Insuramore: Global delegated authority premiums hit $100bn in 2020

Premiums in the global delegated underwriting authority market totalled $100bn in 2020, according to estimates from Insuramore, with revenues generated by MGAs, MGUs and coverholder groups hitting $12.5bn fuelled by growth in E&S lines and mounting interest in specialist risk classes such as cyber.

London-based Insuramore believes there are some 1,000 groups within the MGA space around the world, with around 2,000 individual MGAs actually operational.

And based on the estimated $12.5bn of revenues generated by MGAs around the world in 2020, Insuramore said premiums intermediated by such operations would stand at some $100bn.

That $100bn tallies with the figure suggested by Alan Quilter, the CEO of Randall & Quilter (R&Q), who has also overseen the group’s expansion in the fronting and program markets during the past four years.

In an interview with The Insurer’s Program Manager platform last month, Quilter said the global MGA market “is $100bn when calculated on premiums, with more than half – say $60bn – in the US”.

And that estimate for US MGA premium volume matches the $60bn figure put forward by participants in The Insurer TV’s July programs-focused episode of Prospective.

As Insuramore noted in its study, new launches within the MGA and broader delegated underwriting authority space “have been coming thick and fast in recent times”. These new entities are typically seeking to take advantage of opportunities afforded by use of advanced technologies, for example insurtechs.

And these new MGA start-ups have helped revenues within the market grow.

Partly because of these new MGAs, Insuramore said the $12.5bn of revenues in the specialist delegated underwriting authority sector are likely to have grown at a faster pace than those in the far larger broking market. According to Insuramore, total insurance broker revenues amounted to $117.7bn in 2020.

The MGA market’s growth has also been supported by what Insuramore described as “superior growth in segments of the insurance market traditionally served by MGAs”, for example the E&S sector, “plus the emergence of specialized risk classes for which the need for highly customized underwriting makes them well-suited to the MGA model”, with cyber being a case in point.

Fragmented MGA market

According to Insuramore’s research, the top five MGA groups – all of which are based in the US - accounted for almost $2.3bn of the $12.5bn of revenues generated in the sector last year, equal to some 15.9 percent.

The top 20 largest MGA groups represented 37.1 percent of global revenues, while the top 50 accounted for 54.4 percent. The largest 100 MGA groups represented 66.1 percent of delegated underwriting authority revenues, and the biggest 250 held 79.5 percent of the market.

As the table shows, Brown & Brown led the way in terms of being the largest player in the MGA space with the company the parent of notable players in the space such as Arrowhead General, Hull & Company, JE Brown & Associates and Special Risk Insurance Managers.

Hagerty, which is set to go public having agreed a merger with special purpose acquisition company Aldel Financial that values the specialist auto MGA at $3.13bn, is the second largest MGA platform based on revenues, according to Insuramore.

Amwins holds third spot, according to Insuramore’s research, with the company owning multiple operations engaged in the delegated underwriting market including Amwins Specialty Logistic Underwriters, Atlantic Risk Specialists, Seacoast Brokers, The Flood Insurance Agency and Unicorn Underwriting.

Ryan Specialty Group, which recently went public and whose CEO of underwriting management specialty business RSG Underwriting Managers Tom Clark will step down at the end of this month, is in fourth place, with its operations in the sector including Concord Specialty Risk, EmergIn Risk, JEM Underwriting Managers, RyanRe Underwriting Managers and WKFC Underwriting Managers, among others.

Truist Insurance Holdings, the parent of AmRisc and CRC Group, is in fifth spot.

Bulk of MGA groups remain independent

Of 2020’s largest 250 MGA groups, Insuramore said 167 were independent, although many were backed by private equity firms. A further 55 were classified as broker-owned, with a further 28 having parents that are carriers.

Within the biggest 250, Insuramore said 73 were “specialists” in that they focus solely on one product class, or a small number of closely-aligned ones such as cyber and technology errors and omissions, or personal auto and home. The rest, Insuramore said, can be classified as multiline.

The majority - 145 - of the 250 largest MGA groups are based in the Americas, with 134 in the US. A further 89 are based in Africa, Europe and the Middle East, with 46 of these headquartered in the UK. The remaining 16 are either in the Asia-Pacific region or Australasia, Insuramore said.