The insurance industry is witnessing unprecedented digital transformation, with the MGA (Managing General Agent) sector standing out as one of the fastest-growing and most dynamic areas. MGAs are thriving as they combine nimble operations with unique product offerings, rapidly expanding their market share. However, as they grow, they also become increasingly attractive targets for cybercriminals due to their sensitive data and limited cybersecurity infrastructure.
For mid-sized insurers and start-up MGAs, resilience against these threats is no longer optional – it’s an urgent necessity. In the face of increasingly sophisticated cyberattacks, these companies need to fortify their digital defences to protect assets, reputation, and consumer trust. Enter the Virtual Chief Information Security Officer (vCISO): an agile, scalable solution providing high-level cybersecurity expertise without the heavy overheads of an in-house CISO. For the MGA sector, which is evolving at a breakneck pace, the vCISO model offers a path to resilience that aligns with both growth and fiscal constraints.
Why cyber resilience is a must for the growing MGA sector
With the MGA sector’s rapid expansion, the stakes for cyber resilience are higher than ever. The global MGA market reached $23.9 billion in revenue in 2023, a testament to its robust growth trajectory and increasing influence. However, rapid growth also brings heightened exposure to cyber risks, especially as MGAs often rely on multiple third-party vendors to scale operations efficiently. This reliance expands their attack surface, making them attractive targets for cybercriminals.
Incidents like CNA Financial’s £30 million ransomware payment and the widespread breaches affecting insurers globally serve as stark reminders of the vulnerabilities inherent in the sector.
Recent data from ORIC International reveals different cyber loss events across the five industries that have reported the most cyber claims. It highlights the different nature of the losses suffered by each of the industry groups across nearly 1,200 reported claims between 2013 – 2019 from 50 countries with an average settled cyber claim totalling USD 4.88m.
Data breaches emerge as the most frequently reported losses, with significant financial and reputational repercussions for firms in the sector. Significantly, though, the insurance industry leads in exposure to malicious and accidental breaches among the five major industries reporting cyber claims. This underscores a pressing need for stronger cyber defences.
At the same time, while claims over $10 million make up only 5% of incidents, they account for a staggering 95% of total costs. For mid-sized insurers and MGAs, resilience against such threats is not only about protecting their own operations but also about safeguarding the client trust that fuels their growth.
The challenges of building cyber resilience for mid-sized insurers and MGAs
The growth of MGAs is driven by their ability to operate flexibly and efficiently. Yet, this agility can also be a double-edged sword in the world of cybersecurity. Many MGAs and mid-sized insurers rely on legacy systems or third-party solutions that may not be optimised to handle today’s sophisticated cyber threats. While larger insurers can invest in dedicated cybersecurity teams, MGAs often operate on lean budgets, leaving them with limited in-house resources to establish a robust cybersecurity infrastructure. Building resilience requires addressing these unique constraints.
For smaller firms, creating and maintaining an in-house cybersecurity team is rarely feasible. Instead, a vCISO offers a pragmatic solution, providing high-level cybersecurity oversight without long-term commitments or high costs. This approach allows MGAs and mid-sized insurers to focus on growth while ensuring their resilience remains a priority.
A Virtual Chief Information Security Officer offers mid-sized insurers and MGAs key benefits that align with their unique growth needs and limited resources. Firstly, vCISOs provide access to advanced cybersecurity expertise on a flexible, cost-effective basis. This allows MGAs to implement robust security measures without the significant expense of a full-time CISO, supporting their growth without straining budgets.
Secondly, a vCISO customises cyber strategies to address specific risks, helping firms build resilience against disruptions. By assessing vulnerabilities and aligning defences with business priorities, vCISOs develop strategies that support continued growth while managing cyber threats. Lastly, vCISOs enhance compliance and credibility by guiding MGAs through regulatory requirements. This oversight builds trust with clients, regulators, and partners, distinguishing MGAs as secure, reliable players in a highly competitive market.
Why cyber resilience is essential for credibility in the MGA sector
In the rush of rapid growth, it’s easy for cybersecurity to become an afterthought – especially when resources are stretched and priorities are focused on expansion and market capture. However, overlooking robust cybersecurity processes can leave MGAs and mid-sized insurers dangerously exposed to threats that could destabilise their progress. Establishing strong cybersecurity protocols not only protects the business and its data but also supports procurement standards, ensuring that partnerships are built on secure and compliant practices. As MGAs integrate new vendors, clients, and platforms, their third party risk increases with each integration – and cybersecurity becomes essential in meeting procurement requirements and safeguarding reputation, client trust, and operational continuity.
As insurers and MGAs expand their digital offerings, there’s a widening gap between selling cyber insurance and demonstrating strong cyber resilience within their own operations. For clients, this creates a perception issue: can they trust an insurer or MGA that’s vulnerable to the very risks it’s insuring against? This is where an independent vCISO can play a transformative role, helping firms establish foundational cybersecurity practices that reflect the resilience they promise to clients.
A vCISO can guide MGAs in implementing core cybersecurity practices such as multi-factor authentication, encryption, and regular vulnerability assessments. These measures help bridge the gap between external assurances and internal resilience, ultimately strengthening the firm’s credibility. In a sector driven by trust, a strong, resilient foundation is critical.
Embedding resilience as the MGA sector scales
MGAs are on a fast track to growth, often relying on a complex network of third-party vendors and data sources to scale. This makes them especially vulnerable to cyber threats originating from third-party weaknesses. A vCISO’s role in managing third-party risk is crucial, helping firms assess vendor security practices, set cybersecurity standards for partners, and monitor for potential vulnerabilities within their digital ecosystem.
The vCISO also supports MGAs in developing incident response protocols. Rapid response to a cyber incident can significantly limit damage, reducing downtime and safeguarding the firm’s reputation. By embedding resilience at every level, from internal teams to third-party vendors, a vCISO enables MGAs to grow confidently, knowing they’re prepared for whatever threats may emerge.
Resilience as a competitive advantage in a cyber-driven future
For insurers and MGAs, resilience has become a core competency. As the MGA sector grows, firms must embrace cyber resilience to sustain that momentum and protect client trust. A vCISO offers a cost-effective path to resilience that doesn’t hinder growth – allowing MGAs to benefit from industry-best cybersecurity practices while maintaining their competitive edge.
The vCISO model isn’t just about cost savings; it’s a strategic investment in a firm’s future. By embedding resilience as part of their operational foundation, MGAs can confidently scale in today’s risk-laden environment, building trust with clients and stakeholders alike. As they position themselves as industry leaders, resilience will set them apart in a sector that’s transforming at an unprecedented pace.
As the MGA sector continues to flourish, those firms that prioritise resilience will lead the way, embodying the balance of agility and security essential in today’s fast-paced insurance landscape.
The author
Matthew Geyman is Managing Director, Intersys UK
