MGAA may enlarge membership to embrace insurtechs, says body’s chair Manchester
Many insurtech firms are very similar in their scope and function to managing general agents – and could benefit from being part of the Managing General Agents' Association (MGAA).
That is the view of Charles Manchester, chairman of the MGAA, speaking ahead of the organisation’s annual conference and exhibition, which is taking place in London this week, the theme of which is The Future of Insurance.
Manchester wants to enlarge the membership of the organisation to include insurtech companies.
“The underwriting insurtech businesses are generally constituted as MGAs,” Manchester said. “It would take far too much to start with a rated balance sheet.”
A common theme between insurtech firms and MGAs is the partnership with an insurer for the provision of capacity. Another common feature is that both are driven by an entrepreneurial spirit, Manchester noted.
“Something the MGAA is looking at is trying to make ourselves more attractive and more relevant to insurtech companies, because the purpose of our existence is to promote and support the MGA community and insurtech companies are part of that community,” Manchester said.
“Given that they need the support of experienced insurance professionals you would think that they would actually benefit from being a member of the trade association.”
The MGAA was formed in 2011 to represent the MGA sector to drive best practice and shape the future of delegated underwriting in the UK.
Part of this future includes dealing with the uncertainties around Brexit as many MGAs write business in the European Economic Area (EEA). “Many of them write business from the UK to brokers based in the EEA,” Manchester said, noting that these businesses will not be impacted too much provided that their paper is authorised in the EEA. “As long as they have the right insurers backing them by and large they are not going to have to do a whole lot,” he said.
The situation may be a little more complicated for MGAs that are selling directly to insureds that are based in the EEA. “They will need to have some sort of authorised intermediate in the chain,” Manchester said. Some MGAs are also setting up operations within the EU to ensure that they will be able to continue to serve clients after the UK leaves the EU.
“It all depends on your distribution, which countries you are dealing with. That’s where we are providing advice to our members,” Manchester said.
In addition, the MGAA wants to help its members prepare for the insurance distribution directive and the training requirements that it entails. The MGAA is cooperating with the Chartered Insurance Institute and will launch the training soon.
MGAs that write their own policies and set their own rates will need to provide the necessary material to brokers and insureds to allow them to understand what they are buying, Manchester explained. “There is quite a lot of compliance necessary there,” he said.
The introduction of Solvency II is also driving compliance work up as the regulation requires ever more granular data from MGAs by insurers, which can be particularly difficult for the smaller MGAs. “This is what we are there to try to help them with,” Manchester said.
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