Global MGA market growth outpacing insurance broking sector, finds new report

Although the formation of managing general agents (MGAs) dates back to more than 100 years, revenues in this market have only started soaring in recent years, thanks to the new entrants seeking to take advantage of opportunities created by use of advanced technologies, which is bringing a significant wave of digital disruption in an established market segment.

In 2020, revenues in the global MGA market, including managing general underwriter (MGU), cover-holder and delegated underwriting authority groups, increased to around $12.5 billion, according to a new report by Insuramore, implying that premiums intermediated by these group was approximately $100 billion.

In total, Insuramore believes there are around 1,000 groups globally in the MGA space adding up to approximately 2,000 individual MGA enterprises worldwide given that many of the larger groups own multiple MGAs.

55 of the top 250 MGA groups (including four of the top five) belong to insurance brokers while 28 are owned by insurers. The remaining 167 are independent, albeit many of these are backed by private equity firms.

A vast majority of the MGA groups are based in the Americas, followed by Africa, Europe or the Middle East, including 46 headquartered in the UK, and the least in the Asia-Pacific region or Australasia.

By type of insurance underwritten, 73 can be defined as specialist groups, i.e. MGAs underwriting a single product class or a small number of closely-related ones, such as cyber and technology E&O, or private auto and home, with the rest classifiable as multiline players.

The report found that in 2020, the top five groups accounted for a combined 18.2 percent of worldwide revenues, rising to 39.6 percent for the top 20, 56.9 percent for the top 50, 68.5 percent for the top 100 and 82 percent for the top 250.

Insuramore cited the development of new MGAs, plus the emergence of specialised risk classes such as cyber, as key drivers for the rapid growth seen in MGA revenues relative to mainstream broking revenues. Other factors, it said, have been superior growth in segments of the insurance market traditionally served by MGAs, notably, the market for excess and surplus cover in the US.

Furthermore, in keeping with the broader broking market, the MGA space has also seen significant acquisition activity in the recent years. Of the 250 leading MGA groups at the end of 2020, 12 are known to have been taken over.

The leading insurer-owned MGA clusters in 2020 are estimated by Insuramore to have been Zurich, mainly through its ownership of crop insurance provider RCIS, and Tokio Marine, whose MGA portfolio includes renewable energy specialist GCube and ProAg, another crop insurance provider, among others. Insuramore placed broking groups Brown & Brown, Amwins, Ryan Specialty Group and Truist Insurance Holdings as first, third, fourth and fifth, respectively, in the worldwide ranking.

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