MGAs (managing general agents) fill important roles within the insurance supply chain. If investors understand what MGAs are and how they function, they will be better able to spot potential opportunities. MGAs are insurance agencies that offer underwriting services on behalf of a syndicate or insurer. Their work typically includes rating, issuing documentation and sometimes claim handling.

1. ROB TOLLEY
LONDON
CEO and Co-Founder of Global Specialty Underwriters

2. What Are MGAs and Why
Are They Important?
MGAs (managing general agents) fill important roles within the insurance supply chain. If
investors understand what MGAs are and how they function, they will be better able to
spot potential opportunities. MGAs are insurance agencies that offer underwriting
services on behalf of a syndicate or insurer. Their work typically includes rating, issuing
documentation and sometimes claim handling.
Because the MGA deals with the administration of the policy (with the insurance provider
only providing the financial backing regarding any claims), insurers are able to enter
markets where their £5,000 plus minimum premiums would otherwise be prohibitive.
An Important Role within the Value Chain
Often positioned between other intermediaries (such as wholesale or retail brokers and
insurance companies), MGAs have the potential to play a significant role within the
insurance distribution value chain, offering a unique value proposition to each party
involved.
MGA CEOs – such as Rob Tolley (former London broker) – know that they can also
increase the efficiency of the value chain, as they typically operate without the legacy
placement platforms often deployed elsewhere in the sector. Plus, they’re usually smaller
and younger than insurance carriers and therefore leaner, unencumbered by
operational complexities that could otherwise slow them down..

3. What Are MGAs and Why
Are They Important?
MGAs and Reinsurance
Reinsurance is a significant element of the business of most MGAs, due to the wide range
of risks and coverage options that MGAs typically handle. Reinsurance effectively
provides indemnification and reimbursement regarding payments already made.
Therefore, it should play an important part in an insuring organisation’s strategies to
maximize value and minimize risk.
MGAs work directly and indirectly with reinsurers. In terms of the former, this involves
developing programmes, such as in cases where the MGA identifies an existing niche in
the market within which there are few or no carriers currently writing a specific line of
business.

4. What Are MGAs and Why
Are They Important?
Awareness of Emerging Risks
MGAs are able to bring their market experience and specialist underwriting skills to bear
regarding newly emerging threats, such as cyberthreats, casinos on Native American
reservations, cannabis and transactional liability (for smaller deals). Several cyberthreat-
focused MGAs have already emerged, and MGAs are increasingly active in the specialty
coverage in personal lines field. As a result, this is boosting customer experience and
underwriting quality, as well as enabling access to specialised risks for MGAs’ capacity
backers.
The Rise of Digital MGAs
Recent years have been witness to the rise of digital MGAs, which tend to target specific
end customers to provide certain insurance lines, such as auto, pet, homeowners and
small-commercial insurance. Furthermore, many digital MGAs are retaining some of the
risk on their own balance sheets, which enables them to control some of the capacity
they place.