The trade body’s ‘clear objective’ is to provide ‘relevant’ support and content for both its current and future members, says chief executive

The Managing General Agents’ Association (MGAA) has seen impressive growth in recent times – last month (22 August 2022), the trade body for managing general agents (MGAs) released its annual report on membership that showed it had achieved record growth across all three of its membership tiers.

As of the end of August 2022, the MGAA now boasts 187 MGA members, 47 capacity provider members and 116 supplier members. The previous year’s report showed that the MGAA had 160 MGA members, 42 capacity provider members and 85 supplier members.

More than many trade bodies, growth in the MGAA’s membership works towards improving the function of the organisation and its members – this is because MGAs are reliant on capacity from insurers to be able to underwrite in their chosen specialisms and, thus, easy access to these insurers is vital for their continued functioning.

Mike Keating, the MGAA’s chief executive, explains: “The relationship between MGAs and their capacity partners is absolutely critical to long term success.

“Sharing technical knowledge between insurers and MGAs to deliver best outcomes for all stakeholders – including the end customer – is critical too and we’re also pleased to be able bring our supplier members into the conversation to work through challenges that the industry and MGA community face.”

The MGA ecosystem is reliant on several moving parts to operate effectively and the MGAA has attempted to bring the necessary pieces of this puzzle together under one collaborative roof.

MGAs are often defined by their agility compared to traditional insurers, as well as their deep underwriting expertise in their chosen specialisms.

Often smaller outfits than their traditional insurer counterparts, MGAs are more reliant on working with other supplier organisations for support in certain areas.

The MGAA looks to provide this support from within its membership too. Keating explains: “A small MGA at the beginning of its evolution might not have the liquidity to employ their own actuary. But immediately, we can put them in contact with a supplier member who can provide actuarial services and support them in a discussion with their insurer around capacity.

“We always look to create the right collaborative relationships to get to the right decision making.”

Further growth

The MGAA has carried for the flag for the increasing relevance of MGAs to the insurance market over recent years.

Last month (30 August 2022), global management consultancy McKinsey released a report on MGAs that concluded the market for this type of insurance intermediary organisation was “high growth” and characterised by “technological innovation”.

The report also highlighted that private equity investment in MGAs had accelerated in the UK over the past two years owing to increasing confidence in – and awareness of – the value potential of MGAs.

Keating explains that the MGAA’s “clear objective” is to “make every MGA in the UK and Ireland want to be part of the MGAA”.

The way to achieve this is by ensuring that its content and proposition to members was “relevant and fit for purpose going forward”.

“We need to ensure that the association is fit for purpose and future proof both for our current membership and the future generation of members too,” Keating adds.

Part of this has strategy been achieved by surveying and having conversations with members around their concerns, which have been addressed via the creation of various forums for members and online market briefings held to discuss topics of interest or concern.

Regulatory concerns

Keating says, however, that the biggest issue affecting MGAs at the moment is regulation: “What we’re going to be working a lot harder on over the next 12 months is around engagement with the FCA and other regulators.

“The FCA’s product governance regulation is not the elephant in the room, it is an elephant effectively.”

Keating says that the FCA recognises that there is a level of tension around its fair value and product governance regulations within the MGA market – with this tension focused on the implementation of these regulations rather than their objective.

The new Consumer Duty regulations, originally announced by the FCA in May 2021, will create requirements for insurance firms to ensure that they are providing “fair value” to consumers for the products they purchase – this must be evidenced via annual reporting to the FCA.

“How the fair value requirements have been interpreted across the insurance industry has been inconsistent, so there could be an argument that some form of standardisation for 2023 would be a great benefit to the industry,” says Keating.

“The industry needs to know what sort of management information metrics it needs to collect to ensure that the customer is getting fair value for the product that they’re purchasing.”

He added, however, that the new regulations provided an opportunity for the MGAA to provide true value to its members by providing them with a voice with direct access to the FCA while allowing the regulator to put their case across to its membership.

“It’s like anything, the greater engagement we have with the regulator the deeper the FCA’s understanding of how MGAs operate will be.

“I feel the regulator wants to understand the MGA community a lot better – they see and hear that the MGA community is continuing to grow at quite a significant pace.”