The Australian market is one of the most innovative users of the managing general agent structure, a Global Insurance Law Connect report says.

The report – Innovation Abounds: Opportunities for Growth in the Global MGA Market – says the businesses, also known as underwriting agencies, increasingly provide solutions the commercial and consumer markets have struggled to fill.

“There is a growing role for MGAs in the Australian market as risk advisers and underwriting experts, in addition to placing risks,” Global Insurance Law Connect chair and Sparke Helmore partner in Australia Gillian Davidson said.

The report notes intermediary consolidation in Australia has continued to concentrate a large proportion of broker market share among a handful of companies.

“The provision of back-office services – research, agent training and computer software – is increasingly [conducted] by the larger broking networks,” it says. “This means smaller agents, dealing with clients, pay a fee for these services, which may be in the form of shared commission.”

Other areas of innovation include expected growth in trade and industry bodies setting up discretionary risk mutuals for challenging covers such as professional indemnity and public liability. The mutuals partly self-insure, then place upper layers into more traditional markets via MGAs.

Climate-related natural catastrophe covers are a growing area for MGAs, particularly in Australia, and the report suggests a likely jump in demand for sports cover ahead of the Brisbane 2030 Olympics could increase focus in that area. 

Ms Davidson says MGAs serve as an informal zone for more experimental products and ideas worldwide.

“Their backing by recognised capacity gives them credibility, while their independent management and underwriting allows them to think differently about how to service clients and solve new risk problems,” she said.

The report, covering Asia-Pacific, Europe, the UK, the Middle East and Latin America, notes Lloyd’s is a key player in the MGA space and has been an additional driver of agency formation in countries such as Australia and Belgium.