While the COVID-19 pandemic has presented its fair share of opportunities, it has also presented the insurance sector with some surprising opportunities—and many managing general agents (MGAs) have used their agility and willingness to innovate to take advantage of these.

That was one of the conclusions of a panel discussion delivered by Intelligent Insurer, in partnership with the Managing General Agents’ Association (MGAA) and hosted on the Re/insurance Lounge, the publication’s online, on-demand platform for debate and discussion.

In attendance were Philippe Gouraud, chief executive officer, Rising Edge; Michael Keating, chief executive officer, MGAA; Ian Lloyd, chief executive officer, iprism Underwriting; Katherine Snedden, chief risk officer at DUAL Corporate Risks and a member of the advisory board at the British Insurance Brokers Association (BIBA); Kenneth Underhill, compliance, risk and corporate governance specialist and director of risk and compliance consulting firm Implement Compliance Solutions and Resources (ICSR); and Richard Webb, director, Manchester Underwriting.

Optimising the new normal

Snedden argued that for many MGAs, the transition to remote working was an easy one as the infrastructure for remote working was already in place before the pandemic started. And many, including DUAL, are able to now build on that and improve further.

“We are now heavily investing in our underwriting systems and processes to ensure that they are more streamlined and up-to-date so that we can ensure better client service,” said Snedden.

She admitted that change can be harder for MGAs that are part of a bigger group due to legacy systems being in place. But the COVID-19 pandemic provided the opportunities to address this. “To be frank, it was clear that we needed something more up-to-date in order to provide a good service to our clients,” Snedden said.

She added that the past two years have completely changed the way MGAs and other companies work and that there is an opportunity to expand on this.

“Company cultures have changed and many of us are finding the balance between virtual and face-to-face to improve the way we work today,” she said. Has the penny has dropped? The panellists felt that for most MGAs it has.

Gouraud remarked on the vast range of MGAs in the market with very diverse ways of working.

He said the pandemic has accelerated the understanding that investing in technology that is sustainable pays dividends in the long term. The pandemic has called on many businesses to build an operating model which is compliant and resilient, and while it is a significant investment, it is the only way to remain profitable, he said.

“Along comes COVID-19 and finally the penny drops that without technology you cannot survive,” Gouraud said. “Before the pandemic a big challenge was increasing the adoption of the London Market’s PPL, but then COVID-19 shows up and you see that the numbers are going through the roof because it was the only way to trade,” he said.

Lloyd agreed that technology should enable MGAs to service clients effectively but added that technology should not necessarily become the centre of a business.

“Technology has always been a massive part of our business and we have our own internal team that covers both the infrastructure and the hardware, but we already had this in place,” he said.

“When the pandemic started, the transition to remote working was seamless and that is the flexibility you need to service your clients,” Lloyd said. “We believe that technology should enable you to do what you do better, rather than become the centre point of your business.”

He explained that instead of outsourcing technology, it was more beneficial to have an internal team able to build systems appropriate for the business.

“Technology must enable efficient, streamlined processes and customer service,” he explained. “Furthermore, regulatory requirements and increasing requests from brokers will ultimately demand a more digital solution.”

Still a way to go

Webb at Manchester Underwriting added that at the start of the pandemic, when remote working became necessary, the process was swift and seamless.

Webb agreed with Lloyd in terms on digitisation. “Insurtechs still need to come into their own but I think a lot of that will be driven by customers and their buying habits changing.

“Customers are moving away from going to see a broker on the high street. During the pandemic customers bought in a different way because they had to, and we believe that it is more effective,” he said.

“We have built our own internal system in order to remain agile.”

The panel agreed that, overall, in terms of customer service, MGAs were better placed to adjust and offer good customer service than larger insurers during the pandemic.

“The larger you are the harder it is to stay agile, and MGAs have worked very hard at trying to remain agile during the pandemic.

“We know that some people have experienced service with bigger companies that is absolutely woeful,” Webb said.

“MGAs don’t even consider having days when they won’t answer the phone. Many brokers complained that when they rang up an insurer that they could wait 10 to 15 minutes for assistance—I don’t think MGAs fell into that trap.”

Embracing digitisation

Underhill commented on some of the innovation in the MGA sector, saying that the sector is starting to see firms invest in technology where they may previously considered such investments unnecessary or unaffordable.

“Some insurtech startups have done very well because there is an availability of capital to do so, and the pandemic has accelerated a digital approach in turbulent times,” he said.

“There’s a bit of work going on around where some of the larger MGAs are thinking about transforming themselves into insurers,” said Underhill. He added that firms have also started to look at the opportunities around using alternative capacity.

Unrestricted access

Keating agreed that client service has become a key differentiator and said this is something all MGAA members talk about as a key opportunity.

“I know BIBA are working very hard with insurers to send that message of improving customer service and I am sure that will gain some traction,” he said.

“The key challenge for MGAs is that we have developed that distribution in a dislocated market. The challenge is to maintain that advocacy from brokers when other markets get back to where they need to be.”

The panel agreed that alternative capital models could be the next industry innovation. “I know of three that will emerge within the next six months where existing business will be using that model,” said Keating.

“While there are clearly challenges in doing that, if you an MGA with a portfolio or product line with some predictability you will find a way of doing it,” he concluded.

To view an excerpt of the Re/insurance Lounge discussion click here

Images: Shutterstock / fran_kie