Insurer to provide up to £100m capacity within three years.
See also: Grasping the MGA nettle
Willis has signed a managing general agent (MGA) agreement with a number of major commercial insurers, led by Aviva-owned Norwich Union (NU) .
Willis, which announced plans to develop an MGA offering in the UK in November, has signed a long-term deal to underwrite £10m worth of risks on behalf of Norwich Union in the next year, rising to up to £100m within three years.
The broker anticipates profits of £13m from its MGA by 2011.
The news came as Willis unveiled its new headquarters building in London on Tuesday.
It is understood that the deal, which commences on 1 June, will be applied across all business classes, starting with small ticket, non-complex risks. A source close to Willis said that the MGA arrangement would be extended to larger risks in the future.
The source said: “Willis’ plan is to roll out and grow its MGA business over the next two to three years. It’s a long term arrangement that will continue to expand as long as it provides good underwriting.”
Willis and NU declined to comment.
“It is a long term arrangement that will continue to expand as long as it provides good underwriting.
Source close to Willis
Willis is understood to have signed MGA agreements with a number of other large commercial insurers, each dealing with a different set of products.
The MGA agreement could also benefit members of the Willis Commercial Network, which the broker is currently looking to expand.
In November, the broker earmarked up to £25m for the development of specialist businesses outside the US, including networks and MGAs.
Insurers are looking to change their business models to offset the challenges of high commissions charged by consolidators, and the continuing soft market. Earlier this month, Norwich Union said it would not pay the high commissions being demanded by some consolidators.
Aviva is also understood to be looking to enter into MGA-type arrangements to grow its business overseas.
Speaking at the launch of the new Willis headquarters, chairman Joe Plumeri said that London would be the hub of the business.
He said he would challenge the way the London market operates, and its electronic business transactions.
Plumeri added that Willis aimed to expand its back office processing operations in India, and might develop similar operations in Europe.