The impact of MGAs getting more business

It is taking longer to get insurance placed through managing general agents because MGAs are getting more business in the hard market, one Ontario broker suggests.

Many commercial accounts, which previously would have been handled by retail brokers, are now going to the MGA market, said Greg Robertson, president of R. Robertson Insurance Brokers Ltd., in an interview last week.

“The MGAs are inundated by work,” Robertson said. “It’s not an availability crunch, but there are time constraints now that were not present last year because of the massive strain that MGAs are feeling as it relates to the commercial portfolios. Insurance companies are looking at their appetites in classes of business in restaurant, realty and hospitality.”

Robertson was asked about issues in the property and casualty insurance industry related to vacant properties. Some vacant properties are also being placed through the MGA market, suggested Robertson.

“In commercial lines, it is taking a couple of weeks longer, I would say, on average, compared to what it was at the same time last year. [MGAs] are inundated by volume and there are a lot more things that are out there being ejected out of the preferred market.”

For example, say a client without an existing property policy wants to buy a commercial building right now. They could face a challenge getting coverage for the new building placed unless the insurer deems the business to be “best in class.”

“So the MGAs are swooping in and picking up the business,” Robertson observed. “We are even seeing [MGAs,] saying, ‘Yeah, we can’t compete on that.’ So, even they are getting so inundated that they are getting a little pickier on what they will and will not write.”

The hospitality and restaurant sector is a hot topic within the MGA industry right now, said Gary Hirst, CEO of CHES Special Risk Inc., in an earlier interview. This is because several standard market insurers are not renewing their book of business.

Nation-wide, the condo and strata market is also challenging, Hirst said at the time, commenting on major trends in specialty insurance.

In Toronto, constructors have been building condo blocks substantially for the last 10 years, said Hirst.

If there is a plumbing problem on the 22nd floor, the floors below it suffer water damage

“It’s going to be a perennial problem that can only improve by paying more premium and that’s the problem, in my view,” said Hirst. “There is not enough premium being paid to cover what is a fortuitous loss. Having a flood in a condo block, I’m afraid, is expected.”

Feature image via iStock.com/sturti