Resources for mGAs

Here we outline some resources that we hope are helpful for new MGAs who are looking to obtain capacity.

Contact us to see how we can help get your new product live - quickly and efficiently. 

How to Get MGA Capacity

As an MGA, getting capacity is one of the most important parts of your business and one of the very first things you will likely need to get sorted. But securing capacity can be a challenge. It can take months of negotiations from when you first meet a carrier partner to finally getting your program administrator contract signed.  Here are some things to consider that can help maximize your chances of securing capacity.

What Do Carriers and Capacity Partners Look For in MGAs?

Carriers and capacity partners are typically looking for MGA with program opportunities that include one or more of the following:

  • Access to an existing book of business with favorable historic performance
  • Distribution advantage and unique access to target/desirable customer segments
  • Underwriting expertise, typically in niche and/or volatile product lines
  • Technology or data advantage that can potentially improve risk selection or loss exposure and reduce loss ratios
  • Technology advantage that can potentially provide efficiency benefits to reduce overall expense ratios

For example, It is no secret that the property market in California has been challenging with many carriers sending out non-renewals and pulling out of the state. While there may be a big market opportunity here, an MGA seeking carrier support to fill this gap in the market will need to make the case.

A great way to stand out is with an up-and-running technology platform and a clear distribution strategy that aligns with your tech. Although many technology platforms require large upfront integration fees, some will allow startups to set up without that upfront cost, particularly platforms that are built to be out-of-the-box solutions with little customization. Choose a platform that aligns with your distribution strategy. For instance, if you seek to set up an online storefront with instant quoting and binding, customer self-service, and embedded functionality in third-party sites, you may want to have demos of those features available for potential carrier partners. Similarly, if you have distribution partnerships in mind, having these at the finish line from both a contract and technology perspective will be compelling to potential carrier partners.  

What Does a Program Submission Look Like?

In addition to making sure you have a viable program opportunity that could attract support, you will also need to put together your initial introduction deck and program submission. The submission requirements will vary greatly depending on your product and the type of capacity provider you are talking to. But your initial intro pitch should include:

  • Summaries and bios of key MGA personnel
  • Description of market opportunity and/or problem
  • Overview of proposed program, product line, special features and historic experience (if this is a completely new product, include details)
  • Your program differentiators and advantages (technology, loss exposure, etc)

If a capacity provider expresses interest, some additional materials that may also be required include:

  • Draft policy forms and endorsements
  • Underwriting guidelines
  • Rater and rate plan
  • Loss history or proxy to support loss pick and pricing

If you are talking to a major carrier who is already established in the product line you are seeking capacity for, they will want to know that you understand the product and the market, but they may also rely on their in-house underwriting, loss and market data. They will likely also want to use their own policy form and leverage their own underwriting guidelines and rating plans. This is less work from a product perspective for the MGA but could also mean more program restrictions. Fronting carriers and reinsurers will often rely entirely on the MGA's expertise to put together forms, guidelines and ratings.

Should I Use a Reinsurance Broker?

It is certainly possible for you to approach capacity partners directly to secure capacity without a reinsurance broker, particularly if you have a wide network in the industry. Utilize your contacts at carriers and other MGAs. Target Markets is a program administrators association that can help you connect directly with capacity providers.

If you have a new or hard-to-place product or need access to a wider network, then you might consider utilizing a reinsurance broker. Reinsurance brokers can help you put together a compelling submission and facilitate introductions and meetings with a wider network of capacity providers, from carriers to reinsurers. They are a great resource, but they can be costly for a new company. Most reinsurance brokers will charge based on a percentage of your premiums for several years.

Starting an MGA is a challenge. Stepping out of the large carrier or broker on your own can be daunting. But it's also a great opportunity to create a brand new product and strategy. One of the most important tasks from early on is partnering with the right technology provider to ensure not only that you are fast, efficient and accurate, but also that you have the features you need to execute your plan. Contact us today to learn about how we can partner with you to help you demonstrate your product and strategy to carrier partners.