Alternative Routes for Growth: Insurtech and MGAs
Clyde & Co.’s Insurance Growth Report 2019 highlighted the growing importance of MGAs. According to the report, MGAs are now “one of the fastest-growing segments of the insurance industry” and underwrite over 10% of the UK’s general insurance market premiums. In the U.S., “MGA growth continues to outpace the growth of the property and casualty market” and 21 out of 25 of the top property/casualty insurers have relationships with MGAs. For re/insurers worldwide, MGAs offer a way to either enhance their distribution or provide an alternative to acquisition, as it is far simpler to prop up an MGA or invest in an existing one.
The growth report also highlighted insurtech as an avenue for growth—reasonably enough, considering it received $1.3 billion USD in funding in Q3 2018, “up 20% from the previous quarter”, according to a study by Willis Towers Watson. But most crucially, insurtech can allow the insurance industry to access historically underserved markets, due to the “explosion of innovation” that has characterized the insurtech space in more recent years. One way insurers can make use of new technologies and platforms is either by partnering with an insurtech MGA or investing in one, as MGAs are able to approach these underinsured areas with a “clean slate, unencumbered by legacy systems or processes.”