Unlocking growth with Howden Ventures: why start-ups should embrace the MGA status

The start-up landscape is in constant transformation, spurred on by innovation. The insurance industry in particular needs technology-driven solutions to ensure efficiency and scalability of products.[1] This is where Managing General Agents (MGAs) play a significant role: they act as intermediaries within the distribution chain between insurers and policyholders. 

Read on to find out about the opportunities within the MGA market and how Howden Ventures can help set up your start-up for success.

Why are MGAs so popular?

MGAs tend to attract entrepreneurs; they're a versatile business model that can introduce new products and product modifications in a fraction of the time it can take in traditional markets.[2][3] Far from being novel, the MGA market has been rapidly growing in recent years, thanks to the increasing demand for specialised products that can adapt to the changing business landscape. 

The US MGA market, the largest in the world, went from around US$15bn of premium underwritten by MGAs not affiliated with insurance companies in 2020 to almost US$33bn in 2022, with the global market reaching double this size.[4] This impressive growth is related to the fact that the insurance market is increasingly looking for technology expertise and digital tools which historically haven’t played a major role in the sector – particularly for automation, pricing, risk assessment and analytics.

Insurers are more and more interested in partnering with MGAs to leverage the specialised knowledge and skills that MGAs bring to the table. By being experts in their niche areas, MGAs are able to offer clients deep, unique and specialised solutions to needs that may be challenging for larger insurers to address. Moreover, integrating MGA technology enhances operational efficiency for insurance carriers. 

So, by becoming MGAs, start-ups can focus on delivering quality products to niche clients, in niche territories, without concerns about solvency. That’s why this model has a track record of delivering consistent growth of earnings, frequently outperforming both the stock market and the traditional balance sheet. 

Simultaneously, by combining their technology and the capacity behind them, and without the worry of taking on financial risks, MGAs can bridge the gap in the insurance market, aligning capital and carrier appetite with effective distribution. 

How can Howden Ventures boost your start-up?

Although a successful business model, MGAs are still relatively uncommon as they require a lot of effort to be achieved independently. Regulatory compliance, underwriting expertise, capital requirements, risk management, distribution channels – all of these can make it challenging for start-ups to become MGAs on their own. 

This is why Howden Ventures exists: to provide all the necessary resources and enable the transition from an early-stage start-up to a successful MGA.

MGAs are likely to play an ever-more important role in shaping the future of specialty insurance coverage. As new risks emerge across the economy, companies must align risk management with innovative investment opportunities. Howden Ventures actively fosters this culture of product innovation to help solve some of the world’s most critical risks.