Delegated authority and European market
“With the weak market from the early 2010s to 2018, this was an opportunity for most people to keep their powder dry and not do anything too dramatic in most cases,” he said. . “And then, since the Decile-10 project and the market turnaround over the past two years, people now see their chance to step out of their comfort zone and do something a little more entrepreneurial or a little more. stimulating. And part of that spills over into the Delegated Authority (DA) market, which is great. “
Brexit presented a particularly interesting challenge for the sector, he said, because before its implementation there were many reflections on how to access the EU market in the future. The bigger players sorted out their options early on and tended to create their own entities in Europe to manage the transition. DA Strategy took this approach by creating DA Strategy Global in Hamburg to help MGAs who wanted to have a path to the market without creating a separate entity.
“This offers MGAs, particularly those based in London and elsewhere in the UK, an opportunity to second underwriters into DA Strategy Global so that they are then in an organization that is licensed from the EU and ‘a passport throughout the EU and can then underwrite this company, through DA Strategy Global. What we are proposing is therefore an economy of scale offer for these MGAs.
Currently DA Strategy has a handful of clients, but adding more clients to this offering will allow the company to add sufficient scale to this model, allowing it to deliver a comprehensive offering to clients in the future.
This is a fascinating mix of companies interested in the services offered by DA Strategy Global, Rowley said. Generally speaking, these are usually small businesses that, when they first considered the implications of Brexit, likely did not consider themselves ready to locate in Europe due to their smaller size or their operations. limited there. At that time, they didn’t see the commercial value of putting together a Brexit solution, he said, but they have since reached the scale where it has become necessary.
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“[For many], it is now too late to easily create their own entity, so they choose to use the DA strategy template to access it, ”he said. “So it’s usually the smaller companies. We have had [several businesses] come to us – we got one that is brand new and we had another that approached us very recently where they brought in a new team that they didn’t have last year that wants to write a proportion important EU businesses and they need a solution. So they saw the opportunity to go to Europe and now want to access it.
This is one example of the range of companies seeking access to Brexit-friendly solutions, he said, a range that ranges from new businesses to existing small businesses that had not had the opportunity two years ago and to existing companies that have hired new teams. who want to access this wallet. For some of these companies, there has been an element of waiting for the fury surrounding Brexit to die down before choosing a solution. But the other aspect, he said, was the appetite for capacity to enter Europe. Many capacity providers were reluctant to enter Europe through an entity that they were not sure would be there for the long term.
They thought “let’s just stand back,” he said, but now that these capacity providers and other market players are returning to the city to trade, the attitude is more relaxed. Now carriers are choosing to help companies that want to add a section to write European affairs, which is part of why MGAs are now opening this door.
Going forward, Rowley anticipates continued interest in market players looking to enter the European market, particularly as many UK carriers build much of their portfolios in this open, direct business.
“So I think that although the DA activity and the DA market, instead of growing as they have done over the past two decades, have been fairly stable in 2020 and the first half of 2021, they are now starting to pick up. “, did he declare. . “And I think this activity should have an impact on the demand for European access.”