2025 MGA outlook: Navigating growth, technology, and uncertainty
The insurance landscape continues to evolve rapidly with carriers, agents, and Managing General Agents (MGAs) experiencing significant shifts in 2024. As we enter 2025, the market is positioned for continued growth though with new challenges and opportunities on the horizon. From market conditions to technology and environmental factors, here is a breakdown of our MGA market predictions for the year ahead.
1. While the MGA market remains strong, there is potential for momentum to slow
The MGA space has seen tremendous growth over the past few years, with 2024 proving no exception. That trend is expected to continue, though several factors could influence what shape the market takes in 2025:
New competition
With the influx of business flowing into the E&S market, new entrants are aggressively vying for market share. The rise of technology driven MGAs with strong speed to market strategies may cause niche markets to become more crowded.
M&A activity
While the strategic value of MGAs remains high, and they have long provided an avenue of expansion in the insurance industry; M&A activity in 2025 will largely depend on interest rates. Economic experts predict that the Federal Reserve will cut rates but not substantially. With a slight decrease in interest rates, M&A activity may increase, though the impact could be limited.
Changing regulatory landscape
MGAs have historically operated under less regulatory scrutiny than other facets of the insurance industry. With notable market growth, regulators are paying closer attention to MGA activity, especially in states that have experienced significant carrier pullback due to environmental disasters in recent years. It is likely that new rules and regulations will develop for MGAs in these areas in 2025.
Potential market softening
The MGA market has undergone tremendous growth in recent years, and the sentiment going into 2025 is that this growth will continue, albeit at a slower pace. In our recent webinar, Lauryn Kothavale, VP of Insurance Research at Conning, spoke about how the shifting economic landscape could influence the insurance industry and introduce new dynamics for MGAs. One of these dynamics could come from falling rates for some lines of business, marking a pivot from the hard market that’s been dominant as of late.
Vertafore’s VP of Industry Relations & Partnerships, Kelly Maheu anticipates MGA market growth to slow as well: “The E&S market experienced peak growth during the unprecedented hard market of 2021, with growth rates at 32% year-over-year. While growth is slowing, it still remains strong at 12-15%. The focus for MGAs is now shifting from rapid expansion to profitability. MGAs are prioritizing operational efficiency, integrating acquisitions into cohesive businesses, and leveraging technology to support organizational goals rather than just keeping pace with market growth.”
2. Data and technology will become strategic cornerstones for top MGAs
Core systems and speed
MGAs center their operations on core systems that are adaptable and offer rapid entry into new lines of business. Investing in improved core functionality—rating, underwriting, policy issuance—through systems designed specifically for MGA needs, can enable faster market entry and, as a result, greater market share. By covering their base of operations with personalized solutions, MGAs can give themselves solid footing for product expansion overtime.
As MGAs rely on their ability to adapt to new markets and niche lines of business, they need solutions that can do the same. Agile, scalable, and agnostic solutions that can be customized to fit their needs are key. Additionally, spending significant time and resources in building systems from the ground up can hinder or jeopardize new opportunities.
Through smart, select solutions that integrate seamlessly with their existing core systems, top MGAs will utilize innovative technology to enhance their speed to market operations.
Retail agent experience
Agent experience and engagement are quickly coming to the forefront for MGAs and may be the defining factor to surpass competitors in 2025. In a recent report by Conning and Vertafore, an emphasis was placed on the rise of customer portals: “As MGAs look at technology to drive a better customer experience, customer portals are becoming more of a differentiator.”
Agent portals, while being a central solution on their own, also represent how the digital experience is evolving based on changing expectations. Agents are prioritizing partnerships on ease of doing business, speed, and self-service functions that enable their workflows.
While providing a personalized experience, these portals also offer smoother onboarding, which can make expanding into new market sectors and connecting with new agents a more efficient process. We anticipate that offering robust agent experiences, as part of a broader digital upgrade, will play a pivotal role in MGAs ability to acquire new business. In this new wave of technology, industry expectations are rising, and MGAs will meet the challenge in 2025.
Data
Data and analytics continue to be a clear priority across the insurance industry, and while the use of AI is being explored, concerns over sourcing and bias remain prevalent. However, we expect the role of AI to grow in 2025 as MGAs identify potential use cases that maximize efficiency and minimize risk. Already, AI technology is being explored across several key facets of the insurance industry, such as underwriting, risk analysis, and regulatory compliance.
Beyond these areas, artificial intelligence will contribute more to the growth of MGAs and retail agencies. Doug Mohr, Vertafore’s own VP of Industry Relations & Partnerships, recently said that “Predictive artificial intelligence and high-quality data analytics can help agencies quickly spot trends…and provide the likely outcomes of adding a line of business.”
As a result, MGAs are likely to expand their AI use in 2025, testing the limits of claims evaluation and market identification, as well as automating other processes for maximum efficiency. Data quality will also be a top priority for competitive MGAs which can improve accuracy, reduce friction between MGA, retail agent and carrier partnerships, and boost operational efficiencies.
Compliance
Staying compliant is a task that consistently draws significant resources for MGAs. While this won’t change, it could become smoother, as AI solutions help speed up manual processes and reduce human error. Tim Owen, Vertafore’s VP of Product Management, predicts that “As regulatory requirements continue to evolve, the adoption of automation technology and AI in compliance practices will become increasingly common.” Being faster and more accurate with compliance in 2025 will free up additional resources and time for MGAs to focus on new business opportunities and strategic priorities.
3. Carriers will seek increased MGA partnerships in natural disaster-prone areas
Environmental disasters have always posed unique challenges for the insurance industry. However, the increased frequency and severity of these events in recent years, especially in coastal regions, will continue to have a profound impact on the industry in 2025. As regulators have made it difficult for carriers to raise rates, major insurers have been forced to cancel policies in the affected areas, with some leaving entire states. In 2024, American National Group announced they would be ceasing operations in nine U.S. states due to increased frequency and severity of weather events.
Other major carriers have taken similar action and, as a result, over the past several years, much of the insurance business in these areas has transferred to the E&S market.
It’s difficult to predict how natural disasters will impact the industry in 2025, but one likely outcome is that carriers will seek to partner with MGAs more in high-risk geographies. With MGA expertise underwriting and managing risk in niche markets, carriers will leverage their in-depth understanding of local markets, risk profiles, and mitigation strategies to effectively serve insurance needs in these areas. These increased partnerships will allow carriers to utilize existing MGA infrastructure and access new markets and distribution channels.
Innovative MGAs are already implementing risk-mitigation strategies in high-risk zones including advanced risk selection using predictive modeling and loss prevention measures with their insureds (like rapid wildfire detection technology).
While weather events will remain unpredictable in 2025, carriers will create new opportunities for MGAs that specialize in these areas. Additionally, carriers may be more willing to partner with MGAs to develop new and innovative products for high-risk markets. They may also be more willing to delegate underwriting authority to trusted MGA partners.
2025: A year of momentum
We’ve covered a lot, so here’s a summary of what to expect and what to keep an eye on as 2025 gets underway:
- Market growth but slowed – A lot could change based on interest rates and M&A activity in the MGA space, but it’s fair to assume that growth will continue, albeit less robust than before, and new competition will likely emerge.
- New tech will optimize processes – From core systems to agent experience to data analysis, the insurance industry will continue to innovate and integrate new solutions. As automation and AI become cornerstones of everyday operations, more efficient processes could lead to new business opportunities. Tapping into these innovations, such as a leading agent portal and underwriting workbench, will be key to staying ahead of the competition.
- Environmental impacts may yield new partnerships – The challenge for carriers to operate in regions with frequent or rising natural disasters could result in more MGA partnerships as a way of effectively accessing markets. While regulation changes could shape these markets, we anticipate these markets will remain viable, with an increased preference for MGA presence to help mitigate upfront costs and take advantage of niche expertise. The addition of innovative solutions in disaster detecting and mapping will further improve operations in these regions as well.
The best way to stay on top of this shifting landscape is to be prepared, and that starts with having the right service and support at your side. With solutions built for MGAs by MGAs, more customers trust Vertafore when speed to market matters most—learn more about how together we can take your organization to new heights in 2025.
