Few industry sectors are perhaps quite as well-versed in turning challenges into opportunities as the MGA space. But then few industry sectors have been faced with quite the same relentless directive to take bad news and find its silver lining.
Those looking to test the temperature of the waters surrounding MGAs had a great chance to do so during the recent IBTV webinar that saw Managing General Agents’ Association (MGAA) CEO Mike Keating share his thoughts on the pain points touching the sector coming into 2022. The last 18 months have seen MGAs operating in a range of specialist business lines impacted and impeded by the tumult of COVID-19. However, Keating highlighted that these challenges represent an opportunity for MGAs to dig deep into the reservoir of proactiveness, agility and entrepreneurship that runs through their DNA.
The differentiator between success and failure in a volatile economic environment all too often comes down not simply to being good or even great, but rather to being considered among the best at what you do. Second place just won’t cut it when insurers have the opportunity to set stringent, albeit fair, terms and conditions around capacity, data and transparency. Those MGAs who have forgotten that they are first and foremost an agent of the insurer and that their role is to underwrite profitably are going to face difficult conversations going forward.
But what allows one MGA to set itself apart from peers and competitors? It’s a question that has taken on new urgency as 2022 slips into second gear – and it’s a far-reaching consideration. There are so many components that go into making a strong MGA partner, each dependent on a variety of external factors for effective quantification. What one broker or insurer partner values will, by necessity, differ in response to the standards that are set for them by their own partners.
There are some commonalities, of course, and Insurance Business UK’s 5-star MGAs 2022 report captures and questions the shared aspects that go into making an MGA great.
Number one on the list is pricing. It’s a natural fit for the first port of call. This focus on pricing reinforces Keating’s call for MGAs to understand their place in the insurance ecosystem and to prove the value of the unique services they fulfil. It is only by doing so that MGAs can continue to maintain and evolve their market share, and explore new avenues for their irreplaceable proposition.
Technical expertise and product knowledge are also marked as key factors in setting a market-leading MGA apart from a perfectly serviceable one. In broking and underwriting alike, a new spotlight has pinpointed the need for technical expertise in a fast-changing, often tricky to navigate landscape, where product knowledge is king and a jack-of-all-trades approach can swiftly downgrade even the most worthy of professionals to a court jester’s role.
This ties into a third deliberation – what is an MGA’s ability to place niche or emerging risks? This question is especially critical not only become it leans on the expertise and product knowledge contained within any given MGA, but it also raises the question of how future-orientated the professionals that make up that business have proven to be. With an eye for what’s coming down the road, a professional can quickly establish themselves as the kind of individual willing to, and capable of, seeing the broader picture painted by the current risk environment.
Reflections on reputation cannot be understated, also. In the insurance industry, you are your reputation and MGAs do not differ from insurance companies, brokers or associations in that respect. Whether it’s via market feedback, word of mouth, or online feedback scoring systems – MGAs need to have a firm and considered approach to how they communicate the value they lend their partners and the difference they have made to those who chose to do business with them. Without this, these businesses are shouting in the wind and reliant on forces beyond their control to spread the word about how they’re helping to shape and reshape the insurance market for the better.
These are only some of the factors that go into making an MGA great, others including compensation routes, overall responsiveness, marketing support, technology/automation and geographical reach are also pressing concerns for MGA partners and deserve both time and attention. Time and attention are what it takes to build a market-leading proposition in today’s undulating risk environment – but for those MGAs well used to the water-into-wine miracle that is turning challenges into opportunities, time and attention have always been the order of the day.
If you have an MGA partner you would like to nominate as one of Insurance Business UK’s 5-Star MGAs of 2022, you can do so here.
