Calling all MGAs
Chris Lee-Smith, Gobal Head of Alternative Distribution, Argo Group writes:
Data and Insurtech were key themes at this year’s MGAA conference. Stephen Catlin, who closed the conference, emphasised the need for businesses across our industry to invest in new technology and be willing and able to adapt to new technology. We could not agree more. The evolution and growth of the MGA market in recent years has been phenomenal. Businesses have been established and then flourished based on highly specialist expertise, experience and customer understanding. A number of factors may curtail this growth.
Some of these, such as increasing compliance costs, soft market conditions and increasing need for digital capabilities are not unique to delegated authority businesses. However, the ability to transact business quickly and efficiently online, and to maintain digital platforms which can evolve with new technologies and customer buying patterns comes with significant costs. These can be prohibitive for MGAs.
Conversely, many carriers can only dream of the growth figures achieved by some MGAs in the UK and Europe in recent years. This growth has been underpinned by expertise in niche sectors. Rather than compete in sectors where delegated authorities have established a clear, compelling and focused proposition, we want to partner with those businesses.
MGAs have unique capabilities. They are nimble, entrepreneurial and untrammelled by the demands of larger organisations. However, the characteristics which have been the ingredients to their success, without support, may eventually begin to curtail or even halt their growth. Investing time and resources into digital capabilities is difficult for small teams focussed on growing their businesses and developing contacts in their chosen sectors. We have invested heavily in a cutting edge digital platform which is already being used extensively by delegated authorities in the US, providing them with the software to allow them to do what they do best. This is now being rolled out in the UK and in countries across Europe.
Access to robust actuarial, cat modelling and pricing analytics capabilities can also provide a differentiator for MGAs looking to expand their presence in niche sectors. They can make life easier. These resources can enhance burgeoning businesses and provide a more rounded proposition. MGAs in the UK with aspirations to expand into Europe may find that path more difficult if passporting rights are not maintained after March 2019. Our European office network can help circumnavigate this.
Entrepreneurialism and specialist expertise have been key to the success of the MGA model. Without access to the technology and infrastructure which will define the future of our market, these qualities may be stymied. We want to support MGAs and we have the capabilities and resources to complement those businesses looking to grow. We are looking to grow our MGA network particularly in SME and niche specialty sectors. We look forward to working with you..