MGAs – OPENING UP OPPORTUNITIES FOR BROKERS
Most commentators on the UK insurance market agree that the MGA model is hear to stay. Last year a number of MGA launches were announced, and many more are expected in 2018 and beyond. In a concurrent trend a number of MGA incubators have been established.
So what impact could the ‘rise of the MGA’ have on distribution in the UK insurance market and what are the implications for brokers? To what extent could MGAs act as a market disruptor? In this article we explore some of the key trends.
How will businesses buy insurance in future?
Recent market surveys suggest that larger companies will continue to need and value the services of brokers, specifically as insurance and risk management advisors and market placers. But what about SMEs? It’s widely acknowledged that commercial insurance is ripe for better use of technology in the way that insurance offers are presented and purchased. SME owners say they are receptive to buying insurance ‘direct’, but this is not born out as yet by their buying habits. We expect however that online platforms will be increasingly used by micro SMEs, with the trend moving up to small-to-medium SMEs and potentially the commercial and corporate segments.
SME owners (and other business insurance buyers) could increasingly use online platforms for information and advice about their insurances, relevant developments that affect their insurances and their risks (regulatory; environmental; social etc), and ways they can manage their risks better. The challenge for advisors (in insurance as much as other sectors) is to keep up to speed with developments so their advice is ‘current’.
Customers’ risk data
Technology enables customers to access better data about the risks they represent. This could enable customers to offer their risk data to brokers, who could in turn present it to insurers to ‘bid’ for the customer’s business. In this way the customers are empowered to take more responsibility for their risks and how their risks profiles are viewed by insurers,
Emerging Insurtech MGAs are looking to ‘sign up’ brokers as distribution partners, particularly as brokers have historically been very strong in building and working trusting and supportive client relationships. For their part these MGAs have a strong focus on improving the customer experience and hold ‘niche specific’ data on customers’ risks and behaviours.
Insurtech also enables brokers to work on the move, trading with MGAs on mobile devices, enabling brokers to work more efficiently and respond more quickly to their clients.
MGAs working with brokers
MGAs, particularly those writing commercial insurance business, are looking to work with brokers that have expertise and clients in their targeted niches. MGAs can offer these brokers:
• specialist and innovative products and services, that give brokers an edge over their competitors
• access to key decision makers for quick and clear decisions
• new insights on customers and customer buying behaviours (in their specialist niches)
• relationships with insurers/capital providers that brokers may not otherwise be able to trade with
• access to the Lloyd’s market (with all the opportunities that Lloyd’s provides).
Opportunities that MGAs open up for brokers
Joint marketing campaigns can be run to target customer groups that the broker and the MGA both want to develop.
Facilities for brokers to work with customers that value independent advice offered in a way that’s complementary with emerging technology based advisory platforms.
MGAs can adapt their products and services for brokers in a way that meets clients’ specific requirements and expectations, something that large inurers are not always able to do.
MGAs can give brokers important insights on ‘niche specific’ customer data, and perspectives on emerging trends and risk developments, which brokers can deliver as value added services to clients.
Brokers and MGAs can identify the services that insurance buyers need and value and feed these back to clients in more powerful value propositions. As a result, brokers can be properly remunerated for the professional services they offer, in a way that is more beneficial and more transparent than the traditional commission model.