Product Innovation: Winning Strategy for MGAs
My previous blog post, MGAs: The Gatekeepers of Specialist Insurance, discussed the pressures on MGAs and why their niche focus and in-depth knowledge provides an essential route to market for large insurance carriers. In this follow-up blog post, I’ll dig deeper into the role of MGAs in guiding insurers through one of the main challenges today: product innovation.
The Right Products
Like others in mature industries, general insurance providers are under pressure to innovate by developing new products to increase their slice of a fixed-size customer base. The emphasis on product simplicity and meeting the specific needs of targeted areas of the population, with very specific guidelines set by the FCA, means that developing and launching new products continues to be high on carriers’ priority list.
But developing a successful new product is not easy. A good product is one that meets the needs of the consumer in terms of cover and premium level, and sits well within the insurer’s product portfolio without upsetting the balance of risk on the books.
This is where the niche-focused MGA can help. Whether through a network of brokers, or directly, the MGA is in a position to spot trends early within a single, focused area of the market. They can provide intelligence that has not yet come to the attention of the larger carriers.
Brokers may be requesting new products in response to consumer demands. This is valuable intelligence and provides the evidence needed to develop successful niche products and demonstrate those products are truly meeting the needs of the consumer.
Intelligent Testing and Distribution
Consumer needs can be fickle and what’s hot today can be stone cold tomorrow, which is why the ability to test and quickly launch new products is essential. The MGA’s proximity to the market can help to identify areas to launch new products and evaluate early results.
Once new products are ready for widespread take-up, the MGA can identify the best channels for distribution. By ensuring that innovative products are matched to consumer and broker demand, the MGA is instrumental in ensuring a product’s success. Together, the MGA and insurer are nimble enough to take advantage of market changes before the market moves on, or the need is met by the competition.
Putting Theory into Practice
Spotting industry trends, responding to broker demands and evaluating the performance of fledgling products can get lost in the general mayhem of everyday business – unless systems are in place to support the automation of these tasks. Using an adaptable policy administration system that allows the MGA to collect and analyse essential data takes a lot of the legwork out of market evaluation. The system should quickly enable the delivery of new products and support the rapid distribution of those products via the required channels. In addition, solutions must be in place to provide ease of access for brokers.
MGAs are focused, nimble, and in a unique position to spot trends and distribute new products quickly. This endears them to insurers and brokers alike. Add a policy administration system that supports the business from broker to insurer, and the MGA can enjoy lower costs, higher efficiencies, and a strong position with their carriers.