In the dynamic landscape of the European insurance market, Managing General Agents (MGAs) are emerging as pivotal players, reshaping the distribution of Property and Casualty (P&C) insurance. The MGA market in Europe is following the path of maturity seen in other markets such as the US and UK markets, with significant growth rates in the recent years and a very positive outlook for the ones to come​.

More and more MGAs are driving innovation by embedding insurance products into customer journeys, but also extending their reach to the product definition, by hiring their own underwriters, and pricing experts, and taking over claims handling. 

A Growing Market in Need of Tech-Enabled and Reliable Strategic Allies

Pioneering advancements in customer experience, particularly in small business and personal lines markets, have propelled the rise of MGAs and modern primary insurers. The European MGA market is on the lookout for reliable partners who can provide speed, flexibility, and a close client relationship. This article explores the driving forces behind MGA growth and the increasing need for data-driven capacity providers.

What’s driving MGA growth?

There are four current market trends that are driving MGA growth and the need for tech-savvy capacity providers like ELEMENT to support them:

• Tech & innovation: Nowadays, more tech-first fronting carriers are showing up in the market with enhanced tech and data models to better underwrite and select risks at lower costs. Also, maturing insurtechs are seeking out new carriers to help them grow that can match their established capabilities.​ 

• Lack of capacity: In the current high-inflation and interest rates macroeconomic scenario, traditional insurance players are turning their backs on providing capacity to MGAs, as they’ve had bad experiences and are struggling to trust MGAs with handling parts of the value chain other than distribution.​ Profitability and transparency onto the portfolio are key to succeed.​ 

• M&A activity: Consolidation in the broker market is creating space for new players to gain prominence in the industry. Also, private equity tends to prefer lean capital models (= MGA) over traditional carrier models.​

• Diversification of product offerings. To meet evolving customer needs, MGAs have diversified their product offerings. This includes developing innovative insurance products and exploring new lines of business to stay relevant in the market. Extreme demand and focus on traditional products, such as motor insurance, is leaving the door open for the eager innovators​.

‘Enablers’ in embedded insurance ecosystems play a variety of different roles. But, overall, they provide services that many existing players are unable to provide themselves – such as focusing on steering MGAs business portfolio profitability (vs. a product-led approach), optimising capital allocation with its reinsurance partners, data-driven insights, an international mindset and a tech-driven lean approach to the onboarding of MGAs in the platform, so that they can seamlessly start to build or scale their insurance business.

Data-driven enablers bring standardisation across markets, flexibly and reliably, as well as additional insurance capacity – responding to distributors’ needs to launch in the several markets, or even EU as a whole – as opposed to just in individual markets. 

This tech- and data-driven enablement is powered by proprietary systems and cloud-based platforms. Technology does not change the fundamental logic of insurance – protecting against risk. But it absolutely changes the way insurance solutions are delivered – i.e., the way they are offered, bought and administrated.

In conclusion, the evolving European MGA market is witnessing a surge in demand for tech-enabled and reliable strategic allies. Data-driven enablers, with its innovative approach, expertise, and seamless solutions, emerges as a key player in supporting MGAs to navigate the complexities of the insurance landscape, driving growth and ensuring a customer-centric approach. As MGAs continue to reshape the insurance distribution landscape, strategic partnerships with forward-thinking entities will play a pivotal role in shaping the future of the industry.

About the author:

Tim Kaltofen is the VP Sales at ELEMENT Insurance AG. He held roles like VP Sales Strategy & Steering and General Manager and has also been VP Clients, VP Innovation, and VP Partner Onboarding & Business Development. He founded derblauefuchs UG, helping German insurance brokers with social media sales.