Iprism in the news: Should a bespoke regulatory framework be introduced for MGAs?

The debate is growing about the current FCA regulatory framework, which applies to all types of insurance intermediaries, and whether a new and tailored framework for MGAs is needed.

Why? We, and the wider intermediary community, believe that the current framework does not appreciate the differences between traditional insurers, and the unique operational role, and value, of an MGA like ourselves.

Our CEO Ian Lloyd spoke to Harriet Scott form Insurance Times about the issue. He stressed, “A distinct regulatory identity for MGAs would clarify their obligations and reduce legal ambiguity, enabling regulators to issue guidance that reflects the actual operational model of MGAs which, in turn, would improve compliance accuracy.”

According to data, Ian isn’t the only person who feels this way. The article reports that 68% of 147 surveyed brokers agreed that MGAs should be regulated separately from insurers and brokers. Interestingly, 67% indicated that they would be more inclined to work with MGAs if a new framework was introduced.

The current regulatory framework, which treats MGAs as retail intermediaries, is therefore limiting: “The lack of differentiation between MGAs and brokers has historically created confusion in how rules are interpreted and applied.”

Ian instead suggested that the new regulatory framework should be aimed at building trust, introducing tailored rules, so that redundant compliance work can be eliminated, allowing MGAs to focus on underwriting discipline.

He argued for a distinct regulatory identity for MGAs, “A separate regulatory framework for UK wholesale MGAs would align regulation with reality, reducing inefficiencies and confusion, clarifying roles and responsibilities and improving compliance and governance.”

While the current framework is great for regulating retail brokers, we need to tailor it to the MGA/wholesale broker model.

“This isn’t about reducing oversight – it’s about right-sizing it to ensure that regulation supports, rather than hinders, the MGA model.”

For the full debate, read the full Insurance Times article here: Should a bespoke regulatory framework be introduced for MGAs? | Insurance Times (subscription required).