Soft market forces MGAs to rebuild pricing engines

Managing general agents are being pushed to overhaul their pricing and underwriting operations as commercial insurance rates soften and competition tightens, according to independent research commissioned by pricing and underwriting insurtech Optalitix. The study, Pricing Transformation in MGAs, found that more than four in five MGAs have either already modernised their pricing capabilities or plan to start projects within the next 12 months, marking a shift from planning to execution across the sector.

The report draws on a survey of 111 insurance professionals conducted across insurers, MGAs and reinsurers during March and April 2026, with MGA respondents representing 21% of the sample. Its central finding is that pricing digitisation is now an active build phase rather than a strategic ambition: 35% of MGAs say transformation is already underway, 26% have largely modernised their systems, and a further 22% plan projects within the year. More than half, 54%, say they have made significant progress over the past three years.

Why are MGAs modernising pricing now?

The timing tracks a decisive turn in the underwriting cycle. The Council of Insurance Agents & Brokers reported that average commercial premiums fell 1.2% in the first quarter of 2026, ending a 33-quarter streak of premium increases and marking the first broad decline since 2017. Globally, Marsh recorded a 4% average fall in commercial insurance prices in both the second and third quarters, driven by competition and favourable reinsurance pricing. AgencyEquityInsuranceinsider

That reversal matters most to MGAs because they grew up in the opposite conditions. Much of the current MGA population launched during the hard market of the early 2020s, when rising rates delivered top-line growth with minimal operational investment. With the shift from peak pricing to negative rates taking roughly four quarters, about twice the pace of the 2014 to 2017 soft cycle, that tailwind has vanished faster than most business plans assumed. When rate no longer carries growth, margin has to come from pricing precision and lower cost per policy instead, which is where the case for modernised pricing infrastructure sharpens. PKF Littlejohn

Is technology investment being driven by regulation or growth?

The research points to commercial motives rather than compliance. One-third of respondents, 33%, cited growth or expansion into new markets as the biggest trigger for investing in pricing technology, ahead of competitive pressure at 28%. That reframes pricing systems as a route to scale rather than a defensive measure, consistent with the pressure private-equity-backed MGAs face to hit multi-year growth targets in a market where organic premium is harder to find.

Optalitix co-founding director Dani Katz characterised the environment as a new phase in which underwriting precision and operational efficiency, rather than speed of growth, generate competitive advantage. He argued that connecting pricing, underwriting data and workflows lets underwriters make faster, better-informed decisions while spending less time on administration.

Does pricing transformation mean abandoning Excel?

The report pushes back on the assumption that modernisation means retiring spreadsheets. Excel remains central to MGA operations: 61% of respondents use it extensively alongside other pricing tools, and only 4% have stopped using it altogether. What MGAs want instead is technology that keeps Excel's flexibility while adding enterprise governance, deployment and automated underwriting workflows. That preference is commercially significant for vendors, because it favours platforms that wrap existing actuarial models rather than forcing a rebuild from scratch. Optalitix, for its part, converts pricing models built in Excel, Python and R into cloud-hosted APIs.

On AI, the survey describes a productivity tool rather than a replacement for underwriting judgement. Nearly four in ten respondents, 39%, see reducing manual work as AI's greatest benefit, while 35% expect it to speed up underwriting processes. The framing matters at a moment when AI capability has become a live question in MGA due diligence, with acquirers increasingly probing how targets use the technology to improve efficiency and underwriting performance.

What is holding transformation back?

People, not technology, remain the primary constraint. A quarter of respondents, 25%, cited a lack of internal skills or resources as the biggest challenge, and 18% pointed to organisational change. The report concludes that the next phase will focus on connecting pricing, underwriting, data and AI into a single workflow to support faster decisions, stronger governance and more profitable underwriting.

Why This Matters to FinanceX Readers

For investors and finance professionals, the signal is that the MGA growth story is entering a stress test. The sector expanded roughly sixfold over the past decade, but its first genuine soft market has arrived, and public broker-owned MGA platforms with heavy property exposure face premium declines of more than 30% from peak. In that environment, the MGAs that defend fee income will be those that can extract more margin from data they already hold rather than those chasing top-line volume. Pricing infrastructure becomes the lever, and vendors positioned to add governance to existing Excel-based models, without demanding a full system rebuild, are aligned with what buyers say they actually want. The practical question for anyone holding MGA or insurtech exposure is which platforms turn pricing modernisation into measurable underwriting margin before the cycle bottoms out.