GILC: Clear MGA market interest across Europe
Europe’s MGA sector is poised for further expansion with continued growth expected in leading economies such as France and Germany, albeit at a slower pace than in some of the continent’s less developed markets, according to Global Insurance Law Connect (GILC).
According to the group, which is a collection of law firms with insurance expertise from around the globe, regulatory support is key to the MGA market’s growth in Europe.
As GILC noted, in Belgium the number of MGAs has been steadily growing since the country’s Insurance Act was amended in October last year.
Through to the end of 2023, there were 56 MGAs registered with Belgium’s Financial Services and Markets Authority.
The growth of Belgium’s MGA market has been buoyed by a number of entities settling up in the country to conduct distribution activities throughout Europe, GILC noted in its Opportunities for Growth in the Global MGA Market report.
Europe’s MGA growth has also been supported by the establishment of Lloyd’s Insurance Company SA, which now conducts much of its (re)insurance business throughout the European Economic Area (EEA) through its Brussels head office.
Beyond those European countries that already have established MGA markets, GILC said there is “clear interest” in the sector.
However, as GILC member Kyriakides Georgopoulos Law (KG) noted about the state of play in its native Greek market, there is a need for greater legal and regulatory clarity around the status of MGAs.
At the same time, KG said greater buy-in is also needed from local insurers for delegating underwriting authority to MGAs if the sector is to grow in these less well-established markets.
“Although there are currently few MGAs in Greece, we have already been approached by clients who are interested in exploring the possibility of entering the Greek market in order to operate under this business model,” said Zaphirenia Theodoraki, senior associate at KG in Greece.
“In the coming years, we expect that more parties will express interest and will require assistance in relation to the operation of MGAs in Greece.”
Elsewhere, GILC said “both Spain and Switzerland seem poised for growth in their respective MGA markets, driven by growing demand for niche, personalized and specialist insurance products”.
GILC said the continuing digitization of the insurance sector – which is driving better data analysis, operational efficiencies and an improved customer experience – along with cost efficiencies and the greater agility that the MGA model offers to insurers that are looking to grow their presence digitally are further reasons why the sector is expected to grow in Spain and Switzerland.
In Italy, while there is difficulty in assessing the size of the MGA market in the country, there is an expectation the sector is primed for growth, particularly for those firms that can offer specialist coverages such as cyber, fine art and specie, and for agencies looking to expand their presence in the local sector through the digitisation of insurance.
Further north in Ireland, GILC noted both internal and external drivers that will support the growth of the MGA market in the country.
As with other EU countries that license MGAs, GILC said Ireland is an attractive market because of the ability to passport into EEA countries.
But the law firm group also said there are indications that growth could be inhibited in the longer term if the current shortage of underwriting capacity continues.