The managing general agents (MGA) market space has seen a series of evolutions in recent years.
Pressure to adapt and cater to changing demands in an increasingly tech-driven society has left some MGAs questioning their future value.
But it isn’t all doom and gloom, according to Hyperion Insurance CEO, David
Howden.
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MGA expert Howden addressed the Managing General Agents’ Association (MGAA) in London, UK, on Tuesday (July 4). He told an audience packed with industry leaders that the main thing MGAs must consider is their product distribution.
“It’s all about distribution. If you can’t get your product out there – then don’t bother,” he said. “We need to look at how we can deliver value to the client. What we are seeing now is a delineation. The old things are getting devalued and a new space is opening up.
“Other players have worked this out and are coming into that new space to compete with MGAs. Insurtech is also creeping into that space and looking at how to deliver lower costs.”
Some of the current pressure on MGAs is a result of insurtech companies using data to deliver lower premiums. Howden said this isn’t just for MGA owners to worry about, but rather something for the whole insurance market to ponder.
“Brokers want efficiency. The challenge for MGAs is to think about the underwriting as well as being efficient distributors,” Howden told the audience. “MGAs need to consider their products, their distribution and their underwriting at the same time. Anyone who can think about all of those things at once and get them right, will survive in the market.”
Howden’s main point was that MGAs can survive in an evolving market if they embrace change and improve the efficiency of their product distribution. He also stressed a new demand for MGAs to invest in data – in particular, claims data.
“If MGAs don’t invest in data, they will be dead in the water,” said Howden, who added that transparency is “fundamental” for the MGA industry going forward.
Another determining factor is the new generation entering the market. “We are a massively ageing market. Within six years, 60% of people in the insurance industry are due to retire. That’s an enormous figure,” commented Howden.
He added: “We have got to get out there and sell premium and we must get some young blood into our business. We need to look at how we are going to sell through an MGA to a new generation.”
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