Hagerty, a specialty automotive insurer, has entered into a non-binding letter of intent (LOI) for a new fronting arrangement with Markel, marking a significant evolution in its successful partnership.
Hagerty provides specialty vehicle insurance, expert car valuation data and insights, live and digital car auction services, immersive events, and automotive entertainment.
Under the current model, Hagerty earns 42% total commissions as an MGA and assumes 80% of the risk through Hagerty Re, while Markel retains 20% of the risk and handles filings and administrative support. Hagerty Re pays a 47% ceding commission to Markel.
Under the new fronting structure, starting January 1st, 2026, Hagerty will assume 100% of the underwriting and investment economics, meaning Hagerty Re will control 100% of the premium and assume 100% of the risk.
Hagerty will gain expanded underwriting and claims authority, while Markel will continue to issue policies and provide administrative support.
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Hagerty will pay an initial fronting fee of 2% to Markel, with the fee decreasing based on the volume of policies issued in each calendar year.
McKeel Hagerty, Chief Executive Officer and Chairman of Hagerty, said, “Today’s announcement marks the continued evolution of our highly successful partnership with Markel that began with their acquisition of Essentia in 2013.”
In 2019, Markel also acquired a minority stake in Hagerty for a total consideration of $212.5 million.
Hagerty’s CEO continued, “Under the newly proposed fronting arrangement, Hagerty will control 100% of the premium from our consistent, high-quality underwriting, positioning us to deliver better profitability and operational control with no disruption to policyholders.”
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