“Better claims handling is an obvious target—but the regulatory burden could also be reduced by elements of automation.”
Managing general agents (MGAs) have long been regarded as operating at the more nimble end of the risk transfer market. Their smaller size and ability to grasp opportunities have been the cornerstones of this sector.
But while having the ability to innovate is always valuable in any imaginable set of market conditions, it can become invaluable in the hard market conditions most lines of business are experiencing at the moment.
Capacity is abundant and rates are generally in positive territory. In such an environment, carriers value well run, profitable MGAs with the ability to access business they cannot. The sector has been thriving as a result.
This special report, published in association with the Managing General Agents’ Association (MGAA) ahead of its annual conference in London on June 29, shines a light on just this, while also highlighting some of the challenges the sector faces. The tagline of that conference is apt indeed: ‘Seize the opportunity’.
There is great nuance to that statement, however. In fact, despite the many positives, the challenges are greater than ever for many.
First, while rates are indeed improving, claims inflation is probably the biggest worry for MGAs. This is a situation exacerbated by the challenges many MGAs still have in getting their claims processes running smoothly.
The second big challenge, perhaps the biggest for many, is around the regulatory burden. It continues to grow, making it ever harder for smaller players to remain compliant and keep costs down.
Technology to the rescue
There is light at the end of the tunnel on both these fronts. MGAs have been at the forefront of embracing technology in recent years, and a number unashamedly refer to themselves as insurtechs.
While technology might have originally been embraced to enhance distribution or reduce back office costs, MGAs are increasingly finding ways it can be used to handle some of the challenges. Better claims handling is an obvious target—but the regulatory burden could also be reduced by elements of automation.
Despite these hurdles there is no doubt it is a time to shine for MGAs—and that sentiment will be manifested in the MGAA conference on June 29. Mike Keating, chief executive officer of the MGAA, says the event’s agenda reflects this.
Keating is in a bullish mood. As he says in an interview in this publication: “It never ceases to amaze me how adaptable MGAs are in face of fast-changing market conditions. They are facing significant headwinds. Their biggest challenge will always be looking after their capacity.
“After that, their main concern will be over claims inflation. But I fully believe MGAs will continue to thrive.”
Wyn Jenkins, managing editor, Intelligent Insurer
Image: Shutterstock / IR Stone
