Maximising MGA’s capabilities with technology in the global insurance landscape

Managing General Agents (MGAs) are becoming increasingly instrumental in the global insurance market by targeting niche or underserved sectors. With approximately 600 MGAs in the U.S. and 300 in the UK, their role as cost-efficient distribution channels for carriers has grown. McKinsey’s study further amplifies the importance and rise of MGAs in the global landscape.

Novidea, an InsurTech company, recently outlined how MGAs can boost their capabilities through technology. 

It stated that MGAs are pivotal in offering tailored solutions to customers in specialised insurance areas such as management liability, product recall, flood, transportation, and workers’ compensation. Additionally, they provide access to remote geographic markets without the need for insurers to invest in setting up local offices or employing additional staff.

MGAs have significantly benefited commercial lines due to their specialist market proficiency. They are able to identify and underwrite emerging risks with greater profitability compared to mainstream insurers that might struggle with niche markets.

There are three dominant types of MGAs in today’s insurance market: underwriting-led MGAs established by insurance professionals to target under-served niches, technology-led MGAs utilising innovative pricing methods and service-led companies offering specialist insurance coverage as part of their service range. The majority of the focus in the U.S. is on technology-led MGAs, while the UK market sees a more balanced presence of all three categories.

Regardless of the type, technology is the key driver for all MGAs, aiding rapid growth and overcoming the constraints faced by larger, incumbent carriers, Novidea explained. Traditional underwriting-led MGAs are also leveraging technology to optimise their operations and enhance their pricing models.

Consumer-facing MGAs that allow customers to handle all their insurance needs online are experiencing significant growth. A prime example is UK-based MGA, ManyPets, which reached a valuation of $2bn in 2021 due to its expanding customer base amid the Covid pandemic.

A deeper analysis of how MGAs are utilising technology reveals three critical areas: automation, digital platforms, and data analytics. Many MGAs are using AI and machine learning to streamline routine tasks, such as underwriting processes, risk assessment, and claims handling.

Digital platforms are becoming increasingly common for MGAs to engage with customers, brokers, and carriers. These platforms enable MGAs to provide online quotes, issue policies, and handle claims digitally. Moreover, specialty line MGAs are providing comprehensive digital services to commercial clients as well.

Data analytics play a significant role in the operations of MGAs, assisting them in identifying beneficial business opportunities for their carrier partners, developing more accurate pricing models, and offering more personalised coverage for customers.

Companies such as Novidea, offer state-of-the-art insurance platforms to MGAs, providing them with the competitive edge they require in the ever-evolving insurance market.

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