The DNA of the managing general agent (MGA) and delegated authority market is changing – and key players all across the market are tasked with moving with the times. Between geopolitical risks, shifting inflationary pressures, and rapid technological advancements, the insurance distribution landscape paints a fast-evolving picture.
It’s an ecosystem shaped by the massive consolidation seen in the market over the last decade, according to Alex Hardy (pictured left), director of sales & distribution, at SiriusPoint. That M&A activity has brought a shift in focus in the MGA space including the move among insurers to buy teams pre-loaded with capabilities and expertise, and a changing geographic focus as acquisitive organisations are increasingly looking beyond the UK, to Europe and further afield.
Hardy is seeing increasing recognition of the role delegated authority has to play in the market, and that “long gone are the days where it’s just a volume play”. Today’s MGAs are either fulfilling specialist needs or the service gaps being left by other insurers – either way, they’re playing a crucial role and, “they’re absolutely here to stay.” Also interesting to see, noted Hamish McBride (pictured right), head of MGA & program claims at SiriusPoint, is how DA partners are looking for longevity in their partnerships. They recognise that it’s only by partnering up for the whole cycle that you can really reap the benefits of any collaboration.
Whether it’s through delivering great service to brokers and insureds, investing in product innovation, revamping pricing strategies or deploying technology in a targeted and effective manner – there are a myriad of ways in which an insurance company can look to differentiate themselves today. The problem for many across the market is that it’s easy to talk about a ‘partnership-first approach’ or going ‘back to the basics’ of insurance.
Hardy believes there is a significant space for insurance companies to “partner differently”. In-depth conversations with key players from all across the market have revealed that DAs do not always feel they’ve been heard by their insurer partners. “What is coming across loud and clear is the huge pride they have in their businesses,” he said, “and how MGAs in particular are becoming a home for specialist talent alongside distribution gains.”
Insurers looking to differentiate themselves need to position themselves in a place where they support the plans and ambitions of their distribution partners, without being fixated on having their own brand at the front and centre of these partnerships. “Because we don’t have a lot of legacy distribution or channel conflicts,” he said, “I think we’re in a fairly unique position to be able to do that confidently and stand behind our commitments.”
That also rings true from a claims perspective, and McBride highlighted that it’s very easy for the big, composite markets, having invested significant resources in building their claims infrastructures, to then demand their DA partners bring their claims in-house. However, he said, that effectively cuts the partner out of the loop of the claims servicing element that’s often so central to their own unique value proposition. “As a claims market, it’s too easy to get preoccupied with the coverage, or the number of exposures, and we would do well to remember there’s a customer who bought a policy from us at the end of that distribution chain.”
For McBride, the solution to creating a healthier approach to claims centres on working with truly entrepreneurial MGAs and equipping them with the right level of delegating authority around claims – which is safe to do when you have the right guardrails and controls in place. That empowerment piece is critical, he said, because that’s how you get to the “utopian place” when you have the right blend of technical and operational expertise working in partnership to add value all along the distribution chain.
“While every insurer has their own processes they need to follow, there is scope to come up with more tailored solutions,” Hardy said. “For us, for example in London, outside of Lloyd’s, our minimum term in anything we’re doing at the moment and to date is three years. We’re going out to the market clear in our ambition to be serious, long-term partners and we’re backing that up.”
