The continued rise of marine MGAs

As ships continue to sail an extra 3,000 miles around the Cape of Good Hope to avoid conflict in the Red Sea, the maritime industry faces further stark reminders of its vulnerability to geopolitical upheaval.

With shipping’s ambitious climate targets promising to lead to a fundamental overhaul of routes, assets and infrastructure and cyber threats testing traditional risk models, the sector’s insurers find themselves navigating uncharted waters.

The traditional bastions of marine insurance – particularly protection and indemnity clubs – have long been the bedrock of shipping coverage. But as risks become more complex and immediate, a more agile approach is emerging. Enter the managing general agent (MGA). These nimble operators, once considered supporting actors in the grand theatre of marine insurance, are now stepping into the spotlight, offering solutions where traditional markets sometimes prefer not to go.

At their core, MGAs are specialist intermediaries with a crucial difference. Unlike traditional brokers who work on behalf of policyholders, MGAs act for insurers, wielding delegated authority to underwrite and bind coverage. Their value lies in their deep specialist expertise – a particularly vital asset in the complex world of marine risk. Through partnerships with major carriers, MGAs can offer the security of established insurance markets combined with the agility and specialist knowledge of a focused operator.

This specialist approach is proving particularly valuable in addressing the marine sector’s challenges.

Andrew James, Gallagher Specialty

“MGAs’ ability to operate in specific industry niches allows them to quickly understand what customers are looking for and what they can do to assist,” Andrew James, managing director for marine at Gallagher Specialty, says.

Gallagher places about £800m of marine insurance premium annually, with £80bn in insured hull values and £24bn of insured port values on its books. James emphasises MGAs are “highly responsive, provide quotes and information quickly and their service is excellent”.

“MGAs are a great home for underwriters who may have worked at large multi-line insurers and are looking to become the masters of their own destiny, as they can make the critical decisions much more easily than in some large organisations”
_{Andrew James
Gallagher Specialty}

This is evident from recent launches of new marine MGAs such as Ai Marine Risk, specialising in marine hull insurance with a focus on global risk solutions and a strong Scandinavian distribution network. Similarly, Alta Signa Europe introduced a marine division earlier this year, offering hull and yacht insurance, cargo insurance and shipyard coverage, underwritten in partnership with leading insurers such as SiriusPoint and Sompo International.

Meanwhile, Pen Underwriting’s marine division expanded in the sector by acquiring several niche MGAs, adding expertise in marine trades, ports and terminals and vessel protection, contributing more than £90m in gross written premium to its portfolio.

Much-needed agility

What is clear is their agility is needed now more than ever. Jennifer D’Arcy, executive vice-president at Acrisure Re’s facultative reinsurance division, highlights how “geopolitical tensions, including trade wars, sanctions and key elections, contribute to instability in the marine market”. She points out shippers often need to adjust routes or find alternative trade partners, which leads to longer journeys and higher shipping costs.

These disruptions have significant downstream effects. “The increase in shipping costs and container shortages have significantly impacted the marine sector, leading to higher insured values and more complex risk assessments,” D’Arcy says. “These economic pressures are compounded by other evolving risks, including physical damage from cyber attacks, extreme weather events linked to climate change and potential disruptions from geopolitical tensions such as trade wars and sanctions.”

Jennifer D'Arcy, Acrisure Re

MGAs appear well positioned to navigate these challenges, particularly through their adoption of technology, with many embracing artificial intelligence (AI) and advanced analytics to enhance underwriting accuracy and streamline claims processes. This tech-forward approach, including blockchain implementation and digital platforms, is helping to create more transparent and efficient operations.

By leveraging data-driven insights, MGAs are increasingly able to offer more nuanced risk assessments and tailored coverage solutions that traditional carriers might find challenging to replicate.

“New marine MGAs bring additional capacity to the market and are often more willing to underwrite emerging risks traditional carriers might avoid. This supports clients by offering diverse and competitive solutions”
_{Jennifer D’Arcy
Acrisure Re}

The recent boom in marine MGAs has its roots in the Covid-19 pandemic. “The changes in our ways of working during Covid has helped the MGA sector as these businesses were much more used to working electronically or by phone and when Lloyd’s was closed, they were really able to shine,” James says. This adaptability has led to sustained improvements in service delivery, with many MGAs promising 24-hour response times but often delivering in an even shorter period.

James says the pandemic demonstrated not only the sector’s operational resilience but also its ability to maintain high service standards under pressure. While traditional markets grappled with the sudden shift to remote operations, MGAs’ existing digital infrastructure and flexible working practices allowed them to maintain seamless service delivery, winning broker loyalty in the process.

MGA appeal

The appeal of MGAs extends beyond their operational efficiency. “MGAs are a great home for underwriters who may have worked at large multi-line insurers and are looking to become the masters of their own destiny,” James says, “as they can make the critical decisions much more easily than in some large organisations.” This entrepreneurial environment has helped attract top talent to the sector.

It has also helped to attract the financial interest of several major insurers. As James points out, “MGAs are also attractive for a large insurer to invest in because, if the market is attractive and rates are stable or rising, they can increase capacity easily and vice versa if not”. This flexibility in capacity management has contributed to their growing prominence in the marine sector.

The recent influx of new marine MGAs into the market appears to be built on a solid foundation. “There have been a number of new marine MGAs entering the market over recent years and [they] look to be in it for the long term, which is great news for brokers like us,” James says. These new entrants are taking strategic steps to ensure long-term stability, including diversifying their sources of capacity and building strong partnerships with re/insurers.

What sets modern MGAs apart is their strategic approach to capacity management. “New marine MGAs bring additional capacity to the market and are often more willing to underwrite emerging risks traditional carriers might avoid,” D’Arcy says. “This supports clients by offering diverse and competitive solutions.”

However, challenges remain. D’Arcy cautions “the stability of MGAs depends on the long-term appetites of their capacity providers and how they navigate changing regulatory landscapes”.

Regulatory changes can increase operational demands and affect the business models, profitability, and sustainability of MGAs, she adds.

To address these challenges, D’Arcy says MGAs are diversifying their sources of capacity and prioritising strategic partnerships. “This approach ensures they are well supported even if capacity providers adjust their appetites. Partnering closely with re/insurers and focusing on balanced risk management also contributes to their long-term stability,” she adds.

D’Arcy’s observation MGAs are often more willing to underwrite emerging risks traditional carriers might avoid points to their likely expanding role in the years ahead. As shipping routes shift, vessels adapt to new environmental regulations and cyber threats evolve, the industry will need underwriters who can move quickly and think creatively. The marine MGA, it seems, is no longer just an alternative – it is increasingly becoming the market’s answer to a raft of un­abating and all-too-inevitable challenges.