Danny Maleary chief executive of Vibe MGA Management talks about the newly-launched MGA incubator, and the growing role of MGAs

Explain the role of an MGA incubator. You recently announced a deal to provide support services for the MGA startup Volante. What is your role there?

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Danny Maleary

My world for the past 20 years has been focused on MGAs, business development, managing MGA platforms and really working with both distribution and the customer to work on the right products that the customers are looking for. It’s looking at capacity, whether that’s from an insurer or from Lloyd’s or international, in supporting MGAs and reaching out for new distribution for them to grow their own business while minimizing the cost of growth.

The incubators role is one of adding value to both distribiution and capacity and to bring together like minded individuals who can make a difference in terms of delivery of product to customers.

The MGA incubator bridges that gap between what capacity want to do, versus what distribution wants to do, and finding like minded underwriting teams.

It’s an area that I’m massively passionate about, it’s one I want to see it grow in terms of its profile, in terms of how it shapes and reshapes our industry.

A lot of my time and effort has been developing that platform to support organisations or MGA startups like Volante.

Vaolante is relatively unique in that I would term it a super-MGA, with multiple numbers of underwriters across multiple territories supporting multiple numbers of capacity providers and delivering to customers worldwide.

My client base goes from that degree to the traditional two man band based out in the regions providing some very unique and specialist products to their distribution, and everything in between.

We’ve built a platform that enables me to be able to touch anything, irrespective of class of business, irrespective of territory or sector if it makes sense to do so with the capacity that’s’ there.


It sounds a bit like the California gold rush: you’re not the guy digging for gold, you’re the guy supplying the shovels and the picks.

Yes, it’s a little bit like that, I suppose. Everyone wants to become an MGA at the moment, for various different reasons. The profile of the MGA is quite high now. Everyone’s interested in it. Every day you read something about an MGA. I saw a lot of that when I was at Capita. A lot of conversations with big insurers and big insurers and their desire to grow their business and to be more profitable, but their inability to be able to do so because of the infrastructure costs.

The MGA should be a platform that they can embrace, that should be light touch, that should be efficient, that should add value and should differentiate and should ultimately deliver some value back to the customer.

ultimately to the customer some value back.

We’re under continuous pressure from regulators to make sure that things are done the right way. It’s got to be done right. My biggest fear is that you get the wrong individuals trying to do what I do, and secondly that it attracts the wrong kind of underwriters. Because there is a good MGA underwriter and there is a bad MGA underwriter.


How does an MGA underwriter differ from an insurance company underwriter?

The individual that sits in an MGA that’s been successful will be a developmental underwriter – those that are not pressured to be everything to everyone, but very focused on what they do, which is delivery of a proposition and service to the customer. It’s very innovational in terms of its products and thinking and development, but doesn’t want to have 15 individuals wrapped around them, managing a back office, managing a business, because, with all due respect, the majority of them are not business managers. They’re very, very good at what they do, so therefore they stick to their knitting.

And that’s where the incubator comes in and takes that pressure and that burden away.

The consequence, the knock on effect of that is, if it is structured correctly, it will be nimble, it will be efficient, it will be cost-effective, and it will give the capacity the comfort to do more delegation, and that’s the thing that’s important to me, giving entities the different avenues for them to be able to grow their business without that cost of growth.


So you’re supplying the administrative and regulatory support so they can get on with doing the work.

Absolutely correct. Obviously, we’ll take away that burden, we’ll give comfort to the regulator that the business is being managed in the way the business needs to be managed, we give comfort to distribution that their clients are being serviced in the way their clients need to be serviced, we give comfort to the capacity that delegating their authority is a good thing to do, and that it enables the underwriting team to go on and underwrite good risks and be innovational in terms of product design. It’s a pretty simple model, but you’ve got to be quite entrepreneurial to be in a position to support them and understand what is needed so it’s quite important, and having a flexible, internal target operating model, is something we’ve spent quite a lot of time on to enable us to do that if that’s what we want to do.


Do you do this on a fee basis or do you take equity in these companies

It’s all different, very tailored, very bespoke. It could be any number of different commercial models to be honest. There’s a traditional fee for service, whether it’s a flat fee consultancy, time and materials, commission, pure equity, or a combination of all of the above. Each individual MGA is different. The idea is we build solutions to the individual MGA. The reason to be able to do that is because of the partners I’ve got supporting me and my delivery to them as clients, so therefore the structures of each of these MGAs need to be relatively flexible.

The majority of my competitors don’t have that approach, they’re quite structured and consistent in how they do that. My model gives the ultimate flexibility to the underwriting team, which ultimately ensures that their interests are aligned with both their customer distribution and also the capacity, the support group. And that for me is paramount.

I don’t see myself as a pure service provider. I’m a partner, along with the capacity, along with the underwriting team, and along with the distribution that delivers to the customer.


How important is data to the MGA?

The interesting thing with the majority of insurtech-driven platforms in particular, is the data that they’re gathering, and the utilisation of that data, and how that is driving different thinking and approaches and strategies.

And we’re not a million miles away from an MGA being almost a virtual insurer, where the data it gathers via the toolkit it has at the front end is feeding continuous algorithms, machine learning platforms that, contiuously flexibly, look at the rates on an hourly, minutely basis to meet individual buying needs. That’s especially appropriate in personal lines, and we’ve seen a lot of pay as you go or pay by the minute products and approaches, and that’s going to become more robust and consistent, and more and more that’s the way we’re going to buy our insurance.

We’ll be walking around with a portfolio of our data that describes to insurers what our driving habits are, that can be substantiated by lots of different datasets that show what we’re like when it rains or when it’s dry, when it snows, when it’s hot, when it’s cold, in rural areas or in towns will enable us to get better pricing as individuals and market places, being established, where in theory people are bidding for you as a risk.

I can see the MGA becoming an entity as a risk taker – you could say that’s an insurance company – but I still feel the MGA will need its specialist support from insurers, via traditional delegated authority; but in some instances, it could be because of data, and the data therefore mitigating the risk, becoming a risk taker.


Do you think it is easier for MGAs to fill gaps in the market than it is for insurers?

Yes I do. And the little gaps will become medium sized gaps which will become big gaps and these will become the norm.

The evolution of the MGA is on a path that some are seeing, many are not, possibly because they don’t want to. But it’s going to come, and it’s coming quite fast and that’s exciting.


With MGAs capturing more of the primary market, and reinsurers coming in and dealing directly with MGAs, like the recent Markerstudy deal with Qatar Re, could that potentially cut traditional insurers out of the picture?

It could, and insurers have got to think differently. We’ve got a number of reinsurers that are really engaging with us about how they can access insurance distribution, leveraging the analytical weight those guys have got. It should make some traditional insurers, some of the well known brands, sit up and listen. But they’re so antiquated, they’ve got such clunky infrastructure that it’s difficult for them to change easily without cost. Slowly but surely those antiquated business models will have to change. As an MGA, Markerstudy have some fantastic distribution relationships. Now they’re probably in a position to grow extensively because they’ve got the support of a reinsurer behind them. It gives them a level of comfort. And the reinsurer, because it’s so analytically driven, will be in a position to support them as a partnership, rather than just being perceived as capacity.