Between the question mark over global trade tariffs, an ongoing talent crunch and rapid consolidation, the UK insurance market is living through interesting times. In conversation with Insurance Business, Simon McGinn (pictured), a long-serving insurance stalwart who recently made his first foray into the MGA world when he joined DUAL as UK CEO, offered his perspective on current conditions – and how they’re offering an opportunity for the MGA proposition to shine.
Read more: Simon McGinn steps up as DUAL UK CEO
Addressing the state of in the MGA market, he noted that not only is it buoyant and in “expansion mode” but he believes it is “probably the growth of the insurance market in the UK of the next five to 10 years”. There’s a number of reasons why he believes that and key among them is the deeply dynamic and increasingly sophisticated nature of today’s risk environment.
The risks that customers require coverage for today are both complex and often heavily interconnected and so it is becoming harder to package up one-size-fits-all product sets. That’s not to say that there’s not a large core of the market where that approach works very well, he said, and that more mainstream market segment is very well served by the larger incumbents. “But increasingly, with risk being more dynamic and diverse at the edges, the need for the solutions that MGAs can deliver is only growing,” he said.
A glance at the morning’s headlines shows how changeable the risk environment is today, McGinn said, and he posits that MGAs offer the best route to solving that complexity. MGAs combine the capabilities of capacity providers whose own models may not necessarily lend themselves to servicing particular niche segments of the market in a cost-effective manner.
“With an MGA, you have the strength of capital behind you but then you also having the agility and ability to identify niches using experts who can figure out what customers need, and the products and propositions to meet that need,” he said. “And then they have the ability not only to work with an individual capacity provider, but potentially a combination of capacity providers to deliver solutions.”
The analogy he often uses is that while a composite is like a very high-quality Lego set which comes with a certain set, shape and colour of bricks, an MGA is like having access to everybody’s sets of Lego bricks. With that comes the ability to establish creative solutions using different colours, structures and shapes, he said, and while these don’t come with an instruction manual, they do allow you to build a truly tailored solution. “And that is freeing but it is also challenging because it requires real consideration, every day, of the complexity of the value chain.”
The MGA market offers its participants the chance to answer the challenges that the world is throwing at the insurance industry, McGinn said. “For the people joining it, it’s an exciting and dynamic place to not only build solutions for customers but also to build a career,” he said. “[…] It is a buoyant industry and I’m only seeing more solutions being developed. When I turned up here 14 months ago. I thought I knew a bit about insurance.
“But within about two to three weeks, I was listening to people talk about products and solutions that I never even dreamed that you could build. So, I think that sort of energy and that entrepreneurial spirit is continuing to drive the MGA models forward.” Increasingly, he added, capacity providers are looking to the MGA world as an opportunity to diversify their portfolios. It also allows them to participate in risk pools that they may not want to do on a global scale.
“[The MGA model enables them] to add to their own portfolios of very core, stable, well-run businesses, by carefully selecting the sort of MGAs to work with that can deliver further benefit and greater diversification for them, which, in a very up and down risk environment, is going to be important for them.”
