In Datos Insights’ view, of the 1,200 managing general agents (MGAs) operating in the U.S. today, only 600 to 700 will survive the next five years. If you’re running an MGA right now, your technology stack (or lack thereof) is probably the biggest threat to your survival.
The irony is glaring. The MGA market is booming; Datos Insights projects it will grow by double digits through 2030. Carriers continue retreating from complex, cat-prone markets like rats abandoning a sinking ship. Specialty lines are exploding with emerging risks—artificial intelligence (AI) liability, anyone? Fronting arrangements will double from 20% to 40% of the market. Private equity loves the fee income model. Everything points to a golden age for MGAs.
So why the bloodbath?
The Technological Reckoning
It’s simple: Most MGAs are trying to fight a 21st-century battle with 20th-century weapons. They’re underwriting the same complex risks as primary insurers but without the budget. They’re insurance distributors earning commission; yet, they need to quote every submission and issue policies on bound risks. It’s like being asked to perform brain surgery with a budget for Band-Aids.
The traditional monolithic policy admin system? Forget it. Those million-dollar, multi-month implementations are dead on arrival when you’re testing new products in markets where carriers just fled. By the time you launch, the opportunity has evaporated.
Enter what we’re calling “skinny PAS.” It’s not just a catchy name. It’s a complete reimagining of the MGA tech stack. The policy admin system becomes a glorified system of record. The real magic happens in the underwriting workbench, where AI consumes documents, summarizes content, surfaces risks, and integrates every data source an underwriter needs into a single cockpit. Stand-alone rating engines, often Excel spreadsheets turbocharged with APIs, handle the heavy computational lifting.
The AI Revolution
It’s already here, and by 2030, the winning MGAs will process 60% to 70% of submissions straight through. Let that sink in.
Underwriters will only touch the genuine exceptions. AI will handle the rest: intelligent document processing ingesting submissions however distribution wants to send them, generative AI extracting and structuring data, predictive models assessing and pricing risk, autonomous Model Context Protocol-enabled agentic workflows managing the entire process. The email from your broker with an ACORD app and fifteen attachments? Processed. The API submission from their agency management systems? Handled. Bindable quotes out the door while your competitors are still figuring out what form they’re looking at. Done.
The Survival Formula
At the same time, capital is getting pickier. Those burned by fly-by-night MGAs are demanding skin in the game: 10% to 20% co-participation, three-to-five-year track records, contingent commissions tied to multi-year loss ratios. Regulators are wising up, too, closing loopholes that made gaming the system child’s play.
The winners will need five things: deep specialization, intelligent automation, regulatory compliance (yes, it hurts), diversified capital sources (multiple partners), and disciplined growth focused on profitability over vanity metrics.
The Bottom Line
The MGA market is splitting into two. The top 50% will be leaner, faster, smarter, and ruthlessly efficient. They’ll leverage technology to punch above their weight class. The bottom half? They’ll be acquisition targets at best, cautionary tales at worst.
Which side of that divide will you be on?
Ready to transform your MGA technology stack? Datos Insights provides comprehensive analyses of MGA core systems and underwriting workbench solutions, as well as the benefits of a skinny PAS approach. Contact us to discuss your modernization strategy and learn how leading MGAs are gaining competitive advantages.
