MGAs are already
writing business worth £5bn, according to their trade association the MGAA, and by common consent there’s scope for that to grow – and Chris Butcher, CEO of
Ambant Underwriting Services, believes that all presents more than one benefit to brokers.
Ambant can provide the support, advice and regulatory cover to have an MGA up and running in as little as eight weeks, offering potential lucrative opportunities to brokers. Butcher told
Insurance Business: “Our clients are providing products to those brokers that they might not otherwise be seeing, and there’s the other example where a broker already has a niche and they have already put it into a scheme. We can help them take that scheme into a workable business that has a freehold value in its own right, so they keep the broking business as a broking business and build a freehold value business that they can take a dividend from or look to sell off in the future.”
Butcher, unsurprisingly, is a fan of MGAs and believes the model is driving innovation in the insurance industry. “The classic advantage of MGAs is they are capital-light,” he said. “There is a capital requirement but it’s nothing like a carrier capital requirement. It’s an extremely efficient, thin model and it’s adaptable. I think innovation is easier to perform in the MGA model than in the traditional insurance company model. MGAs are driving innovation.”
Ambant operates in three distinct tiers – at one end helping start-ups in largely under-exploited areas like intellectual property or the sharing economy. “That’s often for someone who has a clear idea of how they’re going to deal with sales and marketing of their product, but doesn’t really know anything about insurance,” says Butcher. In what he terms the middle tier is the more traditional MGA model – “a UK distribution model often with brokers as an intermediary, very often niche product areas, so niche that the traditional insurers are not comfortable that they have any expertise in that area,” explains Butcher. At the top end, Ambant is involved in M&A activity where insurers may be restructuring. “They will have us look after a block of business while they reposition it into a different vehicle,” says Butcher.
He adds: “We can take a business from a written business plan to operations in eight weeks because we have experience and a project-managed model we can deliver. That’s a pretty efficient way of getting a business going. We provide the infrastructure support around that business – in extreme cases they can sit in our office for the first few months, we can provide anything they need. We have in-house lawyers, accountants, company secretary and technical people – we have all the building blocks and we can just apply a little bit of that team’s time to get a business going.”
Here's Chris’s
top tips for setting up an MGA.
