Summary
- Rapid MGA Growth: Managing General Agents are experiencing over 20% annual premium growth, substantially outpacing the 11% average growth of traditional insurance brokers, with MGAs underwriting over $200 billion in premiums globally in 2023.
- Technology as Strategic Foundation: MGAs are leveraging configurable core systems, APIs, automated underwriting engines, and data analytics to deliver superior client experiences and maintain competitive advantage in an increasingly digital marketplace.
- Data-Driven Operations: Tech-enabled MGAs are transforming underwriting through real-time data (telematics, cybersecurity assessments), continuous data sharing with carriers via APIs, and automated workflows that reduce processing times and operational costs.
- Enhanced Client Experience: MGAs are expanding beyond traditional underwriting into distribution and omni-channel strategies, using AI for claims processing, mobile apps for policy management, and improved customer service platforms.
- Acquisition Appeal: Technology-enabled MGAs command higher valuations (compared to traditional 10-20x EBITDA multiples) and are becoming attractive acquisition targets, particularly as US players show increased interest in the European MGA market.
Existing at the intersection of insurers and agents, Managing General Agents (MGAs) continue to occupy a unique and valuable space in the insurance distribution ecosystem. But with the rapid pace of digital transformation, they face growing pressure to deliver faster and more efficient services, or risk falling behind.
While comprehensive global MGA market data is limited, available evidence points to high growth, with premiums placed through MGAs experiencing annual growth rates exceeding 20% over the past five years, according to data from Marshberry. This growth trajectory substantially outpaces the global insurance broking sector's average annual increase of 11% over the same timeframe. Current estimates suggest that MGAs worldwide underwrote over USD 200 billion in premiums across all classes in 2023, underlining the sector's substantial and expanding market presence.
In this fast-paced environment, technology means much more than operational efficiency; it becomes the strategic foundation enabling MGAs to navigate soft market pressures while taking advantage of growth opportunities. Forward-thinking MGAs are investing in configurable core systems tailored to their business. MGA platforms that integrate with other advanced tools, taking advantage of APIs, automated underwriting engines and data analytics to deliver client experiences, will stand out from the crowd in an increasingly competitive landscape.
Technology applications
Innovation is fundamental to the DNA of a successful MGA. In many ways, they are far better positioned than traditional insurers to capitalise on automation and the integration of artificial intelligence into their operations.
On both sides of the industry, the focus on high-quality data sources is a common trend. Both carriers and MGAs are searching for ways to bring accurate, integrated data into underwriting workflows, which would minimise the need for manual input.
Technology impacts virtually every facet of MGA operations. Flexible technology and integration to pricing platforms allow MGAs to adjust coverage or pricing quickly in response to market feedback, something traditional insurers with legacy systems often struggle to do.
Four examples of key areas of transformation are as follows:
Data-driven underwriting
New analytical tools use data to refine risk selection and pricing. For example, 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 results of this approach can also be seen in valuations, with traditional non-tech enabled MGAs trading at 10-20x EBITA, while tech-enabled MGAs such as CFC or Coalition commanding much higher valuations due to their ability to drive better underwriting performance and operational efficiency.
Real-time data sharing & efficiency
A common challenge for MGAs is the monthly bordereaux, reporting batches of policies and claims using spreadsheets. Tech-enabled MGAs are 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.
This is a win-win for Insurers as it gives them a far better view on their 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
Whether serving brokers or end-policyholders, a greater focus on user experience enables MGAs to go beyond underwriting and expand into distribution and omni-channel strategies.
Claims and service
On the back end, MGAs also use tech to improve claims handling and customer service. Some use 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. These service enhancements have the potential to help MGAs compete with larger insurers by offering a modern, convenient experience.
Supporting MGAs across the insurance value chain
Many smaller MGAs are founded by experienced underwriters who may lack tech backgrounds. If the current model works well enough, there’s little urgency to invest, even though it could unlock significant long-term value.
However, by using tools that facilitate clear communication and improve speed and clarity in underwriting, MGAs can grow their partnerships with agents, write more business, and help their own speed to market when it’s time to launch a new product.
At Insurwave, we are focused on helping MGAs succeed in three key areas:
- 1. Exposure and aggregations monitoring (including providing transparency to carriers on exposures).
- 2. Providing insights on risks (pre-quote) and portfolio-level insights, both of which are used to support risk selection and portfolio management.
- 3. To improve operational efficiency across the underwriting workflow, through leveraging automation and AI capabilities in ingesting submissions and integrating structured risk data with pricing, cat modelling and underwriting systems.
Our capability cuts across the value chain, supporting the initial submission ingestion process, to underwriting insights for quoting and integration with actuarial and pricing systems, integration with cat modelling systems and with policy administration systems to support downstream premium management and accounting.
More than general-purpose software
With increased interest from US players in the European MGA space, tech-led MGAs are seen as attractive acquisition targets across both markets. As MGAs gain more expertise and continue to scale, with access to both clients and capacity, they are beginning to offer the benefits of traditional underwriters, but without the costs of supporting legacy technology and slow decision-making.
To stay competitive, MGAs need more than general-purpose software. If factored in correctly, technology can help develop MGAs into a purpose-built model that enables rapid innovation, automates complex workflows, and connects every part of the insurance value chain.