MGAs: The Gatekeepers of Specialist Insurance
MGAs are in a unique position in the insurance ‘supply chain’. Aligned alongside the insurer, yet in tune with the needs of the market, MGAs’ ability to access and serve niche markets has cemented their place within the UK insurance landscape. Many MGAs provide critical support to brokers by delivering specialist products that the broker can offer to niche and specific markets.
Specialise and Dominate
MGAs often operate in areas too costly for large insurers to acquire sufficient in-house expertise to service properly – usually highly complex and specialist markets. This has made MGAs critical to niche markets. According to the Managing General Agents’ Association (MGAA), some of the most important firms in the country buy their professional indemnity insurance from MGAs – an example of the power of the ‘niche’.
But MGAs are more than just a conduit to difficult-to-reach areas – their narrow focus helps them identify gaps in the market and positions them to work with the carrier to develop a product to plug the gap. The more closely the MGA is aligned with its specialised market, the more it can identify the needs of that market, present ideas and desired solutions to carriers and increase market share of those insurers willing to partake in the opportunity.
A Compromising Position
But life is tough on the front line. In practice, it’s difficult for the MGA to find a compromise between meeting the needs of the insured – whether through a broker channel or not – and providing a steady stream of new business at the right price to the risk carrier.
Additionally, the more routes to market the MGA can foster, the more benefits they bring to the carrier. However, managing several channels increases complexity in terms of commission models, internal operations and regulatory compliance. Finding a way to easily manage these opposing forces is key to growth and success.
Overcoming Complexity to Generate Growth
MGAs who cope best with the complexity of their situation will be able to evaluate market requirements and work with their risk carriers to generate new, in-demand products. Add the ability to easily manage and service a high number of brokers and the essential position of the MGA in the niche market supply chain is established further.
Crucial to achieving this is the ability to view the business from the insurer, MGA and broker perspective. This top-level view is only possible when the right solutions are in place to enable efficient policy administration, support all channels to market, simplify processes and systems, and enable products to be brought to market quickly. The correct solution will tie all aspects of the business together – from broker to carrier, whilst supporting the needs of the customer. An end-to-end system allows complex operational rules to be set up, adding an element of automation to every-day transactions and freeing up resources to focus on new markets and products.
And for a truly seamless, efficient sales operation, those products can be delivered to market via a fully integrated broker system, feeding in real data and providing true omni-channel capability.
In today’s fast-moving, competitive world, technology will be the differentiator. MGAs who have at their core a policy administration system that supports them in their unique position in the insurance supply chain will be more than just gatekeepers; they will help to shape the market in the years to come.Share this blog post