Hagerty, Inc. has ended its fee-based fronting arrangement with longtime partner Markel, choosing to retain 100% of its own underwriting and investment economics instead of continuing to cede risk to a front. The company disclosed the change alongside its second-quarter 2026 results.
Brokers who place programme business through MGAs backed by fronting carriers should take note. Since the 2023 collapse of insurtech Vesttoo, which involved roughly US$3.36 billion in forged letters of credit backing reinsurance transactions, state regulators have increased scrutiny of fronting carriers, focusing on underwriting oversight and collateral verification.
The NAIC has not adopted a model act specifically targeting fronting carriers, but its existing Managing General Agents Model Act and Credit for Reinsurance Model Act are now being used more actively by states to review these programmes.
For a broker, this means the fronting carrier behind an MGA relationship is more likely to face regulatory examination, and more likely to decide a programme isn't worth the compliance cost of continuing.
At renewal, it's worth asking two questions: is the fronting carrier facing heightened regulatory review, and does it have the scale to eventually take on the risk itself rather than relying on a front? A carrier that exits a programme, even by choice, can leave a client facing a disrupted renewal.
Hagerty reported written premium growth of 19% to US$713 million for the first half of 2026. The company added a record 279,000 new members, and policies in force rose 19% to 1.9 million. It posted a first-half net loss of US$5 million, driven almost entirely by US$153 million in pre-tax transitional costs tied to the Markel arrangement.
Those costs are deferred ceding commissions for policies written before 1 January 2026, and will be fully amortised across 2026. Adjusted EBITDA rose 32% to US$160 million.
"This is what forty years of building trust, one member, one partner, one car at a time, looks like when the flywheel hits its stride," said McKeel Hagerty, chief executive officer and chairman of Hagerty.
Hagerty will also complete its acquisition of Bennetts, the United Kingdom's second-largest specialist motorcycle insurance broker, in the third quarter of 2026. The deal, agreed at £34 million with Lucida Group, is expected to triple Hagerty's UK revenue to approximately £25 million.
Buying a broker outright, rather than appointing one, is part of a wider pattern: carriers and insurtechs are increasingly buying distribution to capture the full economics of a niche. Brokers working affinity-based or enthusiast niches should watch this trend, since it raises the question of whether a profitable niche they work in could become a similar acquisition target.
Hagerty raised its full-year 2026 outlook to written premium growth of 16% to 17% and net income of US$18 million to US$30 million.
For brokers, the takeaway is simple: as regulatory pressure on fronting arrangements builds, more carriers with sufficient scale are likely to follow Hagerty's path. Building fronting carrier due diligence into programme renewals is worth treating as standard practice.
