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The relationship between managing general agents (MGAs) and insurers thrives on an exchange of specialized expertise and services that insurers may not possess under their own roofs. Within that partnership, technology plays a pivotal role in the transfer of information between an MGA and the insurer, according to Phil Baker, head of Beazley Canada and former leader of Creechurch Underwriters, the specialist MGA acquired by Beazley in 2017.
“From an MGA’s perspective, ultimately it comes down to connecting with their brokers and customers more effectively, and in the manner that their customers want to communicate with them, whether that’s after hours or during business hours,” he said, adding that the specialist insurer looks for partners with the same view on the importance of technology. “Beazley wants to work with MGAs and brokers who want to use technology to increase their presence among their clients.”
Under the technology umbrella, Baker told Insurance Business, Beazley is a big believer in using data analytics effectively, which is a trend that’s becoming more common in the insurance industry overall. In KPMG’s sixth annual Canadian insurance industry opportunities & risks report, 68% of Canadian insurers surveyed identified data analytics and its potential to enhance product design, marketing and pricing as one of the top opportunities for 2018/9.
For MGAs, however, it’s less about data and more about understanding their customers and “their specific niche areas of focus since that’s what the MGAs are good at, is understanding the very specialized segment of the insurance industry,” said Baker. “It’s as much about the art of underwriting as [it is] the science of underwriting and data analytics.”
Another value that MGAs have in their wheelhouse and bring to insurers is service, which is a huge component of the MGA delivery.
“MGAs can be much more nimble in terms of the product offering and their ability to adapt to new industries, and that’s certainly a big value-add – they can bring that new product, for instance, to market very quickly,” explained Baker, adding that minutes also count in terms of the quote, bond and issue process when insurers are dealing with micro-SME accounts. “MGAs are in general very effective at providing a high level of service that very large insurance companies may not be able to match.”
To establish and maintain a fruitful and long-lasting MGA-insurer relationship, an alignment of interests is imperative.
“We as an insurer want to know that our MGA partners share the same underwriting philosophy that we do and are taking a long-term approach to their business, so MGAs and insurers want to make sure that their interests are aligned,” Baker advised. On the insurer’s end, providing consistency in underwriting appetite and having a long-term underwriting strategy is in turn important to the MGA.
As niche spaces in the insurance market continue to evolve – the commercial cannabis space in Canada, for example, is a burgeoning market where MGAs are already proving their worth – the managing general agent and its services will become that much more important.
“What the MGAs are doing is adapting to a changing market effectively and entering new spaces,” said Baker, highlighting the cannabis market as one area where MGAs are establishing a presence after legalization in October. “That’s a good example of where MGAs could be nimble and can respond to a dynamic market very quickly.”
