Towergate chief executive Andy Homer has warned that managing general agents (MGAs) will face ruin unless they improve their underwriting.

Homer said MGAs needed to hire more underwriters to improve their business efficiency.

“Distribution is the easy part. There will be a failure of quite a number [of MGAs] unless they get their unde-writing right,” Homer told a broker conference in Leeds.

In the 1980s and 1990s, around 90% of delegated authority business failed, he said.

The number of under-writing agencies and managing general agents in the UK insurance market is growing.

The MGA-controlled SME market is worth £1.2bn.

Homer also stressed the need for the retail and underwriting components of MGAs to remain separate.

He added that any conflict of interests at Towergate were resolved at board level.

A conflict of interest protocol was introduced following its acquisition of Fusion