With a unique position as both an intermediary between insurance carriers and agents, as well as a direct-to-client underwriter, MGAs understandably face a myriad of challenges from all directions. But what role does technology play and how can it be leveraged to position MGAs in a more favourable position amidst these challenges?

Today’s challenges

To start, it’s worth considering the current challenges faced in the marketplace and how they relate to an MGAs technology adoption maturity. Does insurtech and technology in general play a significant role in the success or failure of an MGA today? That is the question.

One thing’s for sure, the MGA and insurance market is competitive. In the wake of COVID-19, MGAs continue to grapple with a changing capacity landscape, as insurers reduce their tolerance for underperformance and review their capacity availability. This understandably makes attracting and retaining capacity a key concern. An underperforming MGA in a post pandemic world simply isn’t going to last long. So, what can be done to turn the tide and improve performance? Could the right technology, be the answer?

Before we explore that possibility, it’s worth considering some of the other challenges MGAs face today and the role software and technology plays for each.

Business agility

MGAs are, in comparison, known for their agility in challenging market conditions. This has been evident, never more so, than during the turbulence of the recent pandemic. Whilst their specialism and niche often provides an ability to be more nimble than their insurer counterparties, technology adoption is fragmented, so many MGAs continue to rely on legacy software and processes, severely hampering the speed to which they can pivot and address market challenges.

Whilst the world slowly emerges from COVID-19, an MGAs requirement to be responsive to its customers, brokers and capacity providers does not diminish. In fact, the world and many competitors have changed in this time. Reliance on advanced technologies has only increased and if an MGA wants to remain agile, the right technology is the only solution.

Intelligent use of data

Reliable, accurate data is essential in the insurance industry. Unfortunately, many MGAs simply don’t have the capability to access and interpret the necessary data that would allow them to make the most informed and profitable decisions. Instead, the underlying technology driving the business is not centralised, so teams work independently, and data silos emerge – a less than efficient situation.

This issue is compounded by supply chain and carrier partner requirements. With expectations that include live data distribution, MGAs with the wrong technology simply cannot meet their obligations efficiently and in turn must rely on manual workloads, which hit the bottom-line. Without intelligent use of data, end-customers can also be affected as premiums may be higher and the MGA cannot offer added value on policies, having a detrimental impact on winning and retaining future business. All real-world problems, that software and technology has an answer for.

Operational inefficiencies

To remain profitable in any industry, efficiency is key. However, the insurance industry, perhaps more than any other, is blighted with outdated technologies and processes that is stifling this efficiency. Even with a plethora of insurtech and advanced software now available, market knowledge indicates that MGAs retain an over reliance on legacy technologies that is hindering their progress.

The convoluted processes many MGAs deal with whilst using their legacy workflows is having a significant impact on their bottom line. The extra manpower, resources and costs needed to manage these workflows are detrimental to their competitiveness. But how do MGAs change? How do they adapt? How do they improve? The answer lies once more, with the right technology. By leveraging intelligent software and backend management systems, MGAs can evolve at speed, dramatically reducing their inefficiencies and levelling up their capabilities in an ever more competitive marketplace.

Profits slipping away

There has never been tougher financial conditions for an MGA. Not only are operational costs inflating exponentially, but challenging market conditions and increasing supply chain demands are squeezing every little piece of profit that remains. Navigating these challenges is difficult, let alone growing the business at the same time.

Once again, efficiency is critical to an MGAs profitability. Without a metaphorical “well-oiled engine” operating under the bonnet of the business, optimisation of the business itself, to achieve efficiency gains, is unlikely. As a result, each of the market challenges eat away at the meagre profit available. The key to clawing back this profit, is reducing the manual workloads an MGA is reliant on, eradicating legacy processes and leveraging intelligent technologies to fulfil the heavy lifting of day to day operations. The right technology (a.k.a. “well-oiled engine”) can empower an MGA to satisfy its supply chain demands automatically, help it adapt to changing market conditions without additional headcount and most importantly understand how to make the most profitable decisions.

Speed of digital transformation

It’s simple. MGAs that continue to rely on human processes and legacy software will not survive. This may be considered a bold statement, but it’s true. Digital transformation is impacting every industry, and never more so than those heavily dependent on information and data. MGAs that haven’t already embraced digital transformation, will increasingly experience carrier and supply chain performance issues, customer service headaches and a range of other operational challenges as they strive to keep up with a modernising landscape.

Without adopting new technology, competitors will, over time, begin to exceed the MGAs capabilities. As a result competitiveness will diminish. However, leveraging the power of Automation, Machine Learning and even Artificial Intelligence can help an MGA take significant strides towards modern management of their operations. Embracing change and putting in place the right technology will help an MGA remain competitive and ensure they have the foundations in place to drive business improvement on an ongoing basis.

But what technology is the “right” technology?

This is a difficult question to answer. Different vendors and software providers would understandably argue that the most impact can be achieved with their solution as it addresses a particular challenge or requirement of the MGA market that they feel is most important. There are niche solutions that solely optimise the underwriting process or help improve the customer experience for example. Then, there are complete solutions designed to optimise the entire operations of the business – transforming everything from sales and marketing to underwriting and accounting. So, it’s our advice to build an understanding of what requirements your MGA has and the potential weaknesses it displays. From this, you can review the options and find a solution that most closely addresses your needs.

That being said, here are some functionalities that have the capability to truly transform a business and ensure any new technology adoption is future-proofed and best placed to drive growth. We would recommend considering these in any solution evaluated:

• No-code or low-code development so your MGA can maintain control, not rely on extensive 3rd party support and can adapt quickly when required.
• Artificial Intelligence (AI) & automation to improve efficiencies and decrease costs associated with manual workloads, such as automating data handling, analysing large volumes of data and producing meaningful insights.
• Integration with carrier and supply chain partners for automatic distribution of data and two-way communication, so time-sensitive and critical data is shared instantly.
• Robust analytics that incorporates data from within the organisation as well as 3rd party sources, so your business is always well informed.
• Communication and organisational tools that facilitate effective teamwork and collaboration, so your teams work in unison and more productively.
• Seamless integration into other technologies, including existing software, IoT, usage-based and risk rating devices, so your MGA is future-proofed.
• Easy to use platform that can be adopted by the business with ease and will help it grow without additional headcount, resources or operating expenses.

A new dawn for MGAs

So, the question remains – can insurtech and technology in the wider sense assist MGAs to navigate the challenges of today’s business environment and genuinely improve performance for customers and capacity providers? In our opinion, the answer is yes. But it goes deeper than this. Adoption of the right technology to underpin an MGA is critical today. The old ways of improving performance, such as increasing staff count or adding new resources to backfill the gaps in the business, no longer resolve the problem.

We stand here today in a new era of technology, one that can enable MGAs to make a seismic leap forward in their evolution. Instead of looking behind them and plugging the gaps in their model (e.g. capacity provider demands), the insurance software and technology available today gives them the opportunity to look forward and explore new opportunities that were otherwise out of reach for MGAs reliant on legacy software and processes.

For instance, it’s widely understood that it has become increasingly difficult for MGAs to differentiate their offering and showcase their value against direct offerings from the insurers, who now leverage direct channels to offer their wares. However, with investment in technology, an MGA can not only compete but go one step further. Digitisation offers MGAs the opportunity to put their products in front of clients quickly and establish new routes to market. Only possible with the right technology behind them.

Furthermore, MGAs can be more innovative than their insurer counterparties. With expertise in their particular niche, MGAs can offer solutions that precisely match brokers and end client requirements. Unrestrained by legacy workflows, it can quickly become possible to deliver a personal service, backed by responsive technology, coupled with niche expertise – which we’re sure you’ll agree is an attractive offer and will go a long way to winning and retaining business.

Take the leap. Realise the potential.

It’s understandable to be fearful of change. To avoid complications in business which at face value is at least operational. But to stand still is fatal. The world has changed. Not only because of the pandemic but because of a significant shift in human reliance on technology. This reliance is only increasing and without embracing it your MGA will suffer.

By adopting advanced insurance technologies your business can realise its potential. The shackles of legacy software and processes will be broken. Freedom to innovate, freedom to improve and freedom to grow profitably will be within reach.