Best’s Market Segment Report: Rapidly Increasing Premiums in Managing General Agent Space Warrant Greater Oversight
2024年5月22日 - 9:40PM
ビジネスワイヤ(英語)
Premium growth within the U.S. delegated underwriting authority
enterprise (DUAE) segment grew at a double-digit rate for a third
consecutive year in 2023, increasing by 14.9% to $81.4 billion,
according to a new AM Best report. The growth was spurred by
rising DUAE collaborations with insurers to write specialty
business, resulting in a larger share of industry premium shifting
to the managing general agent (MGA) space.
For some lines of coverage—catastrophe-exposed property,
commercial auto, and umbrella and excess coverage in
particular—hardening market conditions over the past few years have
driven business to the surplus lines market, with MGAs serving as
an important distribution channel.
“While softer pricing on other commercial casualty lines have
placed downward pressure on total market premiums, MGAs working
with recent start-up specialty commercial carriers have offset that
impact and fueled top-line revenue growth for these insurers,” said
Greg Williams, senior director, AM Best.
In 2022, five MGAs generated more than $1.0 billion in top-line
premium revenue. In 2023, the number of MGAs in that category
increased to seven, which has generated increased investor
interest. Private equity investment firms have been drawn by the
potential returns offered by MGAs, which serve as intermediaries
between insurers and clients. The report notes that these private
equity firms view MGAs as lucrative, given their ability to
generate stable cash flows through commissions and fees on
insurance policies.
However, the report also strikes a cautionary note on this
growing DUAE segment, especially when MGAs, managing general
underwriters (MGUs), and program managers gain authority over
underwriting, pricing, and binding decision-making without
effective risk controls. Some MGAs have abused their authority,
writing unprofitable business to increase commissions. According to
the report. an analysis of the U.S. property/casualty market for
the years 2000 to 2022 shows that the third leading cause of
impairments was due to affiliated programs.
“Insurers must structure their relationships with these DUAEs
with appropriate checks and balances,” said Dawn Walker, associate
director, AM Best.
In response to this segment’s growth, AM Best introduced its
Best’s Performance Assessment in 2022, providing an industry-first
tool providing an objective, independent opinion of a DUAE’s
ability to perform services on behalf of its insurance partners. AM
Best also affirmed its positive outlook for the DUAE market segment
in November 2023.
To access this market segment report, please visit
http://www3.ambest.com/bestweek/purchase.asp?record_code=343051.
Williams and Walker will join two industry analysts to discuss
the DUAE segment during a complimentary market briefing scheduled
for Thursday, May 23, 2024, at 2 p.m. (EDT). To register, or for
more information, please go to the event and registration page.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2024 by AM Best Rating Services,
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Greg Williams Senior Director +1 908 882 2434
greg.williams@ambest.com Dawn Walker Associate Director,
Industry Relations - DUAE +1 908 882 2422
dawn.walker@ambest.com Christopher Sharkey Associate Director,
Public Relations +1 908 882 2310 christopher.sharkey@ambest.com
Al Slavin Senior Public Relations Specialist +1 908 882 2318
al.slavin@ambest.com