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The MGA Executive Role: Lifecycle
5
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 insured's needs.
You’ve identified a customer need and want to fulfill 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: £50- 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 provide 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: £100- 750m
MGA Magic: The MGA Lifecycle
The author, David Hughes, is founder and CEO of the Insurance
Data & Analytics consulting business mulberryrisk.com