August 19th, 2015

PA/MGA Reinsurance Purchasing

Posted at 1:00 AM ET

Reinsurance continues to play an important role for program issuing carriers. Sixty-nine percent of respondents to the survey this year indicated the use of both direct reinsurers and intermediaries, down slightly from 76 percent in 2012. Those managing their purchase through intermediaries exclusively increased to 25 percent of respondents from 18 percent in the prior year.

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Structural preferences regarding reinsurance shifted to some degree. This year, 57 percent of respondents preferred excess of loss reinsurance structures versus 63 percent in 2012 and 43 percent preferred quota share versus 37 percent in the previous survey.

There appears to be more willingness on the part of carriers to compensate reinsurance intermediaries when program-specific reinsurance is not purchased. In 2012, 82 percent of the respondents indicated they would compensate intermediaries either directly, via a finder’s fee or by increasing the PA/MGA’s compensation, allowing them to pay the intermediary. This year, 94 percent of the respondents indicated they take this approach.

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