MGAs struggling with contradictory broker expectations

Brokers are simultaneously demanding “carrier-grade rigour” and “rapid product innovation” from MGAs, leading to a credibility gap between expectations and realistic product offerings.

This is according to a new survey from MGA Corin Underwriting, which found that contradictory to demands for niche and nimble products, some 98% of brokers would only place high-hazard risks with an MGA backed by A-rated carriers.

The survey also found that 81% of brokers wanted their MGA partners to obtain an AM Best Performance Assessment – a stamp of credibility evaluated by global credit rating agency AM Best – despite a relatively low take-up of the assessment.

Corin Underwriting said the expectations of speed and stability underscored a “widening credibility gap between what brokers expect and what most MGAs can currently deliver”.

Capacity security

The firm also said the demands for backing by A-rated carriers could cause capacity security problems, especially as regulatory pressure and rising rating fees had already been identified as the biggest growth barrier by half of MGAs and a third of carriers.

Andy Hurrell, founder and managing director at Corin Underwriting, said: “Brokers are asking MGAs to deliver carrier-grade governance and startup speed innovation at the same time.

“Our poll shows 81% want an AM Best Performance Assessment, yet only a handful of MGAs have taken the plunge. Until more of the market proves it can pass that test, a credibility gap will persist between broker expectations and what most MGAs can actually put on the table.”