In the current competitive market, MGAs (Managing General Agents) are playing an increasingly crucial role – especially with regards to capacity and retention. Research from Conning found that the US MGA market exceeded $102 billion in premium in 2023 – and it’s only continuing to grow. In fact, the MGA market grew 13% over a one-year period while property-casualty premium grew by just 10%.
“What we're seeing across the market is two-fold," says Brian Refici (pictured below), vice president at MarshBerry. "The first main dynamic is [carriers] exiting the admitted market space and the expansion in excess and surplus lines, as well as where the wholesalers play. We don’t expect that trend to decrease. In fact, we're seeing that acceleration throughout.
“We're [also] seeing a lot of consolidation now, with the top 50, and even the top 100, brokers starting excess and surplus lines divisions. Where the surplus market is today is more consolidation and control on the brokerage and distribution side, with a binder that meets all risks in both admitted and non-admitted lines - putting more pressure on the carriers to understand what those dynamics are looking like."
And it’s not just exits and expansions, shifts in the economy is massively impacting loss cost trends. Population migration patterns significantly influence the insurance sector, particularly in commercial property, construction, and workers' compensation.
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"Not only are the risks actually getting harder to write because of the population shift, but where people are moving further complicates the underwriting guidelines,” Refici added.
States like Florida and Texas are witnessing increased population density, exacerbating underwriting challenges.
"Historically, Florida had storms, but there wasn't the same impact on population. Now, we’re seeing storms impact populations, partly because the density is growing. Regulators are also trying to take more and more of a stance on protecting the end consumer in the admitted markets. That's part of the cause of why we’re seeing more of these admitted risks move over, in my opinion, into the non-admitted market."
Furthermore, the workers' compensation market presents another evolving challenge. As Refici told IB, there’s a shift in industry and re-onshoring of manufacturing in the US, which is going to, to some extent, negatively impact workers' comp in the future.
"Perhaps - and again, this is more of my opinion than a crystal ball forecast - but I do think those trends in general are going to impact both property and casualty markets going forward."
With significant reserve strengthening in casualty markets, concerns over long-tail liabilities are intensifying. Carriers are reassessing their underwriting strategies to balance risk management with profitability.
"Especially in the casualty markets, I do think there’s a bifurcation relative to what kind of risks are being placed in the long-tail markets," Refici states. "Workers' comp is in a soft market. We've actually seen reserves release over time, and I don’t think that’s changing until something happens with the manufacturing footprint."
Cyber risk pricing remains an evolving challenge across all sectors, but in insurance it’s becoming a growing concern. Research from Security.org found that the global cyber insurance market was worth $13 billion in 2023, with forecasts suggesting that figure will grow to $22.5 billion in 2025.
"How do you price cyber? What is the true risk associated with this?" Refici posited. "Carriers price risk based on a look-back theory, and as cyber was emerging, there wasn’t a lot of actuarial or underwriting data to help price that risk. As we get smarter with that - using cyber here as an example - the change in trends to pricing that risk accurately is going to continue to evolve as that risk develops."
Speaking at the CIWA event, a key takeaway from Refici’s session was the rapid rise in surplus lines. He pointed out that, by 2026, surplus lines premiums will equal or exceed 25% of total US commercial P&C premiums. And, if you look back over the last 25 years, that’s actually a jump from 5% to 25% - a steep increase. The main driver behind this trend? It’s the regulatory structure.
Read more: The top cyber insurance companies in the USA
“The reason risk is leaving the admitted market and going into the non-admitted market is that the non-admitted market is free of rate and form," Refici added. "You're basically bypassing the regulator to some extent, but you’re doing that within the rules they put in place. The dynamic results in harder risks being placed for some of the reasons we've already addressed - global economic trends, higher severity and frequency of natural disasters, and billion-dollar storms on the property side."
And emerging alternatives to traditional insurance models could further influence the market.
“We shouldn’t discount the trend of alternative risk placement services," Refici told IB. "We’ve talked about parametric insurance, the role of fronting carriers, and insurtech firms developing technology to price risk. Some are forming captives and keeping that risk for themselves because the underwriting models haven’t caught up."
And there is considerable interest in the MGA model from private equity, carriers and other industry players.
“As carriers continue to move away from underwriting all risks to focusing on specialization, they need to rely on specialized MGAs, which helps drive deal activity in the sector,” Kelly Maheu, VP of industry solutions at Vertafore, told IBA. “MGAs have leaner operations and lower overheads, and they tend to see higher margins compared to retail agencies.
“Their focus on niche insurance products often means they have more power over premium and policy terms – these are factors that often add up to strong, consistent profits.”
With increasing complexity in risk assessment, Refici told IB that, at some point, the market will need to plateau.
“From the conversations that I have daily, the risk is getting more complex, but, at a certain point, it's got to reach a plateau. With parametrics, AI-driven risk calibrations, and technological advancements, the progression has to slow at some stage,” he said.
“Something else could change - like the regulatory environment starting to look at the non-admitted lines. That’s the other shoe that can drop, bringing more of that non-admitted risk back under the regulator’s purview. I’m not forecasting that to occur, but it was definitely a theme at CIWA."
