MGAs: Recession-proof or Recession Prepared?

Recessions bring in reduced sales and profits, slowed hiring and cuts in spending for things like marketing, research and acquisitions. For business owners looking to sell, the start of a recession can significantly complicate the owner’s long-planned exit strategy. Fortunately, those who are prepared will prove their value and draw interest even in an unfavorable market. MGAs should consider how they can leverage their unique role in the market to reach their full potential with insurers and carriers.

Trends & expertise: Niche product expertise and a deep understanding of market trends as they pertain to specific industries make MGAs attractive to carriers and other large insurance organizations. MGA owners looking to sell or otherwise be acquired would do well to lean into whatever expertise they offer. That expertise offers an effective way for carriers and others to access markets where they may otherwise have faced significant barriers to entry, such as building an entire underwriting team from scratch.

Underwriting & premium volume: In an acquisition MGAs are faced with the need to prove they are a good business decision. The purchasing party will look for a track record of positive underwriting results and impressive premium volume. As insurance middlemen, MGAs must be prepared to show potential buyers they are bringing with them an entryway into untapped markets and premium volume to prove success in those markets.

Technology: Being tech enabled helps showcase efficiency, and it usually means MGAs have metrics within their tech tools to support their claims. MGAs must be able to interpret this data not only to prove their value, but as an essential business practice. Consider exploring how to implement or best use the many tools now available to MGAs.

As the potential of a recession weighs on the minds of many, MGAs looking to sell would do well to focus on the aspects of their business that make them most attractive to a purchasing party. Niche expertise backed up by impressive numbers and an efficient tech stack will give strong insurance professionals a boost to insurers and carriers looking to tap into the power of a successful MGA. While no business or industry is recession proof, diligent informed and prepared MGAs can stay on top.