Beyond Legacy: How Data and Transparency Transforms Specialty Insurance for MGAs

For as long as we’ve been alive — and then some — the insurance industry has been plagued by legacy technology, monolithic thinking, high frictional cost, and data leakages.

The insurance landscape has shown some promise over the years, as new embedded and data-driven products have encouraged top specialist underwriters to escape legacy carriers and become entrepreneurs — pushing insurance toward its full potential. Indeed, according to the latest estimates from Conning, MGAs see a blossoming opportunity underserved by large carriers. Their market has grown from $50 billion to $100 billion in size domestically just in the last four years.

But freeing oneself of the status quo is only half the battle. Frustrations of capacity and capital soon replace the relief of having become an MGA. Capacity, capital, and the red tape wrapped around them hold you back.

And how about that capacity. Risk capital partners of all stripes have long eyed specialty insurance as a powerful diversifier for capital allocation models as well as a category often untethered to equity market and interest rate correlations. Current rails frustrate the demand side, however; reinsurers and institutional investors are hungry to enter the specialty market for predictable non-correlated returns, but have historically lacked the information and connections to pull that off efficiently.

The truth is that outdated, inadequate approaches to technology and data plague the systems that would otherwise let MGAs and risk capital partners thrive. In a less broken system, MGAs could spend their time to lock down a dozen more clients, complete core tasks, transform specialist expertise into robust client protection, and thoughtfully grow business. And risk capital could operate in ways no longer hamstrung by regulation and tradition, but instead guided by level-headed economics and a desire to enter a diversified and resilient specialty market.

Both supply and demand sides of the specialty-insurance table realize the table needs to be rebuilt. As long as these deficiencies continue, the small businesses that keep our economy humming will remain dangerously misunderstood, underserved, and underprotected by legacy carriers.

We started Accelerant in 2018 because we knew there was a better way. We just had to build it. We were unencumbered by the technical and institutional debt that had preceded us. We could build from the ground up, designing the system to fit.

We started with a commitment to aggressive transparency.

Across the industry, less than 10% of data collected by underwriters is shared with the ultimate risk bearers — an unconscionable loss. And the information asymmetry monopolizing the little data that’s captured keeps power in incumbents’ hands.

We designed data pipelines that protect every bit of underwriting, exposure, and claims information. That information, processed through our algorithms, becomes the insights that drive the success of our portfolio on Accelerant’s Risk Exchange. This high-fidelity information also delivers detailed exposure data and analytics across the value chain that can transform the industry.

We serve nearly 200 specialty underwriters delivering best-in-class solutions in their niche markets across more than 20 countries. Members’ ingenuity, expertise, and entrepreneurial spirit power the Risk Exchange, which gives them the data, insights, capacity, and support they need to drive market-leading growth and profitability. Through the Exchange, Member MGAs have grown at an average annual rate of 39% — three times the market standard.

In turn, our 60+ risk capital partners include large institutional investors, highly regarded reinsurers, newly created insurance companies expressly designed to participate in our ecosystem, and insurance companies that are over 100 years old. These partners have diverse backgrounds and needs, but they come to the Risk Exchange for the same reason: our novel approach and special portfolio that they can find nowhere else. These partners have earned more than $450 million in profit through Accelerant since 2018.

And as transparency becomes the norm rather than the exception, network effects can lift all boats. Loss ratios will edge lower, growth will persist, and a virtuous cycle for underwriters, risk capital partners, and ultimate policyholders will continue. So that insurance works better, for everyone.

Interested in learning more? Connect with us.