By Michael Jones

July 7 - (The Insurer) - MGAs must move away from overly transactional relationships to ensure they do not lose out to traditional insurers in the softening market, a Managing General Agents' Association panel said on Thursday.

Speaking on the panel, Dual UK chief underwriting officer Catherine Dixon said that MGAs traditionally come into play during hard markets as insurer appetites narrow and then struggle when the market softens and insurers lean back in.

She pointed towards the transactional nature of current MGA relationships, which she said the market should move away from in favour of deeper, more sustainable relationships.

"I don't think that shifting around does anybody any good really. What we really want is stability," said Dixon.

Ardonagh Advisory GI Broking CEO Richard Tuplin identified improved rating on capacity and greater specialisms as two ways that MGAs can ensure they remain competitive in the softening market.

Panellists agreed that the market had already entered a softening cycle, with certain sections renewing with significant rate reductions.

"We are seeing some really significant reductions in some areas. If you imagine everything that we put on during the hard market, we're kind of back down to where we started from," Dual's Dixon said.

Ardonagh's Tuplin said the mid-market was "tanking" and panellists also pointed to softening in UK property, professional indemnity, D&O and cyber.

One area of the market the panel suggested would be affected by this softening was dealmaking.

They said there would be fewer deals done but with greater quality, given an increased focus on due diligence and deal structures.

"The insurer is going to be looking at that benchmark pricing as they get down closer to it and seeing their margin getting squeezed and squeezed. There's going to be lots of pressure on making sure acquisition costs aren't getting crazy," said Bruce Whitmee, CEO of AmTrust Specialty.