COVER STORY: BROKERS ON MGAs
MGAs Brokers share what they love – and hate – about the current state of MGAs
OVER THE past three years, managing general agents (MGAs) have become an increasingly important force in the UK insurance market, alongside carriers and brokers. As the UK moves closer to triggering Article 50, MGAs will be at the forefront of developing insurance products, redefining distribution channels and seeking out innovative underwriting capacity. Their innovation and expertise are indicative of the insurance sectors, and as larger insurers look at their operating cost ratios, MGAs provide a cost-effective route for them to be able to continue their involvement and generate profitable business for smaller and specialist businesses within certain trades and classes without pressure on their overheads. This then
has two advantages. For the insurer, they can continue in this arena and are able to realign their costs for the smaller SME’s business. For the broker, there is an additional source or distribution channel to market. This position highlights the need for MGAs to not only set themselves apart from brokers holding binding authorities, but to operate to the same ethical standards a broker would expect to see from the insurer themselves. MGAs have additional skills, expertise and knowledge to bring to the table, and these can often be overlooked in an environment where price is seen as king, especially by the regulator. We need to ensure that brokers seeking solutions for their clients see MGAs as a viable
source of underwriting and access to the insurance market. MGAs are here to stay and, by providing additional access to the market and forging relationships with brokers, are ensuring policyholders have access to the right products that they need to protect their businesses. 2017 will see further MGA growth, bringing even greater specialist skills and expertise to provide the SME insurance sector with ever-widening product options.
Peter Staddon Managing director Managing General Agents’ Association
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