MGAs – so, have they been the fast track to innovation?

In April 2019, one of the strongest categories of insurtechs attracting attention and raising money were technology-backed Managing General Agents (MGAs). Despite working around the insurance market for over 25 years I realised there was a lot I didn’t know about MGAs and with the growth in the success of InsTech London (as it was then) I needed to do my research. What they were, why they existed, what made a successful MGA and, given the attention being paid to them, why were they such a popular recipient of insurtech funding?

So I wrote an article – MGAs: the fast track to insurance innovation?

Now, six years later, with our InsTech half day event “The bridge to the future of insurance” taking place on 15th July here in London, it seems a good time to look back at the article. How has my assessment from that time borne out in, and more specifically, have MGAs demonstrated that they are the fast track to insurance innovation?

I would say that my opening comments certainly still remain valid today (including the fact that many people are still not really sure what they do):

“Even those that know of their existence are often only vaguely aware of the role they play. Yet MGAs offer one of the best ways for new, and established, companies to enter into insurance and benefit from an existing large customer base or to take advantage of the best emerging technology.”

A lot has happened in those last few years. Whilst some MGAs have undergone a significant evolution since 2019, it has been a brutal journey and many more have failed.

The survivors have succeeded in expanding their role from niche underwriting specialists and are starting to become mainstream partners in the insurance markets. It has taken a while, but MGAs – especially technology-led “insurtech” MGAs – are indeed now beginning to earn their place at the forefront of innovation in the insurance industry. But perhaps the biggest gain has been the ability of traditional MGAs to modernise to keep pace with their fledgling competitors, through wider availability and acceptance of new technology.

This has not, however, despite some of the early expectations of generous investors and excited commentators, been a victory for the disruptors, or for those coming in from outside the insurance industry, full of great ideas to displace the slothful ‘incumbents’. In reality, there have been two characteristics that have underpinned the MGAs we see today. 

Firstly, these are predominantly run and founded by insurance professionals that know the market and the clients’ needs very well, but have wanted to break free from their less agile employers. These founders don’t usually want to build a ‘better mousetrap’ but they do want to be more efficient, use data more effectively and reduce the horrible frictional costs of doing insurance the old fashioned way. 

Secondly, these successful MGAs have access to great distribution from day one. They have the contacts and the credibility to rapidly scale, selling into a market that has already proved it needs an insurance product, and one that is ready to buy.

Once seen only as coverholders for specialised or hard-to-place risks, MGAs are now able to take on a more central role within the UK’s commercial insurance ecosystem, building on this underwriting expertise and operational flexibility. This shift is, finally, being driven by structural changes in the industry across a number of fronts. Insurers have reassessed their risk appetites, clients are looking for more tailored coverage and technology adoption, and of course most recently AI has enabled MGAs to operate with greater efficiency.

And we can measure this success. In the US, premium written through MGAs reached over $100 billion annually by 2024, doubling from about $50 billion in 2016. Similar growth has been seen in the UK and Europe as carriers utilise MGAs to access new markets. The MGA ecosystem is expanding further worldwide too into Latin America and the Middle East.

This growth has also outpaced overall insurance market growth. In 2023, MGA-written premiums grew around 13%, compared to 10% growth in the broader P&C market. Carriers are relying more on MGAs to quickly enter or expand in lines where they lack in-house expertise – from cyber risk to high-net-worth personal lines – without incurring the full operational overhead.

With the established MGAs now investing in modernising their operations and expanding into new areas such as cyber, the distinction is increasingly blurring the line between ‘insurtech’ and ‘traditional’ MGAs. The next 6 years will see less failed MGAs but I suspect we will no longer be using the term ‘insurtech’ in any meaningful way.

Three examples of technology adoption by MGAs are:

• Leveraging carrier systems: Affiliated MGAs sometimes use their insurer partners’ IT systems for policy admin and reporting. Historically this deep integration with the carrier has many benefits, but often lacked flexibility for the MGA’s entrepreneurial needs. This is changing.
• Adapting agency management systems: MGAs that evolved from retail agencies have tried to repurpose agency management software. While sufficient for a narrow set of products, these systems can be limiting when the MGA expands into new programmes or geographies.
• Building focused tech stacks: Forward-looking MGAs are investing in configurable core systems tailored to their business. Modern MGA platforms are able to integrate with other advanced tools, taking advantage of APIs, automated underwriting engines and data analytics. Finally, rapid adjustment to meet changing market needs and lower cost scalability are available to every MGA (as long as they know who to sell to and how).
  

As the original class of early insurtech MGAs gain more expertise and are able to scale over relatively short time, with access to both clients and capacity, they are beginning to offer all of the benefits of traditional underwriters, but without the costs of supporting legacy technology and slow decision making.

Today, few MGA or insurance company leaders would disagree with the view that technology is essential not just for efficiency, but for product innovation and customer experience. MGAs today can launch niche products faster than large insurers in a few months or less. Furthermore, flexible technology and integration to pricing platforms allows MGAs to adjust coverage or pricing quickly in response to market feedback, something traditional insurers with legacy systems often struggle to do.

Technology has impacted virtually every facet of MGA operations since 2019. Key areas of transformation include:

• Data-driven underwriting: Modern MGAs thrive on data. New analytical tools use the data to refine risk selection and pricing. MGAs in auto and fleet insurance use real-time telematics data to underwrite usage-based policies, while cyber insurance MGAs analyse firms’ IT security position to tailor coverage. The Lloyd’s market is now embracing the rise of ‘algorithmic underwriting’. Even before we discovered Generative AI in November 2022, Artificial Intelligence and Machine Learning had become integral to MGA operations.
• Real-time data sharing & efficiency: A traditional pain point for MGAs has been the monthly bordereau – reporting batches of policies and claims via spreadsheets. Some of today’s tech-enabled MGAs are now moving to continuous data exchange with their capacity providers. API connectivity allows an MGA’s platform to feed new policy and exposure data directly to carriers and reinsurers in real time, reducing latency and improving transparency. Insurers have encouraged this shift because it gives them better line of sight on portfolio performance and accumulations. At the same time, digital workflows (submission portals, automated quote-bind systems) have sharply reduced friction in transactions. What used to require emails and manual re-entry is increasingly automated: advanced MGA systems automate submissions, quotes, and policy issuance, cutting down processing times and operational costs. This efficiency is vital as MGAs scale – enabling them to handle high volume without a proportional increase in headcount.
• Client experience and distribution: MGAs, whether serving brokers or end-policyholders are recognising the importance of their user experience. Some MGAs pursue direct-to-consumer or embedded insurance models – integrating their products into other digital platforms. This is enabling MGAs to be more than just underwriting specialists, allowing them to expand into distribution, often experimenting with omnichannel strategies.                                
  
• Claims and service: On the back end, MGAs are using technology to improve claims handling and customer service. Some are using AI-driven systems to triage claims and flag potential fraud, aligning with the industry’s push for straight-through processing. Others employ mobile apps or online dashboards for customers to manage policies and file claims, finally starting to be on offer for personal lines or SME-focused MGAs. These service enhancements should help MGAs compete with larger insurers by offering a modern, convenient experience.

In conclusion when it comes to marking my own homework from my 2019 article, I am going to return again to a phrase I’ve been using for many years – “don’t mistake a clear view for a short distance”. Yes, I believe we can state that MGAs have been one of the fast-track routes to innovation. It’s taken longer than many of us expected and some of the ideas that caught everyone’s attention back then were, we can now say, a road to nowhere.

So if you are curious to learn more about those companies that have been successful and you want to get a chance to take a peek with us into the next 6 years and beyond, register now for our event and see for yourself.