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Chris Butcher, chief executive officer, Davies Insurance Services
10 September 2019Insurance

Corporate insurers are exploring how to use MGA model more effectively

There is a trend for corporate insurers to explore how to use the managing general agent (MGA) model more effectively, Chris Butcher, chief executive officer, Intermediary Services for Davies Insurance Services, told Monte Carlo Today.

“This is less by attaching new products lines and teams and more by considering having an intermediary platform as a method of putting third party capital behind an MGA, allowing it to grow fee revenue and support its client base without necessarily putting business on its own balance sheet,” Butcher said.

He added that they are looking to stimulate their business in new ways: by taking the portfolio away from the legacy structure that exists in an insurer, putting it on a new platform and dropping in a new management team in order to reinvigorate the business and get process efficiency behind it.

“We’re looking at more big-ticket opportunities around re-energising the future of customer experience,” he added.

Other current themes include the recent difficulties experienced by insurers backed by Lloyd’s capacity.

“This is pitched against the positive messaging we are getting from Lloyd’s about how the market is going to be very different in the future and how the six pillars are going to transform the Lloyd’s market which is great, but that isn’t the position today in terms of the interaction with the market,” Butcher said.

“That has given an opportunity to non-Lloyd’s insurers to step in and be more active in areas they are looking to grow in,” he said.

Another hot topic is disintermediation, an aim that has led to reinsurers trying to get closer to the end customer by entering the primary space.

“Linked to that is the same issue in the utilisation of the MGA model to achieve that shortening of the supply chain,” he said.

“It’s an issue that’s been around for a while, but I think there’s traction behind it.

“There’s finally momentum around realising you don’t have to just think about it conceptually let’s get on and make those changes.

“I hope that will drive sufficient change in the market, but from a personal perspective a lot of what we are doing is technology-driven there is a realisation that we need to operate in a different way from before,” he concluded.

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