At nearly 12% of commercial lines premiums, managing general agents are an ever-growing distribution channel that bears more watching, according to a new study and survey findings from global management investment firm Conning. Part of the proof: MGA-sourced premium exceeded $33 billion in 2014, an increase from the nearly $26 billion for 2012.
In fact, the study, “Managing General Agents: Superior Growth in Specialty Markets,” says that MGA growth has outpaced that of the commercial lines sector in 2014, despite softening rates in several lines.
Several factors mitigate rate-induced weakening of premium growth, including a continued shift by insurers toward specialization and their demand for alternative distribution sources to access the customer, says Bill Broomall, assistant vice president, Insurance Research.
Conning says that this continued growth is sustainable, as specialty markets are attractive revenue opportunities for insurers. However, they will assume certain risks as part of their relationships with MGAs—most notably, granting underwriting authority (“giving away the pen”). Premiums sourced through MGAs also come with certain expenses, such as commissions or profit share.
Conning's database reports that 70% of MGAs underwrite commercial risks. General Liability, Commercial Multiperil, Marine (Inland and Ocean), and Commercial Auto are frequently offered coverages.
Both the number of MGAs and the number of relationships that they enjoy with insurers increased in 2013 and 2014. Conning attributes this increase to the non-affiliated (MGAs not owned primarily by an insurer) market.
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