Exposed to a make-or-break situation, managing general agents (MGAs) were given an opportunity to show their resilience and value by articulating consistency as well as innovation.
This was one of the main takeaways from a panel discussion “What does the hard market mean for MGAs?”. The discussion took place on Intelligent Insurer’s Re/insurance Lounge, an online platform where interviews and panel discussions are available on demand.
The panel included Mike Keating, chief executive officer of the Managing General Agents’ Association (MGAA); Catherine Bell, chairman of Magenta Insurance and board member of the MGAA; and Chris Rolland, group chief executive officer of AllClear Travel Insurance, and Networks and MGA advisory board chairman of the British Insurance Brokers’ Association.
Keating said that 2020 required MGAs to gauge their portfolios very carefully.
“If ever there was a time to be agile while creating solutions that were fit for purpose and completely focused on meeting customer needs, the hard market of 2020 opened up the opportunity for MGAs to demonstrate their strength,” he said.
Bell believes the industry has been tested and that the profession was not as negatively impacted as it possibly could have been, provided MGAs were well-prepared and nimble in their response.
“However, not everyone has been affected in the same way and while the industry was put under a microscope that separated good from bad, the most resourceful participants succeeded,” she said.
“Adversity breeds things like camaraderie, willingness to be flexible, and the true spirit of cooperation,” she added.
More change ahead
Rolland said that although this has been a time of rapid change and development, the pace was accelerated by the pandemic.
“There are many important changes ahead of us as an industry and we are being tested and getting a clear message to be far more robust,” he said.
“MGAs and brokers need to work harder than ever before to be resilient and ready for unexpected situations.”
Bell added that while not everyone was affected in the same way during a bleak period around the globe, the pandemic demonstrated that those who were the most resourceful were able to offer their clients unique opportunities.
“Not everyone has been affected in the same way.”
Catherine Bell, Magenta Insurance
“MGAs have shown that they are adding value for brokers so that they can offer better opportunities for clients,” she said.
Keating said that the hard market affected MGAs in three ways. First, it accelerated discussion for MGAs with distribution partners and brokers. Then it highlighted the need for rate strengthening. Finally, it showed the importance of MGAs to engage and consult in a collaborative way with brokers to ultimately test how products will help clients.
Rolland added that with all the complexities taking place in terms of global markets, MGAs have had a golden opportunity to develop and innovate while relying heavily on their insurance partners.
“We are seeing various points of differentiation and developing new products,” he said.
Keating added that he had been pleasantly surprised by the impact of working in a virtual environment, and the capacity to build better relationships.
The panel agreed that in future MGAs will need to establish more vigorous risk selection and underwriting capability to ensure profitable and sustainable growth.
The pandemic has accelerated the necessity for being more selective of their underwriting and distribution partners.
The market was already hardening ahead of the pandemic and in future there may be far better MGAs that set exceptional standards and are able to differentiate themselves to become market leaders.
“The past year has seen some substantial changes in technology and business, and we are still seeing points of excellence that could possibly show future generations how to prepare for a hard market,” said Rolland.
“Now more than ever before, clients need to fully understand the product they are taking on,” he concluded.
To view the full Re/insurance Lounge discussion click here.
Image: Shutterstock / Dmitry Pichugin