By Will Morris, Director of Underwriting Delegated Authority
& Joseph Peloso Jr., CPL, General Manager, Underwriting US Delegated Authority
“It is not the strongest that survive, nor the most intelligent, but the ones most responsive to change.” Charles Darwin
There has been much speculation in the insurance press about what a post-pandemic world will look like. One headline claims MGAs are under threat with insurers set to crackdown in a hardening market and reconsider how they will deal with them. Added to this, a recent MGAA survey found that 58% of MGAs had been negatively impacted by the lockdown and pandemic. More positively, the report also found that 73% had taken action to help brokers and policyholders.
This last statistic emphasises the need and desire for adaptability in challenging times. We all need to show strength, intelligence, and the ability to adapt. This will be essential as we emerge into what will be a different world.
Evolution not revolution – 5 key steps to sustained growth
MGAs are well placed to adapt to client needs. There is much we will all learn – be honest, who was using Zoom or Teams until a few months ago? For the most part, we have picked these up despite that awkward point when you squint and try to end the call without looking panicked. When the January renewal season arrives, we will all need to be prepared. With this in mind, here is a roadmap for future growth and prosperity:
Play the long game
Dipping in and out of business lines is of no help to the client, the MGA, or the carrier. This is a time where we need the strength to plan, look to the future, and take a long-term view about the insurance we write. This will mean an honest appraisal and assessment of how we provide sustainable insurance solutions.
Walking away when times are tough is the easy path, managing the cycle is the sensible one. Carriers need to send out the message that MGAs are core to their business and are committed to mutual profitable growth.
Collaboration, collaboration, collaboration
We need an open, honest, and transparent relationship. As an example, when a member of staff receives their annual appraisal the outcome should be expected. If their manager is doing their job properly then they would have had regular dialogue and feedback. This provides an opportunity to collaborate on ways to seek improvement and development to the benefit of the individual, their manager, and the business
The same should be true with the relationship between a carrier and MGA. One of the areas we need to face up to in this respect is the annual renewal. This need not be some Mount Everest to overcome, tying up time and resources. It should be part of a broader business partnership exploring how to grow business within the framework of win-win objectives.
Be responsive to change
MGAs’ differentiators have always been a combination of agility, expertise, and distribution. If we add flexibility to this, then the future can be bright. Flexibility is an extension of the need for collaboration. As carriers, we must work closely with MGAs to improve existing lines of business as well as seeking new ones. This entrepreneurial philosophy should also extend into engaging with and fostering start-ups.
However, for both existing and new MGAs, it is crucial to develop a mutual understanding and a healthy working relationship. This takes time at the start, building solid foundations that can be nurtured. The benefits are clear – we have been working with many of our Principals for 5 or even 10 years. Development over time fosters innovation and a desire to seek out new opportunities, which will be important as we adapt to change.
Use the right intelligence
The importance of powerful analytics and data is essential. Worryingly, a recent survey of MGAs found that only a quarter knew “whether or not their customer data was in a format that provided commercially beneficial insight or the intelligence for advanced decision making.” MGAs have an opportunity to scale up their capabilities and provide cutting-edge insight. This could, for example, be real-time data to drive accurate rating reducing the need for the time-consuming annual renewal season. Or, customer insight to develop new products and services based on needs.
There is clearly an appetite to improve the data available. The same survey revealed that 90% of MGAs believe that technology will accelerate recovery, and a further 60% believe customer insight driven technology investment will deliver the greatest rewards. MGAs are known for being nimble and agile – this is an opportunity for them to move quickly with the support of carriers.
Think globally, help locally
Not every MGA will need the scalability for products with global reach. However, if they do then they need the support to match their ambition. A global network can also help those who need support but find that the appetite, capacity or expertise is not available.
Insurers need to be prepared to look beyond the local, engage our global expertise and find the solutions. This could be wide ranging, including policy wordings, marketing, and distribution.
Yes, we are facing tough times, yes there are concerns about the future, but for the insurer and MGA market, the time really is now.
If you would like to find out more about how we could help you, please get in touch.