The reputation problem

In days gone by, mentioning managing general agents (MGAs) in certain corners of the insurance market meant a predictable response. Too focused on growth. Too lightly governed. Too dependent on someone else’s balance sheet. Too often rewarded for writing premium rather than profitable business for the delegator.

Admired by some for their specialist expertise and entrepreneurial agility, viewed by others with deep scepticism, MGAs have long been associated with an uncomfortable question: are those making underwriting decisions sufficiently aligned with those ultimately carrying the risk?

It is a perception that has proved remarkably resilient. Despite becoming one of the fastest-growing segments of the specialty insurance market over the past decade, MGAs continue to attract criticism other parts of the industry rarely face with the same intensity. Questions persist over governance, delegated authority, incentive structures and whether rapid expansion has outpaced appropriate oversight.

But the trajectory arguably counters that cynical narrative. Reinsurers continue to expand their MGA partnerships. Institutional investors and private equity firms have poured capital into the sector. Established underwriting teams are increasingly choosing MGA platforms over traditional carrier roles. Some carriers have even begun building strategies around MGA partnerships rather than competing against them.

The contradiction raises an obvious question. If the old concerns still hold true, why has so much sophisticated capital embraced the model?

The answer, according to executives across the Bermuda market, is not that the criticism was entirely misplaced. Instead they argue that it increasingly reflects an earlier generation of MGAs rather than the businesses operating today.

While few dismissed the concerns outright, almost all suggested the conversation itself has evolved. The debate is no longer simply whether MGAs can be trusted; it has become far more nuanced: how should a rapidly maturing part of the insurance market be governed and where do legitimate risks remain?

A legacy that lingers

The criticism surrounding MGAs did not emerge without reason. Historically, delegated underwriting authority created an inherent tension. One organisation originated and underwrote business. Another provided the balance sheet. If incentives became skewed towards premium growth rather than underwriting profitability, capacity providers were left carrying the consequences. That perception became deeply embedded within parts of the market and, for many, remains difficult to shake.

Matt Britten, partner at PwC Bermuda, believes the scepticism stems from a fundamental structural question rather than opposition to the model itself. “There are benefits and there are risks,” he told Bermuda:Re+ILS. For reinsurers seeking specialist expertise or access to markets they cannot efficiently build themselves, partnering with an MGA can be highly attractive. Few carriers can realistically claim deep expertise across every specialist line of business.

Posing as a re/insurer for the sake of explanation, Britten questioned: “If I want to be a diversified player, can I really do that, or can I get there quickly using an MGA who has true underwriting expertise in a specialty line? That’s what makes MGAs highly attractive.”

But alongside that attraction sits an equally legitimate concern: “How do I make sure these two models are fully aligned?” That, Britten argues, remains the central question. “One of the issues with the MGA is there’s a viewpoint that they are being compensated on production and volume, not profitability, whereas the reinsurer is looking at profitability.” He was careful to distinguish perception from reality: “I’m not saying that’s the way they’re structured, but that is the perceived stress in the system.”

His observation captures something important about today’s debate. Much of the industry’s scepticism is less about individual MGAs than about the incentive structure itself. Insurance has always depended on aligning risk and reward. Whenever underwriting authority and capital become separated, questions naturally follow.

Those questions have only become more pressing as the sector has expanded.

Success brings scrutiny

Growth has transformed the MGA landscape. Across the Bermuda, US and London markets, MGAs have become increasingly significant distribution partners, attracting investment from re/insurers and private equity alike. Entire platforms are now being built around specialist underwriting teams, while acquisition activity has accelerated as investors seek exposure to fee-based businesses with attractive growth prospects.

Rapid expansion, however, inevitably attracts greater scrutiny. “I think there should be a level of caution that goes along with it. Whenever things grow significantly, there’s always risk if that growth isn’t constrained in some way,” Britten said.

It is not an argument against MGAs. Rather, it reflects a broader truth familiar throughout financial services. Growth changes the nature of risk. Questions that mattered little when businesses were relatively small become considerably more important once those businesses begin managing billions of dollars in premium.

According to Richard Spitzer, partner at Mayer Brown, that is particularly true, because the label “MGA” now encompasses a remarkably broad range of business models. Some operate purely through fronting carriers while others retain economic exposure through captive structures. Some rely on multiple fronting partners while others are closely integrated with a single carrier relationship.

Treating them as though they represent one homogeneous sector risks overlooking meaningful differences. As businesses become larger, those structural differences begin to matter more. “The more successful an MGA is, the greater this issue becomes.” His concern is not primarily underwriting discipline. Instead, it centres on capital.

As programmes scale, questions emerge around where capital ultimately sits, how concentrated funding sources become and whether existing regulatory structures adequately reflect increasingly complex operating models.

Spitzer gave one example that illustrates the challenge: “There are some MGAs, for example, that write through multiple different fronting companies. That structure is perfectly fine, but the MGA thinks of it as their programme. But then, when they start thinking about getting capital for the programme, the reality is, from a regulatory perspective, every single one of those fronting entities is treated individually, not as a cohesive programme.

“So how do you procure capital for a programme spread across multiple entities? That’s not so easy because you can’t pull those risks together from a regulatory perspective. That probably wasn’t as big a deal a few years ago when companies were smaller, but as they’ve grown and been successful, I think this issue now sits out there.”

In other words, success itself is creating new questions. Not because the MGA model has failed but because it has become large enough to matter.

The burden of perception

What’s interesting is that many supporters of the MGA model do not dismiss its history. Several industry veterans recognised that earlier generations of MGAs often operated under different commercial dynamics and with less sophisticated oversight than exists today.

That history, they argue, still shapes how parts of the market perceive the sector. The challenge, therefore, is not as simple as proving that individual businesses can underwrite profitably. It requires broad-spread demonstration that the incentives underpinning the model have fundamentally evolved.

Whether the wider market fully accepts that proposition remains open to debate. Scepticism has not disappeared and nor should it, according to many.

Evan Greenberg, chairman and CEO of the Chubb Group, issued a warning in a letter to shareholders in the first quarter, addressing MGAs as being “a bad bet in the majority of cases.”

Greenberg explained the problem: “When you add it up, risk can pass through four or five layers of intermediaries who all take commissions before the risk finally gets to the ultimate risk-taker. It’s a volume-based incentive system that amplifies the supply cycle; all of these intermediaries make their money through commission dollars, which are a function of volume.”

“We’ve seen this movie before, and it doesn’t end well. Underwriting is the core function of insurers and reinsurers, who are the ultimate risk-takers. Insurers who outsource underwriting but retain the risk do so at their peril.”

In a similar vein, Pina Albo, CEO of Hamilton Re, directly called out MGA behaviour during a third quarter 2025 investor call, drawing attention to “some irresponsible behaviour in the market with some players out there”.

Taoufik Gharib, senior director at S&P Global, as reported in ‘Partnering with managing general agents can be a double-edged sword for reinsurers’ said MGA drivers could lead to “misalignment and outsized losses” and stressed that “selectivity [is] essential for any reinsurers that partner with MGAs”.

Others have already paid the price. Vince Tizzio, president and CEO of Axis Capital, addressed the structural overhaul during an investor call relating to fourth quarter 2025 results: “We redefined the role and purpose of MGA and delegated authority inside our organisation. It was a painful set of lessons that we had to take.”

In the business of risk and volatility, healthy scrutiny is entirely appropriate for any delegated underwriting model. But the question is whether that scrutiny is keeping pace with how the market itself has changed, because while critics continue asking whether MGAs can be trusted, many of the industry’s largest re/insurers and investors appear to have reached a rather different conclusion.

That contradiction sits at the heart of today’s MGA market and understanding it requires us to look beyond the reputation the sector inherited to the business model many executives argue it has become.

A different kind of MGA?

The first generation of MGAs earned a mixed reputation; those working within the market today argue that the model has changed in ways that many outside it have yet to fully recognise.

They do not deny the industry’s history. Nor do they suggest poor incentives have disappeared altogether. Instead, they argue that the commercial realities underpinning delegated underwriting have been fundamentally reshaped by better data, closer oversight and a far greater alignment between those writing the business and those providing the capital.

Tim Usher-Jones, co-founder and chief executive officer of MGA Banyan Risk, believes one of the biggest misconceptions surrounding modern MGAs is that they continue to operate with the freedom they once exploited.

“In prior years, there was an assumption that MGAs might burn a carrier and have someone else lined up to refill that hole and never look back. That’s not the case. Now there’s so much more governance around it, and there’s real-time data that the carriers can find themselves. If we’re not doing a job, they’re going to do it themselves.”

That shift, he argues, has fundamentally altered the balance of power. Historically, MGAs often selected their capacity providers. Today, the relationship is increasingly reciprocal. “Carriers can move their paper. Before it was about the MGA choosing the carrier. Now it’s about the carriers having almost as much or better data than the MGA.”

For Usher-Jones, the implication is straightforward. Capacity providers are not passive participants relying on quarterly bordereaux and historic reporting. Technology has given them near real-time visibility into underwriting performance, allowing problems to be identified and relationships terminated far earlier than in previous decades. The consequence is that poor underwriting has become considerably harder to hide.

Just as importantly, he believes the economics have evolved. Unlike compensation models driven primarily by premium production, Usher-Jones argues that modern MGAs increasingly depend on sustained underwriting performance to secure both profitability and long-term access to capacity, with many MGAs working on profit commission.

It is an observation echoed elsewhere. Speaking to investors earlier this year, executives at Distinguished Programs, a White Mountains business, described a business model deliberately designed to ensure that underwriters, carriers and shareholders succeed, or fail, together.

President Jason Rotman explained: “A lot of our economics come through profit commission. If we write good business, we make more. If we write bad business, we make less.”

The same philosophy extends to the underwriting teams themselves. Rather than simply recruiting experienced underwriters, Distinguished builds individual MGA platforms around them, giving those teams meaningful equity stakes that vest over time. “They only get that money if they stay. If they’re writing bad business, their equity is worth nothing.”

It is a structure intended to solve precisely the criticism that has followed MGAs for years: that delegated authority creates misaligned incentives between underwriting and capital.

But not all MGAs operate in that way. This has created a challenge because businesses operating under the same label increasingly bear little resemblance to one another.

The talent equation

Perhaps the clearest evidence of changing perceptions is not found in governance structures or remuneration models, but in the movement of people. For decades, specialist underwriters typically built careers inside established carriers. Increasingly, that assumption is being challenged.

Usher-Jones describes a market where entrepreneurial underwriters are choosing smaller, more agile organisations over large institutions: “Talent doesn’t want to join any large company any more. They want to go with a fun, entrepreneurial, fast-moving MGA.”

The attraction, he argues, extends beyond compensation. MGAs offer experienced underwriters something many larger organisations struggle to provide: ownership. According to Usher-Jones, that shift has become sufficiently pronounced that, in some cases, carriers themselves have begun approaching MGAs to structure orderly transitions for underwriting teams they fear losing anyway.

Distinguished has built an entire growth strategy around precisely that trend. Rather than focus primarily on acquiring existing businesses, the company seeks experienced underwriting teams capable of building specialist programmes from the ground up, providing operational infrastructure while allowing underwriters to concentrate on what they do best.

The approach reflects a broader belief that underwriting expertise, not balance sheet capacity, is increasingly the industry’s scarcest resource. “Our business plan is saying that the talent is going to wind up in the MGA market,” Rotman told investors.

That reflects a wider structural change taking place across specialty insurance. Increasingly, underwriting expertise, technology and capital no longer have to reside inside the same organisation.

Partnership, not competition

However, there are clear cheerleaders for MGAs, reflected in a considerably more collaborative approach. Scott Egan, chief executive of SiriusPoint, offers perhaps the clearest example. Around 70% of SiriusPoint’s business now comes through MGAs. Far from viewing that as a weakness, he sees it as a strategic advantage. “We’ve demonstrated year after year that if you choose the right people to work with, you combine it with your own expertise and skill, then I think there is opportunity,” he told Bermuda:Re+ILS.

Like others, Egan does not dismiss the sector’s historical shortcomings. “Of course I’ve heard the stories about MGAs. I’ve seen them with my own eyes in my past.” But he rejects the idea that those experiences define today’s market: “The MGA distribution channel has been the fastest-growing distribution channel in the US and in Europe for the last 10 years. It’s not going anywhere.”

Rather than avoid the sector, SiriusPoint has invested heavily in developing disciplined processes around partner selection. The company says it declines around 90% of MGA opportunities it reviews. Relationships often develop over several years before capacity is deployed, allowing time to assess underwriting philosophy, claims handling, governance and cultural fit.

One of Egan’s expressions neatly captures that philosophy: “We underwrite the underwriter.”

Technology and data matter. So do governance frameworks. Ultimately, however, insurance remains a people business. The quality of underwriting still depends on the judgment of those making decisions.

A debate that has moved on

None of this suggests the questions surrounding MGAs have disappeared. If anything, their growing significance has made them more important. Capital concentration, regulatory oversight, consolidation and governance are likely to remain defining issues as the sector continues to mature.

Tony Russell, chief executive of technology provider VIPR, believes maturity is already becoming visible. “The MGA market is maturing,” he told Bermuda:Re+ILS. Private equity investment, greater regulatory attention and increasing institutional backing are forcing businesses to become more sophisticated. Or, as Russell put it, “they're getting more professional about it”.

That evolution, perhaps more than anything else, explains why today’s debate feels different from the one that dominated the market a decade ago. The conversation is no longer centred on whether MGAs deserve a place within specialty insurance. The market has already answered that question; capital continues to flow, partnerships continue to deepen and experienced underwriters continue to build businesses around the model.

Now the challenge has become ensuring that governance, regulation and commercial structures evolve alongside the sector itself. For all the discussion surrounding the reputation of MGAs, perhaps the most revealing evidence lies not in what their advocates say, but in what the wider market continues to do.

Re/insurers and investors are not behaving as though MGAs represent an experiment. They are an established part of the industry’s operating model. That does not mean every criticism has become obsolete. Nor does it guarantee every MGA will succeed. But it does suggest that the conversation has moved beyond the caricatures that once defined the sector.

People are cautious but the narrative is changing, and the market has already begun judging MGAs by a rather different standard.

Read the full Bermuda:Re+ILS Annual 2026 here. 

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