MGAA CEO Keating: “Pinch point” in rate adequacy expected in 2026/27

By Rebecca Delaney

Feb 13 - (The Insurer) - The year ahead is likely to see a dilution of rate adequacy across the MGA sector but not a swing into negative trends, while 2026 and 2027 are poised to be a potential “pinch point” for upholding underwriting discipline, according to Michael Keating.

Keating, who has served as CEO of the Managing General Agents’ Association (MGAA) since September 2020, spoke to this publication on the sidelines of the association’s recent Broker Exchange event in London.

“One of the things the MGA community should be extremely proud of is that insurers have said to me that they believe the underwriting expertise and professionalism within the current MGA community is at the highest it's ever been,” he said.

“I think that's a fantastic endorsement for the people who are running these MGAs in terms of understanding how to deliver sustainable underwriting profit for their capital providers. I'm not naive enough to know that there'll be some ups and downs, but that’s a great starting point.”

The referenced “downs” include the current reduction in rate adequacy across several lines of business following three or four years of positive organic rate growth.

“My view is that, for 2025, rate adequacy is being diluted but not to the extent that it's becoming negative across most product lines,” Keating added.

“There’s some redundancy in rate adequacy for 2025, but there's also the benefit that they will have a significant amount of earned premium coming through from 2024.”

He added that the challenge for the (re)insurance market – not just the MGA sector – will be whether “muscle memory” and discipline keep the rating environment stable in 2026 and 2027, or whether there will be a dislocation as the space becomes highly competitive.

This concern of a “pinch point” in 2026/27 is in part driven by flat – or even negative – customer numbers once organic rate growth is stripped away,

“The need to grow customer numbers results in more price optimisation to win new business. That, unfortunately, can lead to a weakening rate environment,” said Keating.

“My crystal ball is that I'm not complacent about 2025 but, if the market continues on its current trajectory, I think 2026 and 2027 could be more of a pinch point than in the immediate future.”

He expressed confidence in the insurance market and the MGA sector's capacity to navigate through a potential reduction in rate adequacy.

“I think there's enough muscle memory that they don't want to go back to what was termed the Wild West days – and I don't think they will go back there, because they know they will lose capital.”