The insurtech market is entering a new phase as MGAs shift their focus from rapid growth toward underwriting discipline, insurance expertise, and sustainable growth, says Jascha Prosiegel, who leads Munich Re Specialty – North America’s Insurtech Programs business. 

Prosiegel’s work focuses on MGAs using automation and AI, with the business providing reinsurance capacity or insurance paper to a limited number of partners across North America. For Prosiegel, the world of insurtech MGAs has matured in three distinct waves over the past decade.

“The first focused on automation and digital distribution, which was a big shift as insurance began to be distributed through automated tools rather than human underwriting,” he says.

“The second saw companies with clear underwriting visions use technology to scale their businesses, while the third wave is now emerging around AI agents and advanced automation,” he adds.

All three waves, he noted, challenge the traditional carrier model — and how insurers approach risk selection and underwriting — by putting more of those processes into automated tools.

Technology has helped MGAs operate more efficiently, but Prosiegel says its impact should not be viewed simply as a replacement for employees.

An MGA built around automation from scratch may be able to operate with a relatively small team from the outset, compared with the larger workforce that might have been required to build the same portfolio without the technology.

The advantage also extends to the customer experience, as insurance buyers increasingly expect the same immediate quotes and online interactions available in other industries.

“You might get more efficient from a cost structure, but you also might get happier clients,” he says, “so it’s very much a win-win situation.”

However, in recent times, the market’s focus has shifted from growth toward profitability. Prosiegel says the objectives of MGAs, capacity providers, and venture capital investors are now more closely aligned around “bottom-line” performance and the health of the underlying portfolio.

“As a reinsurer and carrier, we need a healthy portfolio from the start,” he notes.

Key to this, he adds, is the importance of underwriting talent and disciplined decision making, rather than focusing primarily on sales and technology.

While technology allows smaller teams to scale efficiently, as more tools become widely available, simply using automation or AI is becoming less of a differentiator.

“We’ve never had this many tools available to automate and improve efficiency, which means simply using those tools is no longer unique,” Prosiegel says. “Self-built technology still has a role, but it’s not as much of a differentiator anymore.” 

The competitive advantage, he says, instead comes from combining technology with insurance expertise. This means addressing “those traditional insurance questions,” as he puts it, meaning understanding which risks to underwrite, setting appropriate guidelines and exclusions, and making the right risk selection decisions.

That, in turn, makes underwriting expertise particularly important for insurtech MGAs. Technology can accelerate the process, but poor underwriting decisions may not become apparent for several years.

Prosiegel uses a rally-driving analogy to explain the relationship. “You can have great technology and a great driver, but you still need the co-pilot providing the underwriting guidance: when to turn and how fast to go,” he says. “You can run very fast with technology these days, but you’ve got to control what you’re doing.”

The growing availability of technology is also supporting a more specialized MGA market. Prosiegel says focused businesses can build deeper knowledge of their risks and customers, tailoring their products to specific parts of the market.

Brokers can then use specialized MGAs to place particular or unusual risks, rather than relying on a single provider to cover a broad range of business. 

Meanwhile, capacity providers are becoming more selective about which MGAs they support, prioritizing disciplined growth over aggressive expansion. Consequently, proven performance is increasingly important, especially for teams launching new businesses. Being able to showcase previous experience of building a profitable portfolio can help give providers confidence that the same team can succeed again.

For Prosiegel, the strongest MGA relationships are also built around a shared understanding between the MGA and its capacity provider.

That includes agreement over the appropriate pace of growth, underwriting appetite, product offering, and expected loss ratio.

So, looking ahead, to separate themselves from the rest of the pack, the next generation of successful insurtech MGAs will need to combine technology innovation with deep insurance expertise, underwriting discipline, specialty market knowledge, and strong carrier relationships.

“There’s a risk that someone comes around and says, ‘I’m just going to use all these exciting AI agents to build an insurance business’,” Prosiegel says, “while ignoring the traditional insurance work that still needs to go into it.”