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After the shock - insurance in 2021 and beyond

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Page 25 of 31

After the shock — Insurance in 2021 and beyond 26 MGAs and underwriting agencies: The battle for capacity Obtaining and keeping capacity has been a challenge for MGAs and underwriting agencies for a couple of years now, as the market has hardened and capacity has left the market. Greater pressure has been applied as InsurTechs increasingly adopt the MGA model, adding additional competition for capacity that is becoming scarcer. 43 Proceeding with caution: A survey of MGA and insurance carrier opinion on the state of the MGA sector, Clyde&Co As the battle for capacity intensifies, MGAs and underwriting agencies are coming under increased scrutiny. These agencies must prove that they are truly adding value to their capacity provider. Of course, the primary purpose of MGAs is to provide carriers with efficient access to new markets that fall outside of their primary underwriting expertise, and to deliver strong underwriting performance on these product lines. I mentioned in an earlier chapter that insurers are increasingly utilising management information to assess their capacity and portfolio performance and are continually calibrating strategy based on the information available. Should underwriting agencies fail to deliver adequate results then carriers will withdraw capacity. In a Clyde&Co 43 report, Charles Manchester (CEO of Manchester Underwriting Management) highlights the fact that COVID-19 has heightened this pressure on MGAs: Add real value COVID-19 has accelerated an already hardening marketplace for MGA capacity. While MGAs with a good story and who add value will continue to thrive and be able to access capacity, those that haven't made money or who, bluntly, haven't added value may struggle. Overall, capacity providers are going to be more selective in 2020 and onward into 2021. Cycle&Co

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