Uk chief says there is insurer appetite for proposition
Broker giant Willis is looking at developing as a managing general agent (MGA) as part of a multi-pronged strategy to diversify its business in the UK.
Brendan McManus, chief executive of Willis UK and Ireland, who joined the broker in July, said : “I am in the middle of planning what our MGA strategy in the UK might be.
“There is appetite to grow in the SME sector. There is appetite to grow in the networks, which we will also be looking to do. And there is appetite for our MGA proposition.”
A source close to the matter said the broker was already in discussions with insurers.
McManus said the development of the MGA proposition coincided with the company’s global plans laid out earlier this month at a presentation for investors.
The broker is considering plans to allocate between $30m and $50m (£14.5m and £24m) worldwide developing its broking business, which include MGAs and specialisms, such as energy and construction, emerging markets and reinsurance capital markets.
Analysts said Willis’ move to develop MGAs was in keeping with broader structural shifts in the market, coupled with renewed attempts by global brokers to recoup revenue lost when contingent commissions were abandoned.
Andrew Hubbard, partner at accountant Mazars, said: “Brokers need the capacity to make sure they have the ability to broke. Willis will want to use this capacity both internally and externally.”
He suggested it would be a logical step for other global brokers to follow suit.
Hubbard added that because of Willis’ size, it would find itself in a strong leveraging position. He agreed that the move would bring the broker into “virtual competition” with the UK’s largest managing general agent, Towergate.
Greg Dickerson, associate director, insurance, at Fitch, said: “Willis has experience of working with MGAs. The question is whether other international brokers have the skills in place to do the same.
“In a soft market, insurance carriers are more likely to pursue business through MGAs.”
Insurance distribution to polarise, CII report will say
The UK insurance landscape has changed forever, with independent distributors set to be replaced by tied and multi-tied agents, a top-level report due to be released next week will say.
The report on the future of underwriting has been produced by Ernst & Young in collaboration with the CII, and will predict increasing polarisation in the insurance market. It is also expected to predict that consolidators could increase their share of the SME market to 30% by 2012, and that insurers could almost double the amount of the market they control directly, from 5% to 9%.