The Recipe for Building a Successful MGA

The managing general agency model is attracting a number of ambitious underwriters keen to step away from established insurers to build nimble, specialized, and client-focused MGAs. For many, launching an MGA is a chance to offer a more tailored approach to fill product and distribution gaps not prioritized by traditional insurers.

However, success in this sector involves more than just a solid business plan and securing capacity; it requires a robust culture, operational resilience, and agility.

What Makes a Successful MGA?

Thriving as an MGA demands three core elements: a keen eye for client success, a culture of innovation, and a focus on scalability. Together, these lay the groundwork for sustainable growth in a rapidly evolving market. So, what does it take to build an MGA that stands the test of time?

1. Client Centric Model

Client success is the epicentre of an MGA’s focus. With new niches becoming apparent every day, MGAs must be proactive in their own niche and be mindful of their client’s insurance needs, sometimes, even before the client is aware of any issues. By investing in data analytics and real-time monitoring tools, MGAs can strengthen trust with both capacity providers and clients. By establishing themselves as market leaders in their niche early on, MGAs can quickly build their reputation and client loyalty, which is essential in today’s market.

Crux Risk Services exemplifies this approach. Approved as a Lloyd’s coverholder in 2024, Crux specializes in delegated authority underwriting in the Terrorism class. Crux’s modern cloud-based straight-through-processing system has the ability to deliver best-in-class user experience and efficiency to both its brokers and markets, cutting the time taken to bind business from days to minutes. (Editor’s note: the specific MGAs referenced in this article are clients of DA Strategy).

2. Cultivate an Innovation-Driven Culture

An MGA’s success often hinges on its ability to innovate and respond quickly to market shifts. Unlike traditional insurers, MGAs have the flexibility to explore new ideas and adapt quickly to market trends within their expertise with pinpoint accuracy. Fostering a culture that encourages creativity and agility, requires bringing in people with fresh perspectives and a willingness to challenge norms.

This includes continually developing new products designed to address emerging risks, and incorporating regulatory shifts and technological advancements – empowering teams to take calculated risks, within a strong underwriting framework, they are developing a dynamic approach that is responsive to both opportunities and challenges.

3. Design for Scalability

Most MGAs start with a wireframe model, with scalability integral to their strategy. Investing in the right team, digital tools, and partners enhances operational efficiency and service quality, which are key drivers of growth. Partnering with capacity providers, delegated authority specialists and investors, which align with the MGA’s vision, provides the structure, support and stability needed to navigate market fluctuations. With a scalable model, MGAs can expand without compromising on the service their customers have become accustomed to.

Successful MGAs often launch with their second and subsequent growth phases “in sight.” For example, Crux grew its capacity from an initial US$100 million to US$400 million within just six months. Rapid growth is achievable when scalability is embedded in the business model from the outset. Proactive compliance measures and plans for expansion into new territories or classes of business are key parts of this, where experienced MGA incubators play a crucial role in delivering speed of execution.

HIVE Underwriters is another example of an MGA successfully building scalability into its foundations. Since its inception in 2017, HIVE has strategically expanded its portfolio from its original focus on airline hull war to include airline hull and liabilities, excess aviation war liabilities and general aviation hull and liabilities.

This steady growth has been supported by a robust capacity base, which has expanded from the original four carriers to a panel consisting of 11 Lloyd’s syndicates and two company market carriers and includes major names such as Arch, Beazley, Chaucer, Allianz, Probitas/Aviva, and Hiscox. With these partnerships, HIVE is writing business across the globe, demonstrating its commitment to delivering comprehensive, tailored coverage in response to market demands.

Post-Brexit, UK-based coverholders and insurers face new challenges as they can no longer write business directly in the EU. This has created a surge in demand for turnkey solutions that offer compliant platforms for European expansion, enabling businesses to navigate regulatory barriers and seize growth opportunities across the continent. Combining robust compliance with strategic product innovation and a geographic expansion strategy if it fits with the business case, exemplifies how MGAs can thrive in this evolving landscape.

4. The Magic Ingredient: Next-Generation Talent and Leadership

But there’s one additional essential ingredient to an MGA’s success: its ability to attract talent. A thriving MGA is built on more than just strategic vision and operational efficiency – it depends on the right people coming together at the right time, with the right tools to succeed. Initiatives like the UK’s Managing General Agents’ Association Next Gen Committee, chaired by Kaj Pankhania for the last two years, recognize this and are fast becoming a cornerstone for fostering talent and leadership within the industry.

Under Pankhania’s leadership, initiatives that focused on creating opportunities that allow young professionals in the MGA sector to grow, network, and navigate the challenges of a rapidly evolving insurance landscape were created, these initiatives which will continue by the committee are critical to our combined growth and success as a sector.

More opportunities for knowledge sharing, mentoring, educational programs and professional development, and career advancement must be created and utilized to enable our sector to prosper. This not only empowers emerging professionals but also strengthens the MGA industry as a whole by ensuring a steady pipeline of skilled, forward-thinking talent.

By prioritizing talent development as a strategic focus, the MGA sector can set a standard for what it means to foster leadership in the insurance space, demonstrating that the future success of the industry relies as much on people as on business plans.

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