The last hard market — which occurs when insurance capacity tightens, leading to higher premiums, stricter underwriting, and reduced competition — was shaped by the financial crisis of 2008, which triggered widespread capital flight and forced insurers to reassess their risk appetite. In specialty insurance, it was marked by capital scarcity, aggressive rate hardening, and a retreat from non-core lines of business. Lloyd’s and other major players pulled back from certain specialty risks, leaving a gap in coverage that was both driven and further exacerbated by a lack of data transparency to properly underwrite niche and emerging risks. The result was a prolonged period of capacity constraints, reduced competition, and market dislocation, particularly in complex and underserved segments.
But it also laid the groundwork for the rise of MGAs. As insurers and reinsurers retrenched, managing general agents (MGAs) stepped in to fill the void, leveraging their specialized underwriting expertise and nimbler operating models to deploy capital more effectively. According to Conning, the MGA sector has grown significantly since the last hard market, with premium volume increasing 2.5x since 2018, driven by demand for flexible, non-admitted coverage. In 2023 alone, MGA premiums grew by 12%, outpacing the broader P&C market’s 10% growth.
After years of volatility, rising rates, and capital constraints, it’s clear we’re in the middle of a prolonged hard market. But new dynamics—ranging from inflation and interest rate shifts to climate risk and AI-driven underwriting—are fundamentally reshaping how risk is priced, underwritten, and transferred. These forces are creating both challenges and opportunities, requiring insurers, MGAs, and capital providers alike to rethink their strategies. Those who recognize these shifts early and position themselves accordingly will be in the best position to navigate what’s next.
1. Higher cost of capital is reshaping risk appetite
The current environment is defined by expensive and constrained capital. Rising interest rates have altered the return profile of insurance-linked investments, making it harder for carriers and reinsurers to deploy capital efficiently.
This means:
- Insurers are prioritizing profitability over premium growth, leading to stricter underwriting and higher rates. This can be an opportunity!
- MGAs and specialty insurers must justify their capital allocation with data-driven insights—those that can prove underwriting discipline and profitability will maintain capacity and growth.
Despite these capital challenges, MGAs have been expanding their access to capacity, according to Conning — something that drives us at Accelerant through the Risk Exchange.
2. Inflation and loss cost volatility will continue to squeeze margins
While inflation in some sectors has moderated, claims inflation remains persistent. It’s therefore critical to accurately account for these trends in their pricing models to avoid margin pressure—even with higher rates.
3. AI-Driven underwriting is creating a market opportunity
This hard market isn’t just about pricing cycles—it’s about who has the data and technology to navigate uncertainty effectively.
- AI-powered underwriting is enabling some insurers to maintain selectivity without reducing capacity, giving them an advantage over competitors who still rely on traditional pricing models.
- Companies with real-time risk intelligence can justify higher rates and maintain their books, while those with lagging insights risk adverse selection.
- Data asymmetry is becoming a defining factor in market competitiveness, separating tech-enabled insurers from those operating with outdated models.
According to Conning, MGAs are increasingly seen as testing grounds for innovative capital structures, such as captive reinsurance vehicles, which provide greater control over risk and capital deployment. MGAs that embrace technology and alternative capital strategies will be best positioned to navigate this environment.
How to prepare for what’s next
The next phase of the hard market won’t reward those who wait for conditions to normalize—it will favor those who actively adjust their strategies.
For one, double down on data. Underwriting discipline is always key, but data is unlocking competitive advantages.
- MGAs and insurers need to refine risk selection based on real-time data, not just historical models.
- Tracking portfolio performance dynamically will allow insurers to identify trends early and adjust before losses hit.
- Carriers and reinsurers are more selective about where they deploy capital, so being able to demonstrate underwriting rigor is critical.
At Accelerant, we believe long-term partnerships are more valuable than short-term opportunism. While the 2008 crisis created a vacuum that MGAs capitalized on, the companies that succeed today will be those that leverage real-time data, build strong capital partnerships, and maintain pricing discipline. The message is clear: adapt quickly, invest in technology, and stay disciplined—and emerge stronger.