Built for Speed: Why MGAs Are Winning the Insurance Race

Managing General Agents (MGAs) are specialised intermediaries operating with delegated authority from insurance undertakings. They can underwrite policies, price risks, issue documentation, and sometimes handle claims—all without carrying insurance risk themselves. Instead, they act on behalf of capital providers who supply the underwriting capacity.

Lean, tech-driven, and highly focused, MGAs are reshaping how insurance is underwritten, distributed, and delivered. What began as a workaround for geographic expansion has become a structural shift—particularly in niche, underserved, or fast-evolving markets. For traditional insurers hampered by legacy systems and slow processes, MGAs offer speed, expertise, and relevance.

This article explores the rise of MGAs: their historical roots, what makes the model so attractive today, the risks they face, and their outlook in a transforming insurance landscape.

While the surge in MGA activity is recent, the model itself—partly inspired by the Lloyd’s market—has roots stretching back over a century.

In the U.S., MGA-style entities emerged in the early 1900s as a solution for geographic expansion. Insurers based in the Northeast appointed trusted local agents in the South and West, granting them underwriting and claims-handling authority to bypass licensing and operational challenges of opening full branches.

By the mid-20th century, MGAs had found new purpose in specialist areas like marine, aviation, energy, and high-risk property. By the 2000s, formal delegated authority arrangements became more widespread, bolstered by the global expansion of the Lloyd’s coverholder programme.

In the past 10 to 15 years, technology has been the key accelerant. The rise of InsurTech and growing demand for niche risk transfer solutions has fueled a new wave of MGA activity.

Today, MGAs are no longer just distribution extensions for carriers. They are agile, tech-enabled businesses focused on delivering tailored products and superior service in specific risk segments.

MGAs thrive where traditional insurers struggle: in complexity, speed, and niche markets.

Recent market and macroeconomic shifts have created ideal conditions for MGAs. First, new capital from private investors and pension funds has flowed into insurance, seeking diversification from traditional equities. This has expanded insurers’ capital capacity.

Second, globalisation, technological advancement, and climate change have widened the global insurance protection gap. Traditional carriers have struggled to keep pace with the growing demand for innovative risk transfer solutions.

MGAs have stepped in to bridge this gap, developing specialised underwriting solutions that connect capital capacity with insurable opportunities. Entrepreneurial founders are building capital-light MGA models using their specialist underwriting knowledge.

MGAs also maintain strong ties to broker networks. Many are spun out of brokerages, giving them built-in distribution, market trust, and access to end customers. This proximity has helped MGAs capitalise on the embedded insurance trend—integrating products into e-commerce, gig economy platforms, and consumer fintech.

Many MGAs resemble tech start-ups more than traditional insurers—operating cloud-native systems that are API-first, broker-integrated, and powered by real-time data. Lean teams and automation-first cultures help drive efficiency. When executed well, MGA models can command high valuation multiples and attractive exits.

In recent years, MGAs have shifted from the margins to the core of the insurance value chain.

The U.S. continues to dominate the global MGA landscape, with the majority of global premium volume concentrated there—estimated at around three-quarters of the market. Sustained double-digit premium growth has pushed annual written volumes past €100 billion.

Europe is smaller but growing. An estimated 650 MGAs operate across the continent, generating a combined €18 billion in annual premiums, according to studies conducted by Howden. The UK leads the region—home to roughly half of all European MGAs and 40% of premiums.

Beyond the UK, the EEA is less mature but gaining ground. Greater regulatory harmonisation is making cross-border operations more attractive.

Italy and the Benelux countries lead the EEA in premium volumes, while Germany, France, Ireland, and the Nordics are seeing strong—if still early-stage—growth.

Outside the U.S. and Europe, global MGA premiums remain modest, at roughly €30 million per year. But emerging markets like China and Brazil are showing real potential.

The MGA model is compelling—but not without challenges. Governance concerns, regulatory scrutiny, and limited oversight of claims handling have made some carriers hesitant to provide capacity. MGAs are also vulnerable to underwriting cycles and the difficulty of building long-term relationships with capital providers.

Regulatory Headaches

A recent study by the Managing General Agents Association found that nearly half of MGAs—and over a third of carriers—view regulation as the biggest hurdle for new entrants. Most expect scrutiny to increase in the years ahead.

In the UK, many MGAs have struggled with the cost and complexity of complying with the FCA’s Consumer Duty rules, which demand clear evidence of fair value and customer-centric outcomes. In the EU, the Insurance Distribution Directive (IDD) adds further regulatory pressure.

For a sector that prides itself on agility, this move toward more prescriptive oversight has forced both cultural and operational shifts.

As MGAs grow in scale and influence, regulators are sharpening their focus on governance, risk controls, and transparency—especially when MGAs resemble full-stack carriers or InsurTechs.

Claims Handling Gaps

Claims handling is a persistent pain point. MGAs often outsource it, resulting in chain-outsourcing arrangements that reduce visibility and can compromise service quality for the end customer.

With regulators pushing for better outcomes, both MGAs and carriers are under pressure. According to the Managing General Agents' Association, 77% of MGAs and 91% of carriers cite claims handling as the top area in need of improvement.

Claims remains a key source of tension: MGAs want operational control, while carriers are demanding greater oversight.

Capacity Risk

MGAs don’t hold their own risk capital. They rely entirely on capacity providers—fronting carriers or reinsurers. If those providers shift strategy, incur losses, or exit the market, MGAs can suddenly lose the ability to write new business.

While longer contracts and stronger relationships are emerging among established players, many smaller MGAs still operate under 90-day termination clauses. During recent hard market conditions, this left some scrambling to renew or expand capacity.

Underwriting Discipline in a Softer Market

Not all MGAs are created equal. As the market grows, traditional carriers remain wary of new entrants chasing growth at all costs. Without strong governance and oversight, some MGAs may expose their capacity providers to unacceptable risk.

In softer market conditions, the temptation to prioritise premium over discipline increases. But one poor underwriting year can quickly erode trust—and jeopardise future capacity relationships.

Tech and Data Execution Risk

Many MGAs promote themselves as data-driven or AI-powered, but delivering on that promise is not always straightforward. Model errors and algorithmic bias aren’t unique to MGAs, but smaller firms often lack the robust controls found in established carriers.

Cybersecurity is another concern. MGAs handle large volumes of sensitive personal data yet may not have the same infrastructure or protections as traditional insurers.