Managing general agents (MGAs), Lloyd's coverholders, and broker facilities have long occupied a supporting role in commercial insurance. A new Moody's Ratings report argues that role has become something more consequential. It also maintains that brokers, whether running the facilities or placing business through them, hold more structural power in the market than many capacity providers may want to admit.

Premiums written through MGAs more than doubled between 2020 and 2024, according to Moody's. Coverholders now account for around 40% of Lloyd's gross written premium, which grew from approximately £36 billion in 2020 to £58 billion in 2025. Seven of the ten largest London brokers now operate active facility or follow-platform arrangements, with named examples, including Aon Client Treaty, Marsh Fast Track, and WTW Gemini. These are not niche developments. They mark a broad structural shift in how commercial risks are sourced, priced, and placed.

Large broker facilities allow intermediaries to channel substantial premium volumes through pre-agreed underwriting criteria rather than risk-by-risk negotiation. That means faster placements and more reliable renewal terms for clients. For capacity providers, it means ceding individual risk selection to pre-arranged parameters. Moody's is direct on what follows: as brokers control customer access, proprietary data, and premium flows, economic value and negotiating power shift in their direction.

Soft market, harder questions

Moody's expects commercial markets to continue softening, and argues that weaker pricing will push more business through delegated structures. That pressure is likely to intensify competition in the MGA space, where private capital has been moving in at pace.

The concern Moody's raises is an incentive problem. Where MGA compensation is tied to premium growth rather than underwriting profitability, volume can take precedence over discipline. Fee-based MGA revenues are generally less sensitive to underwriting performance than those of capacity providers. That gap in incentives becomes a concrete risk for insurers in a soft market. For brokers placing business through MGA capacity, it is worth weighing before any renewal conversation.

Lloyd's has flagged the same issue. Chief underwriting officer Rachel Turk said in her 2025 market message that increasing delegation risks overcapacity and downward pressure on rates. Moody's separately notes that Lloyd's identified, in 2024, that poor oversight of parts of its delegated portfolio had contributed to deteriorating loss ratios from 2013 onwards. The bar for new MGA entrants at Lloyd's has since been raised.

Who captures the value?

The broader argument in Moody's concerns value chain economics. MGAs perform functions well beyond underwriting: product design, claims management, client servicing and distribution. They are compensated accordingly, which compresses the margin retained by capacity providers. Over time, it can also reduce their influence over the customer relationship.

The picture is more nuanced for brokers. Facilities give large intermediaries efficient access to insurer capacity at scale. They also allow brokers to shape underwriting criteria and manage client placements with greater certainty. Moody's notes that during the last soft market, some brokers consolidated placements among a smaller group of preferred carriers. That concentrated relationship strengthened their negotiating position on pricing and terms. As conditions soften again, a similar pattern could return.

Moody's also cautions against reading this as a one-way shift. Larger, more sophisticated insurers with strong in-house expertise continue to retain genuine control within delegated arrangements, even as they use them to grow. The report points to Pelagos Insurance Capital as a carrier that has built around delegation while keeping active portfolio oversight in place. Smaller carriers with limited internal expertise, by contrast, risk being reduced to pure capital providers while intermediaries capture a larger share of the economics.

Governance under the microscope

The Financial Conduct Authority (FCA) has also moved in this direction. Its Regulatory Priorities for Insurance 2026 report extends oversight to delegated authority models, remuneration arrangements, and the use of artificial intelligence in underwriting and claims. A separate FCA review of MGA and coverholder governance is expected to report findings in early 2027.

Governance standards have become a market access issue rather than a back-office concern for brokers operating or placing through delegated structures. Moody's describes strong oversight, data quality, and risk management as prerequisites for sustainable participation in the delegated underwriting ecosystem. The regulatory direction of travel reinforces that position.