In fact, the answer is quite a lot of people, actually.
Over the past decade, the traditional (re)insurance market has made it increasingly difficult for entrepreneurs to flourish.
Red tape can choke creativity, and the complexity of corporate decision-making and compliance is frustrating for those fleet of foot.
Even the barriers to entry to Lloyd’s, the industry’s traditional home for big thinkers and ambitious business leaders, have become impossibly high for many.
So it’s unsurprising that the idea of setting up your own business and being in control of your own destiny – with the potential of a significant exit sum at the end of it – has appealed to so many, and the MGA market has mushroomed as a result.
But market conditions for MGAs are changing.
Paper providers are under pressure, and their returns are dwindling. They are looking to regain control of their underwriting, to bring matters back into their own hands.
This was most clearly demonstrated at 1 Lime Street, where Lloyd’s push to improve performance as a whole led to a retrenchment of delegated authority capacity, as carriers looked to determine which MGA partnerships give them more bang for their buck.
This capacity, coveted for its licensing and rating privileges, is not easily replaceable in the company market.
Insurance’s bulging expense ratio is still an endemic problem across the industry and you would be a fool to think that efficiency isn’t at the top of every carrier’s priority list.
Cutting back on MGA relationships is an easy, albeit blunt, solution to that problem.
The theme of this year’s Managing General Agents’ Association conference is “survival of the fittest” – and that Darwinian theme could not be more apt at this point in time.
Those MGAs that adapt will win.
The MGAs of the future need to be leaner, more cost-effective and tech-enabled. They cannot be adding needless cost in a distribution chain that already has several mouths to feed.
Product innovation, actuarial capabilities and full confidence and authority in claims handling are becoming increasingly attractive.
And of course, MGAs still need to do the basics of providing unrivalled expertise and distribution, impeccably.
The beauty of the MGA market is its diversity, and there will be variations on this recipe for success.
But there is no denying that the playing field has changed. Paper providers will be demanding and finding alignment with these partners as they adapt to their own challenges will be crucial.
The desirability of launching a new MGA remains – but new entrants must be minded that carriers’ expectations will be higher than ever.
To view the MGA Review 2019, please click here.
Catrin Shi, Acting Managing Editor, The Insurance Insider