Skin in the Game

By: John Speckman , Desmond Bohan

The New Paradigm

For an industry built on forecasting and preparing for the unexpected, we tend to overestimate the speed and scale at which we change. Yet no one would disagree that some aspects of our business are profoundly different than they were only 15 years ago. With alternative capital, more powerful analytics, and the insurtech boom; MGAs are shifting their focus from facilitating cash-flow for carriers to building profitable businesses that can be sold for multiples of EBITDA.

At the core of the shifting dynamics are three players: reinsurers, carriers, and MGAs. Over the next few pages, we explore the burden of risk each player assumes in the transactions they engage in, the market context that led to these dynamics, and why now is the time to redefine what “skin in the game” means in the programs sector.

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Skin in the Game