The global Managing General Agents (MGA) market continues to evolve rapidly, experiencing a considerable amount of dynamic growth, brimming with opportunities for expansion in specialised areas and technological advancement.
Over the past few years changing market conditions have fuelled significant growth, especially for MGAs that specialise in hard-to-place risks or other niche expertise such as customer service or claims management. In fact, according to Conning Insurance Research group’s study the market is projected to reach roughly $110 billion, with a significant portion, around $90 billion, concentrated in the US (The insurer: European MGA growth to accelerate as super cycle expands beyond US).
The ‘hard’ insurance market characterised by rising claims costs and increased premiums has persisted for the last few years, creating opportunities for MGAs, who unlike some insurers are able to offer specialised solutions for complex risks. The growth of ‘fronting carriers’ (insurers that take on risk and then cede a large portion to reinsurers) has also contributed to MGA market growth, with many finding new ways to secure capital including, sidecars, ILS partnerships, and corporate quota shares, which continues to support MGA expansion. In their 2024 report, Marshberry highlight that “In the UK, over 350 MGAs place more than 10% of the country’s £47 billion in general insurance premiums” (Marshberry: The Evolution of the Managing General Agent in Europe).
Recent data from the Managing General Agents' Association (MGAA) also indicates a robust and expanding sector, with membership numbers continuing to climb, reflecting the growing confidence in the MGA model. This growth is fuelled by the ability of MGAs to nimbly address niche and underserved markets where larger insurers may lack specific expertise or operational agility.
Although, a positive growth outlook remains, a persistent undercurrent of concern regarding capacity provision and regulatory navigation is shaping strategic discussions across the industry. As such, we look at the trends that will shape the MGA market and the various opportunities they can capitalise on.
Specialised insurance is driving growth
A key driver of opportunity lies in the increasing demand for specialised insurance solutions. As risks become more intricate, particularly in areas like cyber liability and environmental exposures, MGAs with deep domain expertise that specialise in nice insurance areas are well-positioned to take market share. Industry analysis suggests that the specialty insurance market “is projected to reach USD 184.4 billion by 2033, exhibiting a growth rate (CAGR) of 7% during 2025-2033” (Research and Markets: Specialty Insurance Market Report).
The rising exposure of businesses to varied and complex risks, advancements in healthcare and medical innovations, and the increasing construction activities of residential and commercial places are some of the major factors propelling the market.
Technology as a catalyst
Embracing technological advancements presents another significant avenue for MGAs. Investment in AI-powered underwriting tools and data analytics is on the rise, with an increasing number of MGAs implementing AI solutions to enhance efficiency and pricing accuracy. With agility and scalability on their side MGAs often serve as models for technology adoption, providing test cases and learnings that insurers can adopt.
M&A opportunities
Despite macroeconomic challenges and increased capital costs, research shows that MGAs involved in M&A deals is likely to increase. Marshberry report that “the U.S. leads the pack regarding transaction activity, with 181 specialty transactions last year, accounting for 22% of total insurance broker and agent transactions” (Marshberry: The Evolution of the Managing General Agent in Europe). The UK also continues to see a spike of activity, reporting “another record high of 16% of the total 148 all-sector deals registered” (Marshberry: The Evolution of the Managing General Agent in Europe).
With typical EBITDA margins in the high 20s to low 30s, low capital intensity and high free-cash flow conversion, MGAs remain an attractive financial profile for private capital investors, insurance carriers, and retail and wholesale brokers.
Capacity concerns
Despite the optimistic growth trajectory, securing and maintaining adequate capacity remains a critical concern. While the MGAA reports a healthy influx of capacity into the sector, the reliance on insurer backing leaves MGAs potentially vulnerable to shifts in their capacity providers' strategies or financial health. This emerging ‘capacity crunch’ threatens to limit an MGA’s ability to onboard new business, underwrite policies and thus limit business growth.
This will require MGAs to diversity their capacity sources, evidence disciplined underwriting processes and potentially evaluate their product mix, concentrating on business areas where they have proven expertise and results.
Regulatory compliance
Navigating the evolving regulatory landscape and ensuring compliance with FCA regulations will continue to be essential. As compliance becomes more stringent, especially around AI, MGAs must keep pace to avoid straining relationships with insurers.
This is particularly true of Consumer Duty compliance which will require continuous investment and vigilance.
Attracting talent
The agile and technology focused nature of MGAs means they are often talent powerhouses attracting forward thinking and skilled data analytics and software specialists. In comparison to traditional insurers, their ability to innovate and respond to market conditions quickly means they can capitalise on their agile and entrepreneurial working environment, using it as a key attraction tool for prospective talent seeking autonomy and an innovative culture.
Given their ‘open minded’ and democratic internal cultures, decision making can often be less bureaucratic than traditional larger insurance firms, which enables fast paced and progressive growth. This nimble quality allows professionals to broaden their skillsets across various functions, accelerating career development.
Looking ahead
2025 looks to be promising for MGAs who are willing to embrace technological developments, stay ahead of regulation, and cultivate strong broker relationships. Rather than seeing MGAs as a threat, carriers need to embrace partnerships to support growth, innovation and talent acquisition for mutual benefit.
Looking to explore your business growth options or perhaps you’d just like the latest developments on the insurance and M&A market? Get in touch with one of our insurance specialists who will be happy to have an informal, confidential chat.
Sources
· Marshberry: The Evolution of the Managing General Agent in Europe
· McKinsey & Company: Insurance MGAs, opportunities and considerations for investors
· Research and Markets: Specialty Insurance Market Report
· The insurer: European MGA growth to accelerate as super cycle expands beyond US
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