The MGA Executive Role: Lifecycle

This is the fifth in a series of blogs containing excerpts from my forthcoming publication, 'The MGA Book'.

The Executive Role: The MGA Lifecycle

1. Idea: You have a plan (0–20+ years)

You have an idea and incentive to create an MGA:

• To get paid more for doing what you already do

• To take control of your future

• To create a better work life balance

• To build a solution to meet your insureds needs

• You’ve identified a customer need and want to fulfil it

• You’ve created a great bit of technology and want to use insurance to deploy it/commercialise it

• You’ve seen other people become wealthy from creating an MGA

• Because you were made redundant and need income

2. Start up: The journey begins (3 years)

Seed investment to get going, often regulated under an umbrella arrangement from a regulated entity (broker, underwriter or MGA). The focus is on getting the following set up:

• Business plan

• Capacity

• Systems

• Underwriters

• Distribution

• Claims handling

• Cash

Target Annual GWP: £5m

3. Creating lifestyle (3 – 7 years)

Your business is running well, and now you can grow your income with a view to reaching a healthy amount to give you a good income by:

• Securing more than one capacity provider

• Leveraging your data

• Increasing distribution

• Developing a brand

• Developing claims expertise in house

• Refining underwriting and pricing to improve loss ratios

Target Annual GWP: £10-£25m

4. Building an empire (5-10 years)

You’ve been enjoying the lifestyle business. And many MGA owners stop there. But some want to drive forward. Building a bigger operation by adding new classes, some complementary to current product lines, others opportunistic. Activities include:

• Adding new product lines

• Expanding distribution to other channels

• Small scale acquisition

• Developing actuarial and analytical capabilities in house

Target Annual GWP: £50m-£100m

5. Global domination (10 years+)

Looking to take your business international, you make the leap few other MGAs do. Either with the help of investors, a partnership or from retained earnings:

• Expansion into international territories.

• Acquisition of MGAs.

• Investors or partnerships often providing growth funds.

• Aggressive GWP growth.

• Multiple capacity providers with complex reporting needs.

• Significant back office functions such as finance, reporting, systems etc.

• Professional CEO recruited to take lead on expansion, with you becoming chairman or non–exec.

Target Annual GWP: £100m - £750m

MGA Magic: The MGA Lifecycle

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The author, David Hughes, is founder and CEO of the Insurance Data & Analytics consulting business mulberryrisk.com