How can we support talent in the MGA industry?
Over the last six weeks or so, a number of MGAs have launched in the London market, led by well known, experienced practitioners such as Concordia and Horizon.
Whilst it is great that the MGA market is growing, I agree with a recent initiative from the MGAA which focuses on the need to improve the talent that is available to lead MGAs. If enough high quality MGAs are to come to market we need to establish and develop the market’s talent base, by asking where does that talent come from? And how can we support it as an industry?
In my previous blogs we have looked at the different components of launching an MGA, such as identifying a niche, dealing with regulation and having appropriate back office outsourcing functions, but all of these are secondary to the experience of the founding team and gaining an effective level of experience is the complex part of the equation. Listed below are the four characteristics that I believe can help overcome this Catch 22 scenario.
Understand the industry and your particular book of business or area of the market inside out. It is vital to fully grasp all the risks, pricing, policy wording, claims, actuarial and reserving issues, as dealing proficiently and confidently with these are the building blocks from which to grow a MGA.
There is no substitute for gaining experience through practising what you have learnt and understanding how processes come together through the on-the-job learning of underwriting. The most successful MGAs are therefore likely to be those where the underwriter has spent significant time in their career actually successfully underwriting the book of business before founding the MGA.
People and relationships
Relationships are synonymous with Lloyd’s and the insurance industry. Broker distribution is key, and therefore gaining exposure to people within the market, both in a business and in a social context, is key to creating and building the network needed to successfully launch and develop an MGA.
This is arguably the most difficult quality to gain as it is in some ways, a natural skill that can only really be honed through experience. To create a successful business though, it is important to have an understanding and experience of business acumen ie. being business minded and profit orientated: understanding the income line, the expenditure line, how to control costs and reading a balance sheet.
All four of these elements are needed to launch and run a successful MGA, not necessarily in one person but the management team together should embody them.
The next generation therefore need to develop a wide range of experience of the many different aspects of insurance as possible and gain the full range of skills they need to succeed in the market. If they do this well and take advantage of all the various learning opportunities, then we can look forward to more and more successful MGAs launching in the future.