There’s room for growth in Canada’s MGA market, says president

Read more: Navacord names new president of underwriting solutions

Insurance Business Canada sat down with Irvine to talk about his new responsibilities, and how the current MGA space is looking during this “post-pandemic” phase.

What is your insurance background – and what are the key responsibilities of your new role at Navacord?         

I have been an underwriter in Canada for 20 years. I am fortunate to have worked for large international carriers, specifically Zurich and AIG, which have given me a broad depth of product experience. I have led specialty underwriting teams in: directors and officers, errors and omissions, cyber, surety, environmental and accident & sickness. 

My P&C experience draws from leading Zurich’s programs department that entered the market in 2019 to grow to the #2 domestic player today. I even got the opportunity to stand up a travel insurance company in 2018 – the timing couldn’t have been worse but it was a great learning experience for me as a professional.

I recently joined Navacord, Canada’s fourth largest commercial brokerage with more than $3 billion in premiums. Their growth story has been very impressive – not only through organic growth but an aggressive acquisition strategy. 

My key responsibilities are: assuming leadership of their current portfolio of MGA companies, developing a strategic vision for all of our underwriters, acquiring/developing talented employees and identifying opportunities for growth through acquisition. We see an opportunity to be a consolidator of MGAs in the Canadian commercial insurance industry.

Can you offer an overview of the MGA market in Canada?

According to the Canadian Association of Managing General Agents (CAMGA), there are 65+ MGAs operating in Canada with estimated commercial lines premiums of $3.5-$4B. Canada lags the USA insurance market where 20% of GWP is written through MGAs vs approx. 10% in Canada. We have room to grow.

Navacord’s key MGA brands include: Pitcher & Doyle (a specialty underwriter of automotive dealerships), Westmount Insurance (a specialty underwriter of surety products), TriPoint Underwriting (a multi-line underwriter focused on construction customers) and Global Alliance Specialty Solutions (GASS) (a multi-line underwriter of SME customers on the west coast).

As I see it, MGAs provide an important role in the Canadian insurance industry. To brokers, they offer capacity from quality insurance carriers that niche or underserved brokers may not have access to. To insurers, they offer broad distribution in Canada to areas where they may not have regional offices.

More importantly, I think MGAs can lead the industry in two important areas – product development and insurtech.

MGA’s are run by entrepreneurs who desire to be responsive to changing demand for insurance products. As an example, the pandemic led to significant losses in trip cancellation claims for travel insurers. Some MGAs leaders were quickly able to find capacity and offer new products with COVID coverage to airline travellers. They were first to market. 

On the latter point, technology, I don’t think it’s controversial to state that large multi-national insurance companies are hesitant to invest in new platforms given the payback period required.  MGAs offer an alternative. Start-ups don’t have issues related to shoe-stringing together legacy systems and MGAs are able to identify niche opportunities that may be too small for insurers. 

As a vertically integrated company at Navacord, I am particularly interested in eliminating all the double/triple keying of customer information from the insurer down to the retail broker level.  Automation of simple tasks lowers expenses for all.

Has the relationship between brokers and MGAs changed during the pandemic? If so, how?

I have underwritten through three hard markets in my career. This one was particularly challenging given the WFH mandates and additional stresses related to COVID. Brokers had to deliver tough messages to their customers, whether it was being driven from a domestic insurer or a MGA with foreign capacity.

In the past, there may have been a stigma of an MGA blaming difficult renewal terms on “delegated authority”. In my experience, underwriters at large carriers use the same excuse – worded differently as a “head office mandate”. For this reason, I think the attitude towards MGAs has changed in the last 5 to 10 years. 

Today’s brokers value speed-of-service, broad coverage and a best-in-class claims experience for their clients. If an MGA can deliver that, they are presented as equal to traditional insurance carriers.

Which specialist insurance coverages do brokers in Canada have difficulty placing in this “post-pandemic” period?

I launched the cyber product at Zurich in 2012. The pandemic brought new exposures (i.e. more end-points for the bad guys to hack) but the types of losses also evolved from social engineering fraud to severe business interruption claims related to extortion demands. Claims activity drives hard markets. For this reason, I’m convinced cyber will continue to be a difficult placement until claims become more predictable.

And how can MGAs help them?

I used cyber as an example above because MGAs have been excellent at launching new services to compliment the cyber insurance product. Small businesses in Canada don’t have Chief Information Officers and endless budgets to defend against cyber criminals.

I see some niche MGAs evolving into a pseudo “outsourced IT department” as they continue to partner with cyber vendors. Software patch alerts, network monitoring services and customer table-top cyber exercises (i.e. practicing your cyber response plan) are all currently available through their insurance offerings. The Canadian insurance industry has a role to play in ensuring our country is cyber resilient. We should be proud of the creativity shown to date.