The rating agency suggests that US managing general agents (MGAs) need closer supervision from their capital providers, as their premium increased by 14.9% last year to reach $81.4bn.
Premium growth within the US delegated underwriting authority enterprise (DUAE) segment grew at a double-digit rate for a third consecutive year in 2023, according to a new AM Best report.
MGAs active in the US market increased their premium by a collective 14.9% last year, to reach $81.4bn, the rating agency has highlighted.
This growth in the has been spurred by rising collaborations with traditional insurers to underwrite specialty business through MGAs, AM Best said.
This has resulted in a larger share of the overall insurance industry’s premium shifting to the MGA space, the rating agency observed.
“Rapidly increasing premiums in [the MGA space] warrant greater oversight,” AM Best headlined its note.
“AM Best expects insurers to perform appropriate due diligence to prevent insurer insolvencies from MGA relationships,” the ratings firm added.
Key takeaways from AM Best:
- Substantial premium growth in 2023 demonstrates the importance of MGAs in the insurance value chain
- Our outlook on the DUAE market remains positive due to sustained global growth and momentum, as well as the superior ability of this market to cater to underserved and emerging risks
- Rapid insurance growth may point to increasing risk if lax underwriting or weaker product design drives the growth
- AM Best expects insurers to perform appropriate due diligence to prevent insurer insolvencies from MGA relationships
- Increasing ownership of DUAEs by private equity companies mandates greater scrutiny.
No comments yet