US MGA market tops $70bn premium in 2021

The US managing general agents (MGAs) market exceeded $70 billion in direct premiums written in 2021, including business written for the account of Lloyd's syndicates and non-US insurance companies, according to a new Conning study.

The growth was well in excess of the robust growth achieved in the P&C market as a whole. Key drivers included a “strong rebound” in the US economy following pandemic-induced lockdowns and a continued broad-based rise in premium rates.

Rate rises were particularly strong for some of the more challenging lines of business, notably cyber, that are typically insured in the excess & surplus lines (E&S) market, where MGAs are very active, Conning noted.

The Lloyd's market has historically been the biggest single source of capacity for MGAs in the US, and that remained the case in 2021.

"Fronting companies today play a critical role in securing capacity for MGAs, and we expect this to continue to grow," explained William Pitt, a director of insurance research at Conning. "Most of these fronting companies retain a portion of the risks themselves to ensure their interests are aligned with those of their reinsurers. We have also seen a number of the larger MGAs become risk-bearing entities themselves through the establishment of reinsurance captives."

Lauryn Kothavale, an assistant vice president in insurance research at Conning, said: "The economic rebound that spurred a robust recovery for the economy post Covid-19, boosted the business of MGAs and programme administrators, including those that had been hit the hardest by the pandemic."

"MGAs were historically looked upon by insurers as means to access additional premium in soft markets. But their risk pricing capabilities have expanded and their role in sourcing attractive niche business for insurers in today's hard market is every bit as important."

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