Over the past few years, the MGA market has reaped the benefits of a robust economy. In 2021 and 2022, the MGA sector wrote tens of billions of dollars in premium that drove innovation and competition. Moving into 2023, MGA’s have a strong foothold in specialty markets and the property and casualty space, but will they be able to stay the course amid this year’s anticipated economic turbulence?
While the economy was favorable to MGAs in 2021 and 2022, residual supply chain issues, political concerns, international tensions and more have set the stage for a recession. As MGAs look to the future, here are a few market trends they should be aware of that could impact growth:
Mergers & Acquisitions: The threats to the economic landscape have made mergers & acquisitions much more expensive. Federal rate hikes, inflation and the threat of a recession have all contributed to the decrease in deals made. As such, MGAs will benefit from remaining diligent in their short and long-term goals to prove their expertise and set themselves apart in the eyes of buyers.
Capacity: Even in the ongoing hard insurance market, MGAs have benefited from steady capacity.In 2023, start-ups will likely experience more constrained capacity, on top of the decreased interest in M&A activity. Carriers are also feeling economic pressure, meaning they will be picky when considering an MGA. The key is for MGAs to position themselves as experts in their industries and prove their ability to mitigate risk. MGAs should call on experienced underwriters who can assist in creating a plan that recognizes any potential economic obstacles and how the agency will combat them.
The economic market may not be as advantageous in 2023 as it was 2021 and 2022, but agents and underwriters can leverage the expertise they’ve built to appeal to carriers and weather the economic turmoil this year. With a little planning and the correct expertise, MGAs can continue their growth trajectory and pave the way for future start-ups.