Brokers on MGAs

Brokers on MGAs | Insurance Business

Brokers on MGAs
FAST UNDERWRITING and claims responsiveness are what brokers are looking for in a managing general agency, according to Insurance Business Canada’s annual Brokers on MGAs survey.

Hundreds of brokers across the country responded to rate their MGAs on seven criteria:
  • MGA reputation
  • Premium pricing
  • Range of carriers
  • Underwriting responsiveness/turnaround time
  • Claims responsiveness/turnaround time
  • Automation
  • Marketing support
Brokers ranked each category’s importance on a scale from 1 (unimportant) to 10 (vital). They also rated their MGAs’ performance in each category on a scale from 1 (poor) to 10 (excellent).

So how did things shake out? Brokers were most concerned about underwriting and claims responsiveness; those two categories were their top priorities by a significant margin. However, MGAs’ performance in those areas doesn’t seem to be living up to broker expectations; MGAs overall rated just 7.52 out of 10 in underwriting responsiveness and 7.45 in claims responsiveness.

In fact, brokers seem to think MGAs could stand to improve in just about every area. MGAs only broke an 8 in one category – reputation – and didn’t even rate an aggregate 7 out of 10 in automation or marketing support.

The biggest issue seems to be a lack of responsiveness. Over and over, survey respondents complained that their MGAs responded slowly to inquiries, didn’t answer emails in a timely fashion or just plain didn’t communicate well.

“We spend a lot of time following up on terms and endorsements, and it would be nice to have an MGA communicating effectively so that we’re not left unsure of what is happening during the marketing process,” one respondent complained.

That’s not to say there were no standouts, however. Overall, MGAs generally performed better this year than they did on 2014’s survey. And some MGAs truly stood out; in each category, we’ve singled out the ‘five-star MGAs’ that got excellent ratings from brokers. Only MGAs that received consistently excellent ratings from brokers earned the designation; in one category (automation), only two MGAs achieved five-star status. And only one company (Cambrian Special Risks) achieved five-star status across every
category.
 
UNDERWRITING RESPONSIVENESS
Importance to brokers: 1st
Average MGA performance: 3rd

FIVE-STAR MGAs
ABEX Affiliated Brokers
Anderson McTague & Associates
Angus Miller Insurance
Beacon Underwriting
Cambrian Special Risks
Chutter Underwriting
Special Risk Insurance Managers
SUM Insurance

Average MGA performance: 7.52

Brokers attached the most importance to underwriting responsiveness and turnaround time, rating it at an average of 9.41 out of 10. The agreement among brokers on the importance of this category was overwhelming; nearly 63% of survey respondents rated it at a 10 – absolutely vital – and another third rated it at an 8 or a 9. Not a single respondent rated its importance below a 5.

Unfortunately, brokers didn’t feel MGAs were quite living up to expectations here. While MGAs scored a relatively respectable 7.52 out of 10 in the category, that’s still only the third-highest aggregate score. And 14% of MGAs scored a 5 or lower in the category.

Brokers complained that even those MGAs that performed well in other areas had problems with underwriting responsiveness.

“Overall I feel they do a good job, but depending on the underwriting workload, sometimes their responses to inquiries and turnaround are not the best,” said one broker. Another complained that his MGA had trouble “maintaining sufficient underwriting support.”

Still, it wasn’t all bad news. Eight MGAs wowed brokers in this category, receiving consistently excellent scores.

“They have underwriters that are actually willing to underwrite and not try to fit only square pegs in square holes,” raved one broker about five-star MGA Beacon Underwriting.
 
CLAIMS RESPONSIVENESS
Importance to brokers: 2nd
Average MGA performance: 4th

FIVE-STAR MGAs
ABEX Affiliated Brokers
Anderson McTague & Associates
Angus Miller Insurance
Beacon Underwriting
Cambrian Special Risks
Chutter Underwriting
ENCON
Special Risk Insurance Managers

Average MGA performance: 7.45

Claims responsiveness was nearly as important to brokers as underwriting, scoring an average of 9.14 out of 10. More than 90% of survey respondents rated claims responsiveness at an 8, 9 or 10 – 54% rated it at a 10 – and no one felt it was unimportant. In fact, only one broker rated claims responsiveness below a 5 in importance.

Again, as a whole, MGAs didn’t exactly blow anyone out of the water with their performance, but they got a respectable aggregate score of 7.45. Brokers noted problems with turnaround time or lack of communication on the part of several MGAs when it came to claims.

“[They need] better claims service and the ability to respond quickly,” said one broker.

Another complained that his MGA needed to “create their own internal claim department rather than using claim companies.”

Still, several MGAs did impress their brokers in this area, and eight did well enough to achieve five-star status.
 
MGA REPUTATION
Importance to brokers: 2nd
Average MGA performance: 1st

FIVE-STAR MGAs
A.M. Fredericks Underwriting Management
ABEX Affiliated Brokers
Anderson McTague & Associates
Angus Miller Insurance
April Canada
Beacon
Burns & Wilcox
Cambrian Special Risks
Can-Sure Underwriting
Chutter Underwriting
ENCON
Premier Canada
South Western Group
Special Risk Insurance Managers
SUM Insurance
Totten Insurance Group

Average MGA performance: 8.20

MGAs notched their best performance in this category, averaging 8.20 out of 10. And while MGAs’ reputation wasn’t at the top of brokers’ list of priorities, they still felt it was important, rating it at 8.76 out of 10, making it the third priority behind underwriting and claims responsiveness.

Brokers clearly recognized that a good reputation means a lot for an MGA; 60% of survey respondents rated the importance of an MGA’s reputation at a 9 or 10, and no one said it was unimportant.

And MGAs performed quite well here – 76% of respondents gave them an 8, 9 or 10. What’s more, a whopping 18 MGAs achieved five-star status, more than in any other category.
 
PREMIUM PRICING
Importance to brokers: 4th
Average MGA performance: 2nd

FIVE-STAR MGAs
ABEX Affiliated Brokers
Anderson McTague & Associates
Angus Miller Insurance
Beacon Underwriting
Cambrian Special Risks
Can-Sure Underwriting
Chutter Underwriting
ENCON
Special Risk Insurance Managers
SUM Insurance

Average MGA performance: 7.90

MGAs also did fairly well when it came to premium pricing, scoring 7.90 out of 10. That still fell below broker expectations, however; brokers rated the category’s importance at an average of 8.68 out of 10. More than 85% of survey respondents rated premium pricing at an 8, 9 or 10, and nearly a third rated it at a full 10.

Just 6.7% of survey respondents rated their MGA at a 5 or lower when it came to premium pricing, and 10 MGAs did well enough to achieve five-star status.

“I’m very pleased with the service and abilities of the staff and management,” said one broker of five-star MGA Anderson McTague & Associates. “They offer a very well-priced product.”
 
RANGE OF CARRIERS
Importance to brokers: 5th
Average MGA performance: 3rd

FIVE-STAR MGAs
Anderson McTague & Associates
Beacon
Burns & Wilcox
Cambrian Special Risks
Can-Sure Underwriting
Chutter Underwriting
Special Risk Insurance Managers

Average MGA performance: 7.78

While having access to a range of carriers wasn’t the most important factor to brokers when looking for an MGA, they still assigned it a relatively high priority, rating it at an average of 8.09 out of 10.

In fact, more than 41% of brokers rated this category at a 9 or 10 – effectively making the range of carriers available a vital consideration when choosing an MGA. Only a single survey respondent said the category was completely unimportant.

According to brokers, MGAs are doing all right when it comes to this category – but just all right. MGAs averaged 7.78 out of 10 when it came to the range of carriers they offered – not a bad score, but one that shows definite room for improvement.

Fewer carriers means fewer products available to brokers – and brokers are painfully aware of it. Again and again, our survey respondents said their MGAs don’t give them access to enough products, or enough information about those products.

Still, it’s not all bad news for MGAs on this front. More than 55% of respondents rated their MGAs at an 8, 9 or 10 in the category, and eight MGAs fared well enough to earn five-star status.
 
AUTOMATION
Importance to brokers: 6th
Average MGA performance: 6th

FIVE-STAR MGAs
Angus Miller Insurance
Cambrian Special Risks

Average MGA performance: 6.86

MGAs’ automation capabilities weren’t nearly as important to brokers as things like underwriting responsiveness and turnaround time. Still, brokers felt automation was relatively important, rating it at an average of 7.39 out of 10. That number might not seem to reflect a particularly high priority, but it doesn’t tell the whole story. More than half of the brokers surveyed rated automation’s importance at an 8, 9 or 10 – and 18% of survey respondents said it was vital. Just 7.8% of respondents rated the category below a 5 in importance, and only four brokers said it wasn’t important at all.

Unfortunately, MGAs did not fare particularly well in this category. Brokers rated their MGAs’ automation capabilities at just 6.86 out of 10 – MGAs’ second-lowest overall score. And more than 21% of survey respondents rated their MGAs’ performance at a 5 or below.

Even more damning, just two MGAs performed well enough to earn five-star status – Angus Miller Insurance, which achieved five-star status in six out of seven categories, and Cambrian Special Risks, which swept the survey with five stars in every category.
 
MARKETING SUPPORT
Importance to brokers: 7th
Average MGA performance: 7th

FIVE-STAR MGAs
Angus Miller Insurance
Cambrian Special Risks
Special Risk Insurance Managers

Average MGA performance: 6.75

Marketing support was the least important category to brokers, who gave it an average rating of 7.35 out of 10.

However, more than 51% of survey respondents rated the importance of marketing support at an 8, 9 or 10, and nearly 20% rated its importance at 10. Only 8% of brokers rated marketing support below a 5, and just three survey respondents said it wasn’t important at all.

That’s why it’s a little disconcerting to see subpar performance from MGAs on that front. Brokers rated their MGAs at an average of just 6.75 out of 10. Fewer survey respondents rated their MGAs at a 10 in this category than in any other, and just three MGAs did well enough overall to earn fivestar status.
 
ROOM FOR IMPROVEMENT
We asked brokers to tell us how their MGAs could improve. Here’s what they had to say:

“More office visits to explain products” “Faster turnaround on queries for customers”
“Some lines still have a very small capacity, and it is surprising to us considering the class of business is good standard business”
“Quicker response times and a wider range of targets”
“They need to understand that they are an MGA, not an insurer”
“Offer a contingent bonus payment plan”
“Turnaround is becoming a problem for both renewals and quotes”
“Performance is not the problem. Generally, the split in commission and policy fees are”
“Sometimes there’s more delay in responding to emails and new quotes than usual”