Showing support for the MGAA

It will evolve from having an unelected board of like-minded individuals to a newly constituted board elected by its fast-growing membership. With this process underway it's worth revisiting the special significance of the coverholder/MGA model to the Lloyd's market.

The term 'coverholder' originates from within the Lloyd’s market and describes a company or partnership authorised to write contracts of insurance on behalf of a syndicate. Outside the Lloyd’s market, coverholders may be known under different names. In the UK and US they are known as MGAs, while in some parts of Europe and in Australia they are described as 'underwriting agents'.  Increasingly though, the term 'coverholder' is being adopted outside the Lloyd’s market.

Coverholders are a vital part of the Lloyd's distribution network. They enable Lloyd’s managing agents to operate in a certain region or country, compete with local insurers and, in particular, access SME business efficiently. Globally, around 30% of Lloyd's premium income is derived from coverholders so their importance cannot be underestimated. 

Today almost a third of Lloyd's UK portfolio is derived from a network of around 600 coverholders, comprising both broking firms with binding authorities and dedicated MGAs who are 'pure' underwriting agencies and don't undertake any broking.
 
The approval of coverholders at Lloyd’s sits with the Delegated Authorities Team - with whom I work very closely. In the past 18 months I've visited around 40 prospective UK coverholders from Gateshead to Glasgow, Birmingham to Bristol, assisting in the application process by making recommendations as to each applicant's ability to meet the qualification criteria.

So why do we need the MGAA? The coverholder model is not unique to Lloyd’s and there are believed to be in excess of 200 'pure' MGAs in the UK. They are a long-standing and highly profitable part of the insurance market but historically the UK MGA sector has had no independent representative or voice.

The transition of the MGAA to an elected board is a great opportunity for Lloyd's to support this fledgling association as it grows in representation and strength. Insurance carriers, intermediaries and policyholders all stand to benefit from its existence. The MGAA will ensure that the role its members play in the insurance industry isn't under-valued and will help MGAs receive the recognition they richly deserve.

The objectives of the MGAA can be found at www.mgaa.co.uk/objectives. If you are an MGA, an insurance carrier/managing agent or Lloyd’s broker/service provider and you would like more information about joining the MGAA then get in touch.