Chairman fears managing general agency would be unsustainable
Brokerbility chairman Ashwin Mistry has admitted he is coming under increasing pressure from members to set up a managing general agency (MGA).
Mistry has resisted the calls so far, but said some members are keen to have a Brokerbility MGA.
Members are pushing for an MGA because they believe it could give Brokerbility a competitive edge in rates, Mistry says.
Members also believe that if Brokerbility had its own MGA, it would give them an extra option for placing business and make them more competitive against rivals.
Mistry refused to reveal which members wanted an MGA or which insurers might be promoting the idea, saying the details were commercially sensitive.
Mistry said that so far he believed the drawbacks of an MGA outweighed the benefits.
He feared a Brokerbility MGA could come under pressure from its capacity provider to write underpriced business.
“My understanding is that to secure an MGA you have to commit to a certain volume of GWP, otherwise you won’t be given the wording and the support,” Mistry said. “That bucket has to be filled. It’s filled with substandard business, or standard business but at a lower rate.”
He added that another issue with any Brokerbility-owned MGA was that underwriters for large, established insurers often had access to better information for evaluating risks than MGA underwriters.
MGAs were also more vulnerable to being defrauded by organised syndicates looking to exploit the information gap, he said.
“We’re resisting this because we think the underwriting pen and capital provision should be the domain of the key insurers,” Mistry said, “because that’s their skill set, and the relationship and the risk management should be down to the broker and their client.”