UK & Europe
Insurance & Reinsurance
MGA business will prosper under the proposed reforms at Lloyd’s.
The UK's £4.7 billion MGA market will become an even more popular feature of the London market in 2020, even as competitive and regulatory pressures increase. Established players that can survive the increased scrutiny and pressure to perform will emerge from 2020 as bigger, better run and more profitable. New start-ups, or those without a track record, may find themselves out in the cold as capacity is realigned.
Both carriers and established MGAs will be keen to explore the new opportunities opening up as a result of planned reform in the Lloyd’s market. The syndicate in a box proposals, for example, could dramatically reduce entry costs averaging around £20m over the traditional three-year incubation period for new syndicates. With 80 applications already open following the lead set by Munich Re, the prospects here look good. The Lloyd’s risk exchange is another exciting development clearly targeted at reducing the cost of standard, commoditised or low complexity coverage.
Key to success in the next 12 months will be the ability of MGAs to move fast to take advantage of these new structural opportunities. Those that can offer access to profitable niches in new geographic markets and classes which would be uneconomic for carriers because of skills gaps, complexity or size will be at an advantage. Specialism aside however, market winners will be those that can demonstrate how they can manage underwriting and distribution more innovatively and efficiently leveraging the new market structures.
Read the rest of our insurance predictions here.