Emerging MGAs: Tech, Capacity & Distribution Challenges

Launching an MGA today offers a tremendous opportunity to break into the insurance space—but it’s just as much a balancing act. While emerging MGAs are uniquely positioned to innovate, they also face a distinct set of challenges that can determine how quickly (and sustainably) they scale. 

Based on conversations with MGA founders and industry experts, here are the 3 most common challenges emerging MGAs face, and how you can approach them strategically.  

1. The Cost of an Ideal Tech Stack 

An MGA’s ideal tech stack clearly communicates and adds to their product value speeding up their processes. Unlike carriers, MGAs aren’t held back by legacy systems — both expanding and making their tech choices more complex. While building custom systems equals exorbitant fees and equally lengthy timelines, buying genuinely cost-effective, carrier-grade Policy Admin System (PAS) is a big ask as well.  

If you’re an MGA dealing with the Build Vs. Buy conundrum right now, this is for you. 

Your Next Steps: Think AI-ready, API-first systems, and Build AND Buy. Yep, you read that right. You can do both! 

Evaluate your current requirements and identify the tech that sets you apart — Not that cool new agentic bot that promises to cut your underwriting time in half (does it deliver?), but the essential MGA insurance software that makes your product value stronger.

MGAs in the P&C insurance space usually require a configurable underwriting workbench which allows for tailored coverage, while MGAs in commercial lines definitely benefit from automated submission platforms as they receive a ton of unstructured data. Our Advice: Buy the trusted, speedy systems that provide a solid operational foundation as you look into developing the solutions you need to set you ahead. 

Additionally, tech-enabled MGAs with a strong financial profile also make for highly attractive investment and acquisition options for Private Equity investors. 

2. Securing Risk Capacity (With Aligned Interests) 

Finding capacity is foremost on any emerging MGA’s mind, especially with allocation becoming highly selective in hardening market conditions. While product innovators know they must evidence low loss ratios, refine their underwriting and make more data-driven decisions to increase their chances of being supported; the more confusing capacity questions are often “Where exactly can I find Capacity Providers?” and “How do I evaluate if this partnership is sustainable long-term? 

Your Next Steps: As you put together your pitch, connect with more producers in your space to discuss your product, market shifts and understand and what they’re selling. 

Research potential capacity providers: insurers, programs and innovation labs that can enable you with the resources you need to grow. Each capacity provider has different specializations and values that shape their long-term goals and management approach — factors to consider as you organize your reach-out list. Here’s our experts’ top recommendations on where you can connect with capacity partners.

  When it comes to long-term alignment with your capacity provider, key responsibilities such as: 

• Who’s building the actuarial models? 
• Who’s defining the underwriting guidelines? 
• Who’s responsible for compliance reporting? 

are questions that should be discussed during capacity conversations, along with these integral capacity contract terms that determine an MGA’s revenue and profits.  

3. Forming Sustainable Distribution Partnerships 

Building a trusted distribution network with a strategy that’s right for your MGA takes time, experimentation, and most of all, expertise. For product innovators new to the insurance distribution, this requires insight into the distribution channels available for MGAs, an experienced team that can develop and guide your distribution strategy, and API-enabled MGA distribution software that helps improve agent/broker connectivity. 

Your Next Steps: Approach MGA distribution experts that have established relationships with agents and brokers, and can speak their lingo for guidance. Participate in events and associations which serve as trusted spaces to foster connections with brokers and agents.  

Here’s our expert’s top distribution groups and events to get you started:

1. Big I Regional-State Specific groups
2. WSIA for Top 100 Brokers
3. PLUS National & Regional Level Groups
4. Big National (Catalyit Group) 
5. Keystone Conference  

We wish you the very best on your MGA journey! Check out our Blog section for more valuable insurance MGA resources.