The UK managing general agent (MGA) sector is under growing pressure to balance underwriting discipline, regulatory compliance and innovation, according to a report from Clyde & Co.
While MGAs have benefited in recent years from favourable rate conditions and strong capacity support, the outlook is becoming more complex, shaped by economic headwinds, shifting risk appetites and regulatory scrutiny.
This year’s sector report, produced in collaboration with the Managing General Agents’ Association (MGAA), highlighted the evolving role of MGAs as both a source of innovation and a key distribution partner for insurers.
According to the research, 46% of carriers increased their MGA capacity allocation over the past year, and 57% expect allocations to rise by 5% or more in the next two years.
While economic volatility remains a concern, most are responding by focusing on underwriting quality and operational efficiency. Carriers are also placing greater weight on MGA’s data capabilities and pricing discipline, while MGAs emphasise capacity stability and ease of doing business.
The claims process continues to be a point of friction, according to the report. Over three quarters (77%) of MGAs and 91% of carriers believe the MGA-carrier claims relationship requires improvement.
The FCA’s focus on Consumer Duty and Fair Value has intensified scrutiny, especially as more than half of carriers expect claim severity and frequency to rise over the next two years. While some MGAs reported faster communication in claims handling, most carriers said they saw little to no improvement.
Furthermore, the lack of standardisation in claims processes, particularly where third-party administrators are involved, remains a concern. Both MGAs and carriers flagged limited progress in areas such as authority to settle low-value claims, data sharing, and automation, suggesting more structural change is required.
Regulation is widely seen as the most significant barrier to entry, with 46% of MGAs and 34% of carriers citing it as the top challenge for new entrants or firms seeking to expand into new markets.
Compliance demands, especially under Consumer Duty, are reshaping operations across the sector. Many MGAs are investing in governance frameworks and data-led oversight to meet growing expectations on transparency and customer outcomes.
Looking ahead, 71% of carriers expect regulatory scrutiny on MGAs in the UK to increase, and 57% expect the same in Europe. While the MGAA continues to engage with the FCA to advocate for proportionate regulation, the operational burden remains significant.
AI is increasingly being embedded into core operations, with use cases ranging from data extraction to first-notification-of-loss triage and pricing estimates, the report said.
There is also broad agreement that AI will play a supportive role in the sector, with 65% of MGAs and 66% of carriers expecting it to enhance decision-making and operational performance. However, legal and compliance challenges remain. Industry experts warn that firms must establish clear policies around data use, monitoring and ethical governance, particularly as third-party tools become more prevalent.
Amid economic and regulatory pressure, MGAs are still pursuing expansion. The majority (84%) plan to add new product lines, while 53% are eyeing acquisitions and 40% are exploring international growth. Specialty lines remain a primary area of focus, especially in climate-related and tech-driven risks.
While the London Company Market is favoured by MGAs as the best environment for growth, carriers lean slightly towards Lloyd’s. There is also growing interest in European markets, with firms identifying countries such as the Netherlands, Spain, Italy and Poland as offering untapped opportunities.
As capital becomes more expensive and regulatory demands intensify, MGAs are under pressure to justify their role. But their ability to move quickly, invest in digital capabilities, and meet emerging market needs positions them as key players in the evolving insurance ecosystem, the report said.
