Why the future is bright for the MGA market in Europe

Why the future is bright for the MGA market in Europe

Why the future is bright for the MGA market in Europe | Insurance Business UK

MD on the ‘foe to friend’ evolution taking place in the sector

Why the future is bright for the MGA market in Europe

Insurance News

Mia Wallace

Europe is fast establishing itself as a new gateway for the managing general agents (MGA) market and it’s poised for significant growth – that’s the message from Hans Martin Døhlen (pictured) who stepped into the newly-created role of MD of Pro MGA Solutions’ European platform in November of last year.

The ‘turbo-rise’ of the market is reflected in the fact that 2023 saw a record 15+ MGAs incubated in Europe through Pro MGA, he said, and is forecasting double-digit opportunities and €100 million in premiums across its supported MGAs by year-end 2024. For Døhlen, the question now is how to support businesses looking to enter and grow in new territories. It’s a task he has ample experience in accomplishing having previously served as MD of an MGA and Lloyd’s Syndicate ably supported by Pro MGA Solution’s infrastructure and people.

“It was about five years ago that I came out of corporate insurance after 10 years with one of the global carriers,” Døhlen said. “At the time, I felt that innovation wasn’t really a core strength in a marketplace where there should be a lot more, as showcased by the insurance coverage gap and how insurers aren’t being seen by clients to be innovating in order to develop the products and solutions required to meet their coverage needs.”

The support of Danny Maleary [CEO of Pro MGA Solutions] and his team in helping him establish his MGA was his first introduction to the business, but what held his attention was their stated ambition to make MGAs a standpoint of innovation and market growth. When he was asked to help develop the business’s European expansion ambitions, he said, it was a rare case of “the stars aligning”.

“Previously, Pro MGA was very much London-focused because London has always been the go-to place for MGAs globally,” he said. “However, what the team has seen is a big trend towards clients embracing the MGA model across the European continent so they wanted somebody on the ground to support them with those ambitions. And they already had a German vehicle set up so it was easy for me to join.”

How is the MGA market developing in Europe today?

Assessing the MGA market in Europe today, Døhlen noted the 20-plus set-ups carried out by Pro MGA were across different business classes, risk classes and sizes. The pipeline for this year is similarly strong, he said, and the firm is seeing high demand from individuals and organizations who are actively pursuing the MGA path.

There are a lot of factors at play behind this, he said, but key has been the changing attitude of risk carriers towards MGAs. These carriers no longer see MGAs as a threat to their market superiority but instead are embracing the opportunity to benefit from partnering with organisations with innovation and agility at the core of their mindsets.

“They are embracing more of a risk partnership model, which we’re seeing across the insurtech sector with how they’re evolving from ‘foe to friend’ by partnering and combining strengths instead of being in competition,” he said. “So, it’s all about being high-pace and having the ability to work with data and technology without being stopped by the legacy issues, which is a typical challenge amongst big insurers.

“It’s about them being able to dip their toes into new products and new markets and, in doing so, achieving growth. Something we’re seeing more insurers enjoying and embracing is the Lloyd’s coverholder model as well, which insurance companies are happy to support given that they know the framework.”

What’s behind the change in MGAs in Europe?

The change in approach has been “more of an evolution than a revolution” Døhlen said, because MGAs have worked to get themselves into shape as the clear go-to set-up for risk carriers. Brokers have also been instrumental in enabling that evolutionary shift by supporting MGAs, and affirming the value case of this business model.

He highlighted that some of the credit must also be given to clients because they have proven themselves prepared to purchase insurance from new and emerging companies, buoyed by their appetite for a rejuvenated value proposition that is more aligned with their specific needs and interests. It’s a very rewarding time to be in the market, he said, because with innovation now front of mind, MGAs have a very clear role to play– and he’s positive this will continue in the coming years.

The future is especially bright in Europe, he said, where, largely speaking, it’s relatively easy to set up an MGA and the path to doing so is increasingly well-trodden. Insurance companies giving the MGA model their stamp of approval is leading to increased instances of insurers partnering with MGAs which, in turn, is encouraging more brokers and clients to step away from traditional placement models.

How MGAs continue to utilise data and technology remains a key driver of the success of the model, he said, and it’s when all these factors come together that you have a really strong platform on which MGAs can thrive.

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