Amlin said it would be working to find a solution in the areas they were to cease to underwrite

MGAs are feeling the squeeze, and as the ability for Lloyd’s syndicates to attract capital becomes more difficult, the year ahead is set to be competitive.

The recent decision by MS Amlin to withdraw from nine lines of UK business as its focuses on its specialty, international and reinsurance operations has thrown their support into doubt.

In a statement the firm said it would be working to find a solution in the areas they were to cease to underwrite and the insurer told Insurance Times while they were keen to support UK MGAs, there was no guarantee going forwards.

An MS Amlin spokesperson said: “We are supportive of the MGA distribution model and will continue to use and develop them in our areas of ongoing strategic focus. As explained in our announcement on Monday, for our UK business lines it is business as usual, although once we complete our review process there may be changes to how we work with some of our existing MGAs. We can’t confirm these changes until our review is complete.”

It comes as Vicky Carter chairman of global capital solutions at Guy Carpenter said MGAs had a role to play in the integration of insurtech into the market.

Speaking in London on a panel which included Convex Group chairman and chief executive Stephen Catlin, Carter said: “We want to see insurtechs and the industry collaborate.

Capital for underwriters

“What we are seeing are some MGAs that have implemented a high degree of digitalisation in their operations. They are running their business with a significant level of automation and therefore are running off a cost base of 3% rather than 12%.”

However, Carter also said that capital for underwriters at present was not as accessible as many in the market claimed.

“We have been working hard to find capital for Lloyd’s syndicates and it is not easy at present,” she explained. “They are going to the investor meetings and being questioned over their performance and results.

“There is a lot of talk about an abundance of capital, but if you asked Stephen [Catlin] and I, I think we would not support that statement.”

Justin Davies, head of region, EMEA at Xceedance, told Insurance Times MGAs are now in a position where they need to prove their worth.

“Whilst there is still a fair bit of capacity, the providers of that capacity are looking for better quality from MGAs. They are looking more closely at what the MGA will bring to the relationship.

“The days where the capacity provider was simply looking to utilise that capacity are gone. They now want to see a degree of differentiation, be it in product, distribution, or the technology which drives operational efficiencies.”

He added that there was also a desire from some capacity providers not to be drawn into the MGA’s operation.

“They want to work with MGAs that are fully operational as a business,” Davies explained. “They simply want to have access to a bordereau that makes it clear what their exposure is at any given time and some access to the management information which will allow them to ensure that the MGA is operating under good governance and management strategy.

“They do not necessarily want to be involved in claims, actuarial decisions or the management of the MGA. It’s more a question of a degree of oversight.”