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Best's Market Segment Report: Rapidly Increasing Premiums in Managing General Agent Space Warrant Greater Oversight
[May 22, 2024]

Best's Market Segment Report: Rapidly Increasing Premiums in Managing General Agent Space Warrant Greater Oversight

Premium growth within the U.S. delegated underwriting authority enterprise (DUAE) segment grew at a double-digit rate for a third consecutive year in 2023, increasing by 14.9% to $81.4 billion, according to a new AM Best report. The growth was spurred by rising DUAE collaborations with insurers to write specialty business, resulting in a larger share of industry premium shifting to the managing general agent (MGA) space.

For some lines of coverage-catastrophe-exposed property, commercial auto, and umbrella and excess coverage in particular-hardening market conditions over the past few years have driven business to the surplus lines market, with MGAs serving as an important distribution channel.

"While softer pricing on other commercial casualty lines have placed downward pressure on total market premiums, MGAs working with recent start-up specialty commercial carriers have offset that impact and fueled top-line revenue growth for these insurers," said Greg Williams, senior director, AM Best.

In 2022, five MGAs generated more than $1.0 billion in top-line premium revenue. In 2023, the number of MGAs in that category increased to seven, which has generated increased investor interest. Private equity investment firms have been drawn by the potential returns offered by MGAs, which serve as intermediaries between insurers and clients. The report notes that these private equity firms view MGAs as lucrative, given their ability to generate stable cash flows through commissions and fees on insurance policies.

However, the report also strikes a cautionary note on this growing DUAE segment, especially when MGAs, managing general underwriters (MGUs), and program managers gain authority over underwriting, pricing, and binding decision-making without effective risk controls. Some MGAs have abused their authority, writingunprofitable business to increase commissions. According to the report. an analysis of the U.S. property/casualty market for the years 2000 to 2022 shows that the third leading cause of impairments was due to affiliated programs.

"Insurers must structure their relationships with these DUAEs with appropriate checks and balances," said Dawn Walker, associate director, AM Best.

In response to this segment's growth, AM Best introduced its Best's Performance Assessment in 2022, providing an industry-first tool providing an objective, independent opinion of a DUAE's ability to perform services on behalf of its insurance partners. AM Best also affirmed its positive outlook for the DUAE market segment in November 2023.

To access this market segment report, please visit

Williams and Walker will join two industry analysts to discuss the DUAE segment during a complimentary market briefing scheduled for Thursday, May 23, 2024, at 2 p.m. (EDT). To register, or for more information, please go to the event and registration page.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2024 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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