TechTalk: Capacity providers ‘more willing to experiment with insurtechs’ – but bar for collaboration is set high

Securing underwriting capacity has long been one of the biggest barriers to growth for insurtech MGAs, with membership body Insurtech UK’s chief executive, Melissa Collett, describing this as a “key issue” for insurtechs – particularly those looking to scale.

To explore this topic in more depth, Insurtech UK partnered with market intelligence firm Insurance DataLab to conduct a survey reviewing market-wide appetite for offering capacity to insurtech MGAs. Running between 1 November 2024 and 31 January 2025, the survey received 26 responses.

The results of this research were published by these organisations on 9 May 2025 in a report entitled Access to Capacity: Ample or Absent?

“This report aims to provide a snapshot of the current capacity market, investigating providers’ appetite and asks of insurtechs to help our members better understand the current capacity environment and how best to navigate through to a done deal,” Collett said.

The findings of the research suggest that the UK general insurance (UKGI) market may be more open to collaboration than previously thought.

Ed Gaze, an advisory panel member at Insurtech UK, noted: “It is a commonly held perception of insurtechs that securing capacity is both very hard and takes a long time.

“The survey results paint a somewhat different picture to what we expected, showing a market of underwriters keen on insurtechs and willing to invest more.

“After a long stretch of a hard market for capacity, rates are easing and underwriters feel more willing to experiment with insurtechs.”

This optimism is reflected in the survey results. Around 81% of respondents, for example, currently provide capacity to insurtech MGAs, while four-fifths of those polled expect the amount of premium being placed through insurtechs to increase next year.

Furthermore, not a single respondent said they expect premiums to fall over the course of 2025.

But, despite this overarching positive sentiment, finding capacity remains a slow and often frustrating process – Gaze urged insurtechs to be patient when embarking on their hunt for capacity.

He told Insurance Times: “There’s definitely capacity out there, but it can take a lot longer than [insurtechs] think it will to get it secure – even more so if it’s [for] a new product.

“The advice is take how long you think it’s going to take and at least double it. Maybe triple it. Even if someone very senior is positive, it doesn’t mean it’s going to happen or can happen quickly.”

 

Pinpointing productive partnerships

The survey additionally asked insurers what mattered most when deciding to partner with an insurtech MGA.

The top three factors determined by respondents were access to the insurtech’s data, the insurance experience of the insurtech’s team and the insurtech MGA’s ability to offer a unique product proposition, with two-thirds of respondents classing access to an insurtech’s data as very important.

Neil Kempston, head of incubation underwriting at Beazley, added that it was also important for insurtech MGAs to consider the culture of the insurer being approached for capacity, as well as what its current capacity portfolio looked like.

“The ideal scenario is thematic alignment with the provider you’re approaching, but not proposing a product that is directly competing with [its] existing portfolio,” he explained. “To succeed, find your niche and outperform others.”

Gaze agreed with Kempston, adding that insurtech MGAs need to be intelligent about which insurers they spend a lot of time working with.

He continued: “Work with ones where you know they’ve got a culture of innovation. [For example, insurers that are] willing to do something that is using technology and taking additional risks beyond the standard, traditional underwriting.”

KPMG partner Susan Dreksler echoed this sentiment too, urging insurtechs to think carefully about where they dedicate their resources in the hunt for fresh capacity.

“Insurtechs can help themselves by looking at [which firms] they’re going to target and the culture,” she said. “Really think about what your proposition is and use your energy to pitch it in the right place.”

Financial future

Further feedback from the survey revealed that capacity providers have a number of expectations around what insurtechs need to deliver as part of a capacity partnership.

When it comes to premium forecasts, one-third of respondents said they require premiums of between £500,000 and £1m in the first year of a partnership.

Meanwhile, a further 25% said they would consider a premium forecast between £1m and £5m, while 21% stated they would support a business projecting between £100,000 and £500,000 in its first year. Approximately 13% said they would require a premium forecast of more than £5m in order to offer up capacity.

In terms of insurtechs’ combined operating ratios (CORs), the average acceptable threshold that capacity providers expect across all lines of business was 78%, according to the survey. However, 29% of respondents said they would tolerate CORs of between 90% and 100%, suggesting some flexibility in the early stages of a relationship.

Notably, no respondents were willing to accept a COR above 100%, reinforcing the expectation that insurtechs must demonstrate at least a pathway to first year underwriting profitability in order to secure capacity – even with 42% of respondents confirming that they would accept short-term underwriting losses.

Insurance DataLab co-founder Dan King warned that insurtechs cannot rely on good ideas alone in order to lock down capacity.

“There’s clearly an appetite to provide capacity, but insurtechs need to come prepared,” he said. “Data and credibility matter more than ever. If you don’t have both, even the most innovative proposition won’t get over the line.”

 

‘Mutual respect’ breaks barriers

With underwriters more willing to experiment with the products their capacity backs, the onus now falls squarely on insurtechs to present credible, data-backed propositions that stand out from the crowd.

However, barriers still remain for insurtech MGAs on the hunt for capacity.

The most significant external barrier cited by insurers was the availability of appropriate capacity opportunities, cited by 56% of respondents as a critical or significant issue.

This was closely followed by concerns around team expertise and underwriting discipline, while access to reliable claims data and questions around funding or solvency were also flagged as potential barriers.

Internal barriers presented a less prominent challenge, but were still evident in the survey results.

For example, the most common internal issue was a lack of understanding or appetite within the insurer itself, followed by the perception that insurtechs are not core to the provider’s strategy. Difficulty conducting due diligence and limited experience working with technology driven businesses were further noted barriers.

To help overcome these barriers, Gigasure chief executive Ernesto Suarez said insurtechs need to foster a sense of trust with their capacity partners.

“Carriers need to be able to trust your expertise and buy into your ambitions,” he explained. “Forming a relationship of mutual respect is key to progressing a deal.”

So, while the survey findings offer encouraging signs of a more receptive capacity market for insurtech MGAs, the reality is that securing support remains a complex and time consuming challenge.

For insurtechs with a clear strategy, robust data and the patience to navigate the process, opportunities are out there – but success will depend on building trust, demonstrating value and finding the right cultural fit with capacity providers.