Competition in the managing general agent (MGA) market is intensifying as growing numbers of start-ups compete for insurer backing, forcing capacity providers to become increasingly selective about the delegated authority partnerships they support.
Alex Hardy (pictured left), director of delegated and distribution at SiriusPoint, said his firm reviewed around 450 new partnership opportunities over the past 12 months, illustrating both the strength of demand and the increasing volume of propositions insurers are now assessing.
The trend reflects a market that remains buoyant but is becoming increasingly crowded. Hardy described conditions as more nuanced than they were 12 to 24 months ago, when conversations largely centred on capacity availability and pricing. While specialist risks continue to benefit from firmer margins, greater competition is beginning to emerge across more commoditised classes.
"The MGA segment is really thriving," he said, adding that harder-to-place specialist business continues to perform better than areas where competition has intensified.
For Hardy, the steady flow of new MGAs is ultimately a positive sign, provided they bring something genuinely different to the market.
"If they all have a real point of differentiation, then it's fine," he said.
The challenge, he argued, is that competition is increasingly taking place between MGAs themselves rather than simply competing for insurer backing.
"It cannot possibly continue to support" every new MGA indefinitely without some consolidation, he said.
Charles Rowley (pictured right), founder of DA Strategy, has identified the same trend from the advisory side of the market. He previously told Insurance Business that the next phase of the MGA market will reward discipline, arguing that carriers are increasingly backing fewer MGAs through deeper, longer-term relationships rather than spreading capacity across a larger number of businesses.
He also believes increasing specialisation is reshaping the sector. Marine business, for example, has fragmented into niches including brown water, blue water, ports and terminals, and specialist yacht cover as MGAs continue carving out increasingly narrow areas of expertise to differentiate themselves.
Despite the increasingly competitive environment, Hardy said SiriusPoint had not yet seen evidence that competition was eroding underwriting discipline. He attributed that to the extensive due diligence delegated authority partnerships undergo, with insurers assessing not only underwriting performance but also an MGA's systems, governance and operational capabilities.
That reflects the fact that delegated authority arrangements are typically designed as multi-year partnerships rather than one-off placements. As a result, Hardy said capacity providers are increasingly looking beyond today's placement and pricing to how partnerships will perform over several years, even as the soft market continues to reshape pricing dynamics.
"We've all got to guard against" overly aggressive terms creeping into new agreements, he said, describing some recent examples in the market as "not sustainable."
The same long-term focus increasingly extends beyond underwriting performance. Hardy argued that successful MGAs combine a clear point of differentiation, whether through service, distribution, technology or people, with continued investment in those strengths and the ability to measure performance accurately.
"You can't really analyse and really care about your performance if you don't have clean data," he said.
Rowley likewise believes execution has become just as important as the original proposition. While a distinctive distribution model or specialist expertise may help launch an MGA, sustaining growth increasingly depends on investment in licensing, finance, compliance, technology and operations. He noted that technology and external capital are playing an increasingly important role in helping MGAs build those capabilities.
Together, the comments suggest the next phase of MGA growth will be defined less by the availability of capacity than by insurers' willingness to back businesses that can demonstrate sustainable underwriting, operational discipline and a genuinely differentiated proposition over the longer term.
