The strong recovery in the US economy following pandemic-induced lockdowns, as well as a continued broad-based rise in premium rates, were growth drivers. Rate increases were especially strong for some of the more difficult lines of business, particularly cyber, which are typically insured in the excess & surplus lines (E&S) market, where MGAs are active.
Fronting insurers have played a growing role in channeling capital from global reinsurance markets to support MGAs. “Fronting companies today play a critical role in securing capacity for MGAs, and we expect this to continue to grow,” said William Pitt, a director of insurance research at Conning. “Most of these fronting companies retain a portion of the risks themselves to ensure their interests are aligned with those of their reinsurers. We have also seen a number of the larger MGAs become risk-bearing entities themselves through the establishment of reinsurance captives.”
The Lloyd’s market has historically been the biggest single source of capacity for MGAs in the U.S., and that remained the case in 2021. Conning’s latest study quantifies the role played by Lloyd’s syndicates in the market for the first time.
“The economic rebound that spurred a robust recovery for the economy post Covid-19, boosted the business of MGAs and program administrators, including those that had been hit the hardest by the pandemic,” said Lauryn Kothavale, an Assistant Vice President in Insurance Research at Conning. “MGAs were historically looked upon by insurers as means to access additional premium in soft markets. But their risk pricing capabilities have expanded and their role in sourcing attractive niche business for insurers in today’s hard market is every bit as important.”
The Conning study, “Managing General Agents: Firing on All Cylinders,” presents MGA marketplace dynamics, trends, players, and outlook. It includes analysis of the growing fronting market and findings from Conning’s 2021 proprietary survey of MGA executives. Survey respondents shared insights into premium growth trends and the overall market, as well as insights into relationships with insurers.
“Managing General Agents: Firing on All Cylinders” is available for purchase from Conning by calling (888) 707-1177 or by visiting www.conningresearch.com.