Flexibility and differentiation in the MGA market

“We’re looking for long-term partnerships, not just quick opportunity plays,” said Dominick Tassone, chief underwriting officer at AM Specialty, as he reflected on the company’s approach to the market.

Tassone, a veteran with 46 years in the insurance business, remains deeply committed to the industry and his extensive experience has given him a keen eye for what makes a successful managing general agent (MGA).

“These relationships are not just transactional; they are strategic partnerships.”

“The relationship between carriers and MGAs is pivotal in the programme business space. MGAs serve as crucial intermediaries, possessing the market knowledge, underwriting expertise, and distribution networks necessary for carriers to tap into niche markets.

“Building and maintaining successful relationships with MGAs is an art. It requires mutual trust, open communication, and a shared commitment to underwriting excellence,” Tassone said.

“In my role as chief underwriting officer at AM Specialty, fostering strong partnerships with MGAs has been a priority. We understand that these relationships are not just transactional; they are strategic partnerships that need to be nurtured over time.”

He outlined the four key pillars used when evaluating MGAs:

Underwriting expertise: The individuals making the day-to-day pricing and risk selection decisions have specialised underwriting knowledge that yields a consistent underwriting approach.

Customised products: The policy form offers specialised coverage and/or wording that is unique to the market segment, not found in standard policies.

Specialised services: The agent and/or carrier offers value-added services, such as claims management, loss control service, and rate/quote/policy issuance, beyond what is found in the standard marketplace.

Distribution channel: The product is traded using an alternative distribution method, minimising competition and acquisition costs. “Underwriting expertise is absolutely paramount,” Tassone stated.

“It’s not just about how much experience an MGA has, but whether the team making the day-to-day underwriting decisions truly understands risk selection, pricing, the competitive marketplace, and how those decisions impact the bottom-line profit.

“We need to know their expertise aligns with ours as a carrier. If it doesn’t, the partnership won’t work,” he added.

AM Specialty seeks long-term, collaborative relationships with agents and brokers, as Tassone explained. “It’s about finding the right partners. Our programmes aren’t designed for transactional, short-term gains; we’re interested in building sustainable partnerships that focus on underwriting profit rather than chasing top-line growth,” he said.

Data-handling keeps MGAs vigilant

Tassone is very aware of the increasingly important role of data, saying: “The way MGAs handle data is central to our partnership.

“We conduct regular audits monthly and annually, ensuring that MGAs stay aligned with our standards specific to established underwriting authority, guidelines, pricing, and loss control procedures, ensuring a consistent approach which meets with our expectations.

“When MGAs provide significant programme data which aligns with our extensive data-mining capabilities that allows us to proactively look at our business on a real-time basis,” he added.

Sustainability, he explained, is all about alignment. “We don’t chase growth just for the sake of it,” Tassone said.

“We look at a programme’s historical premium, and loss and pricing trends, and ask: ‘Is this a class of business that aligns with our underwriting appetite, and one that provides services such as specialised claims management, loss control, and a dedicated robust distribution network?’.

“Are all these key pillars claims being managed efficiently and within our expectations? Growth for the sake of it can be dangerous.

“If an MGA’s programme plans to grow from $20 to $100 million in a short period of time without a clear and precise plan, that’s a red flag for us. We want conservative growth which produces upward pricing, and predictable loss ratio results.”

Flexibility without compromise

Another aspect of AM Specialty’s strategy that Tassone is particularly proud of is the synergy between its primary underwriting and reinsurance operations.

“The same team oversees our primary underwriting and manages our assumed reinsurance business,” he said.

“This creates consistency across both sectors, and it allows us to pivot quickly when needed.”

For Tassone, flexibility without compromising profitability is the cornerstone of AM Specialty’s approach.

In a competitive and evolving market, differentiation is vital for MGAs, according to Tassone.

“It’s all about the details; we’ve recently launched a small jewellery programme, and we’re developing a new pet insurance product.

“We look for niches where we can retain a higher percentage of the risk and create value for our MGA partners and their valued clients.”

For Tassone, success in the MGA space comes down to relationships and transparency. “It’s a small community and reputation matters,” he said.

“We’re looking for long-term partnerships, not just short-term gains. That’s how we’ve built our success.”

Dominick Tassone is the chief underwriting officer at AM Specialty. He can be contacted at: dominick.tassone@amspecialty.com

For more news from the American Property Casualty Insurance Association (APCIA) click here.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.