There are multiple ways to do this, as a partner or not, with MGAs; providing a differentiated experience and product for customers and finding the right distribution model to deliver this is a crucial first step. Debbie Calderbank writes
This is where working in partnership with MGAs (Managing General Agents) really makes a difference. The market is an important and established sector of the UK insurance market and has seen significant growth in recent years.
With over 300 MGAs operating across the UK, placing more than 10% of the country’s £47bn in general insurance premiums, MGAs have become a cornerstone of the UK general insurance landscape.
But what is an MGA and what are the benefits of pursuing such a model?
MGAs, often also used interchangeably with MGUs (Managing General Underwriter) are specialised insurance agents that have been given underwriting authority by an insurer and can administer programmes and negotiate contracts on the insurer’s behalf.
Such a partnership paves the way for insurance intermediaries to bind coverage and underwrite and price policies within agreed upon risk parameters.
In some instances, the insurer may also allow the MGA to settle claims and appoint retail brokers within the agreed parameters.
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Why work with MGAs as a partner?
The biggest advantage of the MGA model is that it allows each party to maximise their individual strengths in the value chain. Partnering with MGAs that possess expertise and effective distribution in their chosen products and sectors drives the best possible outcomes and experience for the customer.
What do carriers offer in return? In addition to an underwriting line and capital, the right carrier will provide flexible deal structures, reporting transparency, deep industry expertise, and dedicated resources that improve the scale and profitability of each programme. Some carriers share risk with their partners, so when businesses such as ours invest in programme improvements, everyone wins.
Working with MGAs supports long-term, strategic partnerships. By partnering with someone who shares your values, you can build a lasting partnership that maximises profitability and ensures an optimal customer experience.
How to choose the right MGA
Establishing long lasting relationships is a crucial part of sustained business success. Just as insurers want long term relationships with insureds and are committed to contributing to their clients’ long-term success, the same rule applies when it comes to choosing a suitable MGA partner.
Choosing an MGA partner can sometimes feel daunting, but the appropriate level of due diligence will ensure the right fit.
I cannot understate the importance of getting to know your MGA partners, doing your homework, and taking the time to understand each other’s businesses. Knowing what you both want from a partnership, and understanding how you will work together, even when things go wrong, ensures a mutually beneficial relationship that succeeds from the start.
Assessing how MGA partners can help carriers deliver on strategic objectives, whilst understanding how they can help them with their own ambitions, is important for both sides. By way of example, at Fortegra we consider aspects such as what is different about this MGA and what do they bring to the table compared to their competitors Evaluating an MGA’s competitive advantage is a key component in assessing potential partners.
The same applies for the MGA’s distribution network and product portfolio. Insurers look to MGAs to provide new and different distribution opportunities and to help expand their portfolio beyond their existing range.
Track record is another key factor in assessing MGA capability. After all, MGAs are looking to address market challenges and provide innovative and creative solutions; assessing how an MGA has performed relative to the market is an important step in ascertaining whether the partnership is a good fit for both parties.
The final, more intangible, consideration to a great MGA-insurer partnership is cultural alignment. If two organisations have different values, different strategies and mindsets then it is very difficult to achieve a successful partnership . This is why taking the time to truly understand each other’s business, and the key people involved, is so essential.
The MGA sector across both the UK and Europe remains buoyant and I believe provides plenty of opportunity for growth. We are seeing new MGAs coming to market and we see established MGAs extending their range of products. The future of the MGA market is bright, it’s exciting and we look forward to developing both new and existing partnerships over the coming years.
Debbie Calderbank is the chief operating officer, portfolio risks, Fortegra