There is likely to be consolidation at smaller managing general agents in the international private medical insurance (IPMI) sector due to the scale required for such organisations to make meaningful profits, according to James McGrigor, director of McGrigor Group.
He also suggested there may be potential for as many as 10 smaller MGAs to be brought together, but this could be tricky to enact.
Closing out the first day of the Health & Protection IPMI Summit, McGrigor (pictured) told delegates $10m in gross written premium was not enough for an MGA to make significant progress.
“On the smaller side, $10m as an MGA is not enough,” McGrigor said.
“It’s too hard. You can make some money depending on the number of people you’ve got and what you’ve invested. And the owner or the owners will probably make decent money.
“But it’s proving difficult to push that to $20m and very difficult push it to $30m because you have a limited number of brokers around the world that you’re great friends with and they trust you.
“And how do you get five more of those? It’s difficult.”
McGrigor noted that there was interest from private equity firms in the IPMI market and investing in smaller players.
“So everybody, and I get so many PE people coming up to me saying, surely you can do a roll up of 10 different small players, and the answer is in theory it’s doable,” he continued.
“But because everybody’s got different brokers and suddenly you go from three you know to 15 you know. That’s good.
“But putting all those entrepreneurs together, has anyone got the system behind this which would really make it work? I’ve seen a few and they look good, but doesn’t really seem to get to the juice of it.
“So I think there will be consolidation because some people will put enough money into that idea, but we’re not there yet.”