Best’s Market Segment Report: Technology and Talent Drive Managing General Agent Growth
- September 19, 2022 07:48 AM (EDT)
Oldwick //BestWire// - Fueled by premium growth, delegated underwriting authority enterprises (DUAE) are gaining a more prominent role with insurers when it comes to addressing more specialized coverage needs, according to an AM Best report.
Experience and specialty expertise have helped DUAEs widen the scope of responsibilities they handle for their insurer/partners. In the current global insurance market, some of the biggest growth areas include construction, energy, healthcare, environmental, professional, and cyber liability. Inflation, changes in climate-related risks, and exposure to cyber attacks have combined to necessitate specialized coverage to address inherent risks.
“The factors involved with these risks has fueled a demand-side need for more specialized coverage approaches and created a multitude of premium growth opportunities for the managing general agent (MGA) segment, said Sridhar Manyem, director, AM Best. “MGAs play a vital role in matching these risks and insurers.”
According to the report, MGA premiums stood at a record $60 billion, or 19%, in 2021, up from $51 billion, up 6%, in 2020. However, the actual premium produced by MGAs is more than $60 billion since insurers report only MGAs that generate premiums greater than the 5% surplus; there may be a number of MGAs whose premiums have not been captured because of the 5% threshold.
By AM Best’s estimates, the premium generated through the MGA market has doubled over the past decade. Acquisitions and consolidations of insurance distributors have led to a decline in the number of brokers, while the number of MGAs has grown. Specialized brokers have shifted to MGA operations, providing insurers with a more cost-effective conduit to new markets.
Recognizing the growing importance of DUAEs, AM Best introduced the Best’s Performance Assessment earlier this year, which provides a framework for differentiating among DUAEs. For additional information, please go to https://www.ambest.com/assessment/methodology.html.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=324087 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.