand out in a field of rivals.

These models illustrate the evolution of MGAs in recent years, and SMA expects further developments to unfold as transformation continues in the sector, including:

Growth in MGA premiums,
Continuation of new MGA launches,
Increased M&A activity among MGAs, brokers, and carriers, and
Expansion into new product lines/segments.

What’s clear is that MGAs bring tremendous value to insurance transactions, and new entrants are elevating services by driving innovation, conceptualizing new products, and creating more and more specialization. The variety in MGA business models emerging across the segment will help foster a healthy and vibrant market that will continue for years to come.

For more information on business models within the MGA/MGU property & casualty insurance market, read SMA’s recently published research report, MGA/MGU Business Models: The Evolution of MGAs in P&C Insurance.

About The Author

As the Lead Research Analyst at SMA, Heather Turner supports SMA’s advisory and consulting engagements through rich written content, quantitative and qualitative primary research, market and technology trend analysis, and the management of SMA IP materials. Prior to SMA, Heather was managing editor of the NU Property & Casualty Group at ALM, which includes the insurance industry publications PropertyCasualty360.com and NU P&C and Claims magazines. She started her career as a journalist reporting on the property & casualty insurance industry at Insurance Business America and its sister publications in Canada and the UK.

Heather is a graduate of Florida State University, where she earned her bachelor’s degree in Editing, Writing, and Media.

About SMA, a ReSource Pro company

Strategy Meets Action is an industry-leading strategic advisory firm delivering strategic insights, consulting services, and published research to carriers, solution providers, and InsurTech startups. The firm provides insights and guidance on business strategy, digital transformation, core systems and customer experience. Learn more about SMA at www.strategymeetsaction.com.

SOURCE: Strategy Meets Action (SMA)