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How to take advantage of digital innovation as an MGA

digital first

At a time when managing general agents are performing strongly, working hard to stay profitable and maintain growth, the question of how to make best use of the latest tools is more important than ever

Shahin Amir-Ebrahimi
Shahin Amir-Ebrahimi, group product owner, RDT

Many MGAs’ strength is in their risk management, in their well-honed ability to understand their market and manage their customers. However, there could be a lot of missed value if they don’t take a digital first approach.  

For modern MGAs there is an obvious desire to seek out the latest insurtech, as they will know how, if implemented well, technology can reduce costs and increase income. The revenue differences can come from smart use of data and artificial intelligence in pricing, the speed to respond to new distribution opportunities effectively, through to the right choice of third party integrations. The reduction in costs can come from applying intelligent automation to business processes, with the power to adjust it placed in the hands of the MGA.

Digital advancements can speed up the underwriting and claims processes; preserve the underwriting expertise of the MGA and enhance risk selection and claims management through data enrichment. It can also cut the cost of distribution while offering enhanced broker services and a direct channel, reduce software house fees; reduce the cost of back-end operations, both in-house and for brokers; reduce the cost and time taken to introduce new products and expand distribution; reduce cost of IT teams and speed up change through a cloud-based managed service and increase customer and broker engagement. 

So what should an MGA look for in a technology partner, when it’s seeking to embrace a digital-first approach?

Established and start-up insurtech providers offer a range of solutions. They can look at the familiar insurance value chain, which can help to determine how extra technology could be used to improve business and decide which areas to prioritise. They can also select the partner that offers the most flexible, scalable and open technology, who has deep insurance knowledge, is consistently innovative and has an impeccable track record for timely delivery.

Some established insurance software providers have created all-encompassing end-to-end solutions, while many newer suppliers offer specialist solutions to improve the process within a small area of the value chain. This can make it hard to know what will be the most flexible way to structure technology to scale and adapt to the changing needs of a business.     

The ideal partner

The ideal technology partner should be able to facilitate the optimum digital advantage for each step, combined into an end-to-end solution that is focused on providing expert modular insurance functions that can be used together to provide total solutions. This includes working with existing systems and niche software from insurtech start-ups, having flexible workflows to automate processes that business users can change via simple, intuitive interfaces and making pragmatic use of AI, whether to augment workflow automation or to offer modern interfaces such as natural language digital assistants to lower the administrative burden. 

The ideal partner should be either cloud-based on-premises or hybrid private/public cloud, to provide all the advantages of the cloud. They should provide a low-cost, scalable on-demand infrastructure that’s easy to turn on for test projects, developed or optimised, resilient and secure. In addition to this, they should be scalable, with the ability to allow for multiple lines of business to support the growth of even the most aggressive MGA, have a product design ethos that allows business units to make their own changes without relying on software development teams and is capable of supporting legacy workflows to allow legacy systems to be retired. 

A crucial question to consider is whether the technology provider can match the pace of change needed, particularly when that means new products and features being built. Do they take the view that they must control and build everything in house, in which case how much change can they accommodate? Alternatively, do they recognise that there is value in building out an ecosystem of partners to accelerate their speed to market, making a conscious choice not to build it all themselves. The second option would most likely be an open platform that’s easy to integrate with, with broader solutions on tap that are provided by a well-developed network of technology partners. This approach can also reduce the burden on the MGA as there is less work needed to procure and identify broader solutions.

A common pitfall companies make when looking to boost their digital infrastructure is focusing too heavily on what is new, and on specific features of the software. However it’s easy for a technology partner to claim they have the most advanced products, so the technology on its own, much of which is available to anyone, is no longer the key factor in selecting a partner. What’s important is how that partner uses their technology to bring value to a business.

It’s also key to choose a technology partner that has a solid track record of successful partnerships with MGAs and insurers, one that understands how the technology and insurance landscape may evolve, and has time and again created positive, profitable solutions to business problems.

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