Managing general agents (MGAs) have become a vital link between insurers, reinsurers, and the growing U.S. excess and surplus (E&S) lines market. Their rise has introduced efficiencies and diversification opportunities, while also heightening risks around underwriting discipline and alignment, according to a recent S&P Global report.
Rapid Growth in the MGA Market
The U.S. MGA market has more than doubled over the past five years, reaching approximately $114 billion in direct premiums written in 2024 — about 11% of the total U.S. property/casualty market, according to Conning. This represents a compound annual growth rate of 20.2%, compared to 6.5% in the previous five-year period. The expansion closely tracks the surge in the E&S market, where premiums reached about $98 billion — or 9.5% of the total P/C sector — driven by a shift from capacity constraints in admitted markets.
Growth has been supported by social and economic inflation, more frequent and severe natural catastrophes, and the migration of complex and hard-to-place risks to the E&S space. MGAs have leveraged agility, specialization, and customized coverage to meet these demands.
Why Reinsurers Partner With MGAs
Reinsurers and carriers increasingly rely on MGAs for specialized underwriting expertise and established distribution. MGAs can accelerate market entry and portfolio diversification without building internal teams from scratch. Many employ advanced analytics and AI tools to enhance efficiency and underwriting capabilities.
These partnerships also provide access to first-dollar specialty risks — coverages that respond from the first dollar of loss, with no deductible — helping reinsurers diversify beyond severity-prone catastrophe exposures. Some MGAs have created affiliated carriers, Lloyd’s platforms, or reciprocal exchanges to stabilize capacity and retain underwriting profit, aligning interests with capital providers.
Risks of Misaligned Incentives
Traditional commission-based MGA compensation can create an incentive to prioritize premium volume over underwriting quality. Without robust oversight and aligned compensation, carriers may face underwriting losses and reputational damage. Delegated authority can limit visibility, as periodic reporting and limited granularity may hinder proactive risk management. Entering specialized lines via MGAs can also expose reinsurers to unfamiliar risks if due diligence or ongoing monitoring is insufficient.
Economic and social inflation — including higher litigation costs and jury awards — remains a concern, especially in long-tail casualty lines such as general liability and commercial auto, where adverse reserve developments have occurred. Aggressive growth during soft market cycles can amplify these pressures.
Structural Shifts and Market Integration
Many MGAs have adopted structures that show stronger accountability and alignment, including risk participation through affiliated reinsurers or captives. Private equity investment has fueled consolidation, and acquisitions by brokers and carriers have increased — with brokers generally focused on growth and synergies, and carriers on profitability and strategic fit.
Fronting carriers supported approximately $19 billion in MGA premium in 2024. Reinsurers partnering with fronting carriers often require the front to retain a portion of risk to better align interests.
Oversight and Credit Implications
S&P Global Ratings notes elevated risks for reinsurers that rely heavily on MGAs where governance and alignment are weak. Key considerations include the proportion of total premiums sourced through MGAs, each MGA’s track record by line, and the strength of internal risk controls. Material dependence on fee-only MGA platforms with limited governance may pressure credit ratings if underwriting quality deteriorates.
While property market recovery has been supported by disciplined underwriting, rate adequacy, and tighter terms and conditions, underperformance in MGA-sourced business could be harder to correct than in internally underwritten portfolios.
Balancing Agility and Discipline
As cycles soften and capacity grows faster than demand, pricing pressure may incentivize MGAs to write less desirable business to maintain commissions or fee revenue. Although underwriting discipline can weaken across cycles even in-house, the delegated model can intensify this risk when direct oversight is limited.
MGAs that demonstrate disciplined risk selection, clear alignment of interests, consistent performance across cycles, and strong data oversight tend to be more reliable partners. The model remains a tool — effective when structured, governed, and aligned to maintain underwriting discipline and portfolio stability.
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