There has never been a more worrying time to keeping your capacity.
MGAs offer insurers routes to niche markets whilst retaining a level of capital fungibility. But the state of the London Market has sent shock-waves across the global MGA capacity markets.
Acapella, Pioneer and Vibe all going into runoff. The change, to force syndicates to improve results, kicked off in 2018 with the Lloyd’s decile10 project.
Further pressures on Syndicate business plans meaning that Syndicates have withdrawn from classes with the impact of experienced teams of underwriters facing redundancy. And the Lloyd’s restrictions has had further knock on impacts to the wider company market.
These changes are having a three fold impact on the market for MGA capacity:
1. MGAs need to show profitability and meet minimum standards
2. New MGAs starting up from many of the ‘let go’ underwriting talent
3. Getting new capacity is proving hard, with the need to demonstrate adherence to strict underwriting and financial performance.
We are seeing a market where more MGAs are competing for less available capacity.
What can you do to stand out from the crowd?
There are many challenges you face as an MGA owner.
Protecting your capacity, at this moment in time, should be your priority. And I advise a three step process
1. Own your Numbers
Ensure data quality of highest standards
Review loss ratios, premiums and rate adequacy each month
Forecast ultimate loss ratios.
2. Communicate effectively and regularly
Set up minimum quarterly underwriting meetings with capacity
Prepare a capacity report for meetings
Be open and develop a strong partnership
3. Embrace Lloyd’s minimum underwriting standards.
Aim to take the best parts of LMUS
Ensure rate change tracking and technical loss ratios included in data collection
Document underwriting rationale.
Running a business is incredibly difficult. Running an MGA adds a level of technical difficulty on top of that which makes it an extremely challenging endeavour.