AUGUST 2014                                                                              

Dear Colleagues,

Welcome to our August newsletter; again, any comments, suggested topics or ideas on how to improve this would be gratefully received. 

~The Editorial Board~ 

Catherine Bell, Director, MGAA and Chairman, inet3 talks about the MGAA Membership & Benefits Committee 

The Membership & Benefits Committee focuses attention on all matters relating to our much valued and ever increasing membership. With 94 MGAs from an incubator to the established large multi national, the committee is dedicated to reflecting the needs of all of our membership and factor in the diversity of the classes of business and territories that are traded with. Currently our membership criteria means that we can only consider UK Regulated MGAs who underwrite from the UK. We are currently reviewing this, with the advent of interest and applications being received. As a committee we factor in all views and it is our intention to ensure that members are true MGAs and that they fit our criteria of having a “primary fiduciary duty” to insurer partners, rather than to the end consumer. This does not mean that we are not heavily vested in the needs of the client, and ensuring that the client is at the heart of the approach of MGAs to their primarily broker community.  We work closely as a team to consider all aspects of how we as MGAs distribute and underwrite our business and as a committee we are constantly working to bring together parties in a spirit of collaboration.

One of our key themes for 2014 was to develop nationally our regional out reach via podcasts of our briefings and by attending a variety of “meet and greet” events. BIBA was hugely successful this year building on our awareness and meeting potential new members in person, garnering opinion, and welcoming comments about our Association. With a new CII "Off the Shelf “ involvement we are broadening the medium by which we are helping people understand what MGA’s are and do, and meet the broker and wider community, by working in conjunction with the CII. Our podcasts and market briefings account towards CPD hours which mean that we are integral to the professionalism in our sector, and a recent Delegated Authority P66 paper as part of the ACII qualifications help to focus on our sector as part of the educational process. These podcasts are primarily on the website for our members who cannot make market briefings, but are keen to derive value and participate. We will also be attending the Lloyd’s of London hosted Meet the Market event in Manchester on 7th October as part of this initiative.


Our committee are always keen to encompass issues which we believe are topical and relevant relating to MGA’s including applications to join, TOBA’s, compliance, regulation, conferences and recently having amalgamated with the Events Committee our busy calendar of events, market briefings and Capacity Exchange. The MGAA Membership Committee has a representative for insurers who is able to add a hugely relevant insight when we are debating issues with an insurer focus. We encourage contributions and welcome ideas on matters which are worrying or create concern.  One of our key intentions is to create environments where our members can come together and network, establish business opportunities and find ways to work together to benefit our sector and with this in mind our next upcoming major event, the Capacity Exchange on 10th September, is definitely a date for the diary. Insurers with capacity and our much valued supplier members all congregate in one place so the MGA members can establish new relationships. Of all of our events this is key in bringing people together.


The committee is made up of volunteer members who are all highly experienced in the MGA community and have much knowledge and experience with which to consider the very varied and diverse matters which affect MGAs in this ever changing dynamic industry.Three of our team are board members and this is instrumental in keeping our decisions at the forefront of the direction of the Association. 


We ask for experts to attend our meetings to gauge feedback which may be relevant to members and consider ways in which we can practically assist by cascading the information via newsletters, and at our very well attended events. We garner supplier members who are of critical importance to the MGAA. These are businesses with expertise and knowledge, with a mindset of wanting to be involved and many of these suppliers sponsor our events such as the very popular and well attended event at the House of Commons last month.  This event, very kindly hosted by Jonathan Evans MP, was the pinnacle of opportunities to network in the most auspicious of surroundings whilst enjoying a full tour of the House of Commons. Feedback from members has been overwhelmingly supportive and we will certainly consider repeating this next year. Supplier members are key to what we do and contribute hugely to our market briefings and provide insight and awareness of key topics which relate to our businesses. Keeping an open mind to learn what they can bring to add value is in the spirit of collaboration that we support. We always like to hear about new innovations and technology so that this can be shared to benefit all.


We meet monthly and our findings and recommendations are fed back to the bi-monthly Board Meetings in order to ensure that the MGAA is ever conscious of the needs of members with the decisions we make. We are here to further the future of our sector by working together. 

MGAA Meet The Board

On the 23rd July the MGAA held its first social function at the House of Commons. The function was supported by members with over 190 registered to attend.

Our host for the evening was Jonathan Evans MP – Chairman of the All Party Parliamentary Group on insurance – who agreed to escort a guided tour for dignitaries such as Sian Fisher - Chief Underwriting Officer OIM, Inga Beale - CEO of Lloyds and Nicholas Hales - CEO of R&Q.


With the assistance of the staff at the Palace of Westminster we also organised a series of guided tours of which nearly 140 members joined.


Members will recall that in February 2014 at our General Meeting Reg Brown was awarded Honorary Life Membership of the MGAA and we took the opportunity of presenting Reg with a Certificate to commemorate this award together with an engraved paperweight.



The board recognised a number of other members who gave their time and commitment to the formation of the MGAA. Reg Brown, as Chairman, explained how this came about and made special presentations to Brian Russell (APC) and Frances de Zulueta (Alpine).

The board also recognised that in addition to engaging with the steering committee certain members had continued to play an active part within the MGAA. Accordingly the following members were awarded the status of Honorary Members of the MGAA; Sian Fisher (OIM), Charles Earle (Arista), Keith Stern (Lloyds), Ian Barrett (Concise PR) and David Coupe (EC3 Legal).

Sian Fisher (Board Director, MGAA) with Lord Hunt

MGAA would like to thank all those that joined us at this wonderful event and our sponsors for supporting us in the organisation of the evening. We would like to share with you some of the comments the MGAA received in praise of the evening.

An absolutely splendid evening! It was a perfect setting for the event and everything was so well organised” (Norman Hughes, Compliance Management Services Ltd)

“A high profile event, well attended and said everything about what you and the team have done and the direction and relevance of the MGAA.” (André Ford, Nexus Underwriting Ltd)

“It was also lovely to see all the deserving people who have made the MGAA possible receive recognition.” (Paula Doolan, BLM)



On Monday 28th July we held a market briefing in Lloyds with the tracing office of ELTO. The briefing looked specifically at the situation of ERN tracing. Whilst FCA have accepted that the 99% capture rate is unrealistic they will be looking for “best endeavours”. This position was explained by the tracing office executives of ELTO at the briefing. Slides of the briefing are available on our website.

Following this meeting we have obtained the links for the relevant guides that you may find of use. Included is a link to the Broker Guide should you wish to pass that on as well as the Employers guide for the end customer.

ERN Formats

ELTO often get asked what format the Employer Reference Number (ERN) takes. From their discussions with HMRC they can confirm that each ERN is unique to the employer and will not be replicated. On PAYE records the format for most numbers allocated since 2001 is ‘nnn/aznnnnn’. ‘nnn’ is the 3 digit number for the tax office whose catchment area the employer falls into. ‘aznnnnn’ is the ERN, where ‘n’ is numeric and ‘a’ and ‘z’ are letters. For numbers allocated prior to 2001, the format is ‘nnn/annnnn’ in the majority of cases.

As previously mentioned the ELTO guides to give further information on the ERN and ELTO in general. ELTO have also produced a guide which can be issued to policyholders to explain why the industry is now collecting the ERN. For added information click here for the ELTO newsletter should you wish to subscribe.

ELTO Consultation

Many of you will be aware of the FCA’s consultation paper CP14/8. ELTO have responded to the current FCA consultation confirming that at the close of 2013 the Employers’ Liability Database (ELD) contained some 12 million policy records covering the equivalent of more than 22 million policy years. Though there are still issues with this data reaching insurers, most of which is captured by insurance brokers, these figures demonstrate the industry’s determination to make policy data available for potential claimants to access.

Delegated underwriting in a regulated environment

As has been identified in our regulatory newsletter there is increased scrutiny over delegated underwriting from both a prudential risk and conduct risk perspective. Lloyd’s of London issued their new code of practice for delegated underwriting in October last year and members will recall Peter Montanaro’s market briefing in February 2014 [available on podcast].

Lloyds has continued its emphasis on strengthening the supervision and management of all of its cover holders which will include MGAs with Lloyd’s paper.

Areas of FCA concern

Clive Adamson, director of supervision at the Financial Conduct Authority (FCA), highlighted four key areas of concern regulators have about delegated authority:

  • insurers not performing effective due diligence or oversight of coverholders;

  • coverholders acting ultra vires or in a manner contrary to insurers’ expectations and instructions;

  • coverholders writing business their principals would not or could not write due to that business being contrary to the principals’ underwriting philosophy; and

  • coverholders not having the requisite ability, expertise, facilities or systems to write the business they are handling.

Adamson comments “insurers must consider whether those to whom they have delegated authority for underwriting or claims handling are capable of acting in the manner they expect and have adequate information to ensure that their agents are acting properly."

So what should MGAs do?

The simplest answer is to behave like any other risk carrier working in today's regulated environment. Being an underwriter, irrespective of whose balance sheet they are working from, they should be reporting to the management or board and communicating to their principals on all significant underwriting MI. This will allow the MGA to demonstrate they know, understand and are in control of the risks they are writing. 

FCA raises conflict of interest concerns

The FCA has published its thematic review: ‘Commercial insurance intermediaries – conflicts of interest and intermediary remuneration’. The review focused on seven large intermediary groups operating in the SME insurance market and was supplemented by a survey of over 1,000 SME businesses.

Key findings of the review included:

  • Inherent conflicts in business models where intermediaries carried out more than one role in the distribution chain, often exacerbated by lack of segregation

  • Insufficient control mechanisms and management information on conflicts

  • A lack of customer understanding on the nature of the service being provided

    Follow-up actions from the FCA include direct engagement with the intermediary sector, to enhance understanding of its rules and expectations on conflicts management, and the provision of further information to SME customers about their right to receive full commission disclosure on request. 

European Insurance and Occupational Pensions Authority

EIOPA issued a discussion paper in May 2014 looking at conflicts of interest and proposed amendments to IMD II. Whilst this is nothing new in relation to conflict management it does seem that the UK market is well ahead of our European colleagues. However we believe that it is wise to be aware of what is happening on the European front. This affects our sector of the market as the discussion paper specifically mentions proposed amendments to the IMD around Insurers agents being required to act in the best interest of policyholders.

Whilst this discussion paper does not mention commission disclosure as it falls outside the scope there are concerns following the German U-Turn on mandatory disclosure.

We will follow this as it progresses through the European discussion and keep members apprised of the progress. If you would like to review the discussion document please contact Peter Staddon

FATCA [Foreign Account Tax Compliance Act]

This issue has been raised by a member who trades in US$. Our Associate partners Grant Thornton have prepared a short article and further information can be found on our website (click here).

Flood Re

Our friends at the ABI have advised that Brendan McCafferty has been appointed Chief Executive Officer of Flood Re. Brendan will begin his new role in the fourth quarter of 2014 and his appointment will be subject to further regulatory approval as part of Flood Re’s authorisation.

Brendan has over 28 years’ industry experience across insurance, broking and consulting and has worked for leading brands including Aviva and RSA. He was formerly UK President of global insurance broker, Willis. Our relationship with ABI in regard to Flood Re continues.

The Law Commission

Many of you will have seen that there is currently a paper going through the House of Lords regarding Insurance contract law. At the MGAA Board meeting in March we were joined by the Law Commissioner, David Hertzell. David outlined his view on the Commercial Insurances Bill which was similar to the Consumer Insurance Act passed last year. Further details are below 

Report on Insurance Contract Law

The Law Commissions have published their second report on this project, Insurance Contract Law: Business Disclosure; Warranties; Insurers’ Remedies for Fraudulent Claims; and Late Payment(Law Com No 353; Scot Law Com No 238). The report includes a draft Bill which would implement the recommendations. Further information is available at:

Insurance Bill

The majority of the Commissions' recommendations are included in the Insurance Bill presented by Government to Parliament under the special procedure for Law Commission Bills. The Bill also makes amendments to the Third Parties (Rights against Insurers) Act 2010, so that that Act can be brought into force.

The Insurance Bill and accompanying Explanatory Notes will be made available on:

The Bill does not include our recommendations on late payment, or those concerning warranties or other terms relating to particular descriptions of loss. The Government did not consider these provisions to be sufficiently uncontroversial for the procedure at this time, but has asked the commission to continue to work on solutions to be introduced at the next legislative opportunity.

The executive summary of the Commissions' report identifies how our recommendations are included in the Insurance Bill currently before Parliament.

Law Commission                       

Scottish Law Commission |


Conduct & Ethics Committee

At the last C&EC Duncan Minty, market specialist on business ethics, joined the meeting and explained how MGAs can manage and improve their own conduct.

Duncan identified 4 key areas being

  • Transparency – emerging across the product life cycle (policy design, pricing, claims, complaints, whistleblowing); puts pressure back on management oversight of key ethical issues; tough for MGAs in their 'agents of carrier'.

  • Conflicts – on the FCA radar; expected to be better managed; focus not just on disclosure but on mitigation as well.

  • Consent – central theme of add-on thematic review; complex, not well understood, but proximate cause of much detriment down the delivery chain.

  • Inducements – focus of review in long term market, but FCA will apply lessons learnt to general market.

    Watch out for a market briefing late 2014 or early in 2015 in the Old Library at Lloyds.


IT Forum – “The Cloud”

One of the 4 members' only forums run by the MGAA is on IT. All too often we see the words that our IT is “in the Cloud”, but what does that actually mean. Member of the IT forum, Michael Dear [Collegiate Management Services] has prepared a paper which explains what this means and how it affects MGAs.

Why use Twitter

The MGAAs public relations partners Concise have explored the use of twitter and confirm that with over ½ billion users worldwide, it’s not surprising that Twitter is no longer the preserve of the big brands. Businesses all over the world in many different commercial sectors are embracing it to reach and communicate with their existing customers and to find new ones.

Considering that the insurance market has developed and thrived on the strength of relationships, it’s no surprise that Twitter can be an important tool in maintaining and building partnerships, in a relatively cost-effective way.

In some respects Twitter is like a networking event. But rather than having to work a room of lots of potential contacts to find one or two that might be relevant to your business, it provides the opportunity to identify and communicate with many businesses without the leg work, refreshments and need to travel from your desk!

Twitter does require commitment and maintaining a presence is a key part of using it. It must also be able to demonstrate a return on any time investment made in it. Knowing your audience, what they are interested in and want to hear about are very important for delivering Twitter success and evaluating impact.

There are also reputational matters to consider particularly around who is able to use and who monitors a Twitter account, as well as staff using their own personal accounts in work time. A specific social media policy needs to be drawn up and in place to provide the parameters and guidance on using Twitter.

The effective use of Twitter can help build awareness and understanding of your business. You can participate in discussions relevant to your business lines or areas of expertise. You can find out what other industry experts and leaders are talking about and respond to them. Most importantly, you can communicate directly with large numbers of likeminded individuals and businesses to drive growth and sales.

Is it time your business joined the fast growing band of insurance Tweeters?

Alex Wise is a director of Concise PR (


PKF Littlejohn

John Needham and John Perry have written a technical briefing regarding Income Recognition for MGAs. This followed their successful market briefing which was held in the Lloyd's Old Library on the 10th June 2014. This briefing has been pod cast and is available from our website.

One other issue raised at the market briefing related to Application Note G to the FRS 5 form. John Needham has issued a confidential guide and copies can be obtained by contacting the MGAA


Keycare has locked a deal with Suffolk Constabulary with a 500 per cent increase in customers over the last 12 months.

This ground breaking SAFEkey lost key recovery and key registration service provides residential and business owners protection and assistance if they lose keys – enabling police to access unattended property in the event of an incident.

Launched in 2012, the unique safety scheme has been taken up by thousands of people – as reinforced by the fivefold surge in members when compared to the same period last year. It was showcased by Suffolk Constabulary at this year’s Suffolk Show, which attracted over 70,000 visitors, including Prince Harry.

Keycare provides recovery and replacement for any type of keys attached to a Keycare fob, including both personal and business keys, up to £1,500. There is a 24 hour emergency helpline, 365 days a year and access to a nationwide network of locksmiths.

For further information or call 0845 303 0550.


MGAA – On the Road

On the 24th June Peter Staddon, Managing Director, and Jane Comerford, General Manager, spoke at the Leeds Town Hall to the local Insurance Institute of Leeds. Attended by in excess of 70 local institute members, Peter explained about MGAs and how they interact with the market. The meeting concluded with Peter and Jane hosting a coffee meeting in a local hotel where we were joined by interested parties.

Further dates are being agreed and we will shortly be attending meetings in  

London, Manchester, Chelmsford, Cambridge and Cheltenham 

For further details or to join Peter and Jane please contact


Upcoming Events

Meeting with FCA – 1st October 2014

We have been able to secure an open door meeting with the regulator. The current date is the 1st October 2014 and will be held at Canary Wharf. At present we are advised that this meeting will be limited to 100 but we are awaiting the actual time of day. Please put this date in your diary and look out for our announcement.

London Market Claims 2014 - 16th October 2014

The London market claims event is being held on the 16th October and is dedicated to improving claims performance for policyholders.

The conference brings together the entire value chain, including insureds, underwriters, MGAs, reinsurers, brokers, claims adjusters and other service providers - to benchmark and share knowledge and expertise.

This year there’s more discussion time to tackle the practical issues, a stronger focus on pre-placement and more client/risk manager perspectives, as well as a keynote from Dominic Christian at Aon and the results of exclusive research from Gracechurch Consulting.

Register before 15th Aug with the code MGAA14 and receive 20% off the registration fee. Plus book 2 delegates and the third comes free.

Cyber Risks – Does perception reflect reality? – 11th September 2014 15:30pm – 17:30pm

Cyber Risk and associated regulatory scrutiny is growing exponentially across Europe.  A successful cyber-attack could cause significant financial, operational and reputational harm to a targeted company, and potentially also to the organisations and individuals that the company does business with. 

For Managing General Agents the importance of understanding the nature of cyber-threat is two-fold; information risk practitioners must appreciate the level of preparedness needed to mitigate and combat such events, while brokers and underwriters must appreciate the full extent of the risk and exposure in order to place and write business effectively.

BNY Mellon is a Global Systemically Important Financial Institution (G-SIFI) and Lloyd’s have created this symposium to bring together all those in the Lloyd’s market with a vested interest in understanding and managing cyber-risk. 

To join and hear industry experts explain new cyber threats, regulatory concerns, best practice behaviours, and cyber-attack examples:-

The Old Library at Lloyd’s, 1 Lime Street, London, EC3M 7HA

To reserve your place email


Useful Links

Compliance Newsletter

For those of you who missed our compliance newsletter you can access this from

Financial Ombudsman News

The Ombudsman newsletter 117 was issued on the 24th June, 2014. Although it is looking at health care and PPI we can draw some conclusions as to how they will view similar situations which relate to general insurance issues.

Information Commissioner Newsletter 2014

The information commissioner has issued their July newsletter which can be accessed via the following. The newsletter looks at data protection authorities responding to complaints.

Ordnance Survey

Ordnance Survey have recently issued a news round up in their newsletter. A copy can be downloaded from