IGI UK: All change at Lloyd’s amid rapid MGA growth

Lloyd’s of London has undergone a transformation in recent years and its return to profitability is attracting new entrants, including IGI, which opened a box in Lime Street’s iconic underwriting room in May this year.

Lloyd’s recorded its highest gross written premium (GWP) result in sixteen years in 2023, having written over £52bn in GWP. The results demonstrated a steady underlying underwriting performance, which has enhanced Lloyd’s standing with credit rating agencies.

With this recent track record, it’s no wonder there has been increased interest in Lloyd’s from the insurance and investment sectors over the past two years.

Lloyd’s has also been working hard to become a market-leading profitable underwriting platform. The institution has rolled out several initiatives, including attracting big underwriting franchises as well as smaller entrepreneurial companies, hosting captives, opening its doors to new investors, and encouraging innovation.

As a result, prominent companies like Aviva, Fidelis, and Blackstone are among the recent newcomers. IGI saw the opportunity to access a new distribution channel and discover new business opportunities in carefully selected regions and markets.

Change at Lloyd’s

Lloyd’s has brushed off its image as being overly bureaucratic and has grown more flexible in recent years, coming up with fresh concepts to attract smaller syndicates that will hopefully grow into larger organizations.

Being associated with a globally respected 330-year-old, “A+” rated organisation like Lloyd’s has many advantages, such as giving access to special business that comes with being housed in the Lloyd’s building and providing a marketplace for in-person negotiations. It also presents an opportunity for brokers to interact directly with our underwriters.

While IGI has not formed a syndicate, we may look at it again in the future if market conditions are favourable.

MGA evolution

The managing general agent (MGA) market has grown rapidly in the last five to 10 years, and several of them are now bigger than typical insurers. Companies in the re/insurance space are increasingly considering creating their own MGAs, supported by both internal and external capital, that function independently.

MGAs can be an important and valuable link in the insurance distribution value chain, positioned between other intermediaries, such as retail or wholesale brokers and insurance companies. Certain distribution models have minimal central costs because they are expressly designed to write MGA business; these expenses are covered by an extra override to the MGA.

While MGAs were once only seen as a way to gain wider and better distribution, today they are more prized for their access to capacity and expertise. As more insurance companies become aware of the advantages that MGAs offer - including specialised knowledge, lower risk, broader geographic coverage, and the speed and innovation that come from adopting cutting-edge technology and having an entrepreneurial mindset - the number of MGAs will only rise.

It is not surprising that the market has embraced and welcomed the MGA model, as it gives brokers and consumers more options and enables insurers to tap into specialist segments of the industry.

Consequently, MGAs are becoming advocates of the wider underwriting industry and many companies in the market – including IGI – are prepared to assist skilled MGAs with robust underwriting expertise and a deep understanding of the markets in which they operate.

Andreas Loucaides (pictured) is CEO of IGI UK