MGAs 4.0: The Role Evolves Yet Again

The journey, over time, of the insurance managing general agent (MGA) is an interesting one. In their original manifestation in the late 1800s/early 1900s, MGAs were a way for East Coast insurers to get their products west, without having to commit their own resources – clearly a valuable business model. As insurers either established their own offices on the West Coast, or entire new insurers were “born” there, the role of the MGA changed. When I started in the insurance world as an underwriter – a very long time ago – the insurer I worked for considered MGAs to be kind of like used car salesmen. As large networks of independent agents and brokers emerged across the nation, MGAs lost their business value. However, as risk has evolved in complexity, the role of the MGA has once again evolved. See also: When Insurers and Insurtech Collide   Today, many MGAs possess deep technical skills for both sales and service, frequently in complex lines of business. A recent SMA survey of agents/brokers/MGAs showed that 57% percent of MGA respondents were in specialty lines of business and another 17% in middle market commercial lines. MGAs provide critical capabilities to other agents and brokers who would not otherwise be able to serve a customer with unique needs. From an insurer perspective, MGAs are a source of high-quality, well-underwritten customers. Our research topic from which the above data points were derived was agency connectivity. We surveyed insurers as well as agents. From a business driver and technology perspective, MGAs presented themselves differently than multi-line agents and brokers. For example, for MGAs, the #1 business driver for investing in connectivity technology was profitability. For multi-line agents, the business driver was customer retention. As another example, 44% of MGAs thought portals were either a strategic solution or a must-have solution. 58% of multi-line agents believe that portals are either strategic or must-have. In general, the survey found that MGAs were less focused on technology than the multi-line agents were. MGAs were more focused on hard-core business issues. The reduced focus on technology on the part of MGAs may make sense to some. MGAs are, more often than not, focused on the complex commercial lines of business. Technology isn’t as important in commercial lines. However, the critical point, relative to technology, is that MGAs are once again evolving. At the InsureTech Connect conference held in Las Vegas this past October, a good number of those in attendance were MGAs. Interestingly, many were there because they had developed technology that solved a business problem. They were at InsureTech Connect to see if anyone else was interested in that technology. There is definitely change afoot. MGAs are interested in hard-core business problems, but they are also seeing that technology can help solve those problems. The other evident trend at InsureTech Connect, and one that is continuing to evolve as SMA tracks more than 600 insurtech organizations, is that MGAs are undoubtedly focusing on emerging opportunities. Cyber risk and micro-insurance are but two examples of where MGAs are once again pushing new boundaries, much as they did in the late 1800s. See also: 7 Symbiotic Ties With Insurtechs   The line between on-line agents and brokers, enablers (those technology providers that bring technology to a distribution challenge but do not actually produce insurance business), and, yes, digital MGAs is blurring in the insurtech world. It is very hard to tell who is who, and what is what. This should be a call to action for all MGAs. MGAs come from a legacy of innovation! The business and technical value of MGAs in today’s world of hyper-complex risk is undeniable and needs to remain crystal clear. However, that should not be an excuse for sitting on the technology sidelines and doing things the same old way. Because MGAs know their customer base so well, and because they  understand the business challenges and risk parameters more thoroughly than most, looking for ways to bring technology to bear on business outcomes could be of very high impact. New, digital MGAs are appearing, but stalwart MGAs have an amazing opportunity to reinvent themselves once again in the digital world. Everyone needs to get in the game!