While the primary responsibility of MGAs and MGUs is generally underwriting, it’s also fairly common for them to handle claims.
Rob Blasio, managing director of Gallagher Bassett Specialty, recently chatted with IB Talk about the biggest underwriting challenges currently facing MGAs and MGUs.
“The biggest claim challenge facing MGAs and MGUs today is no different, really, than that facing specialty liability carriers – and that’s the ever-increasing severity that exists,” Blasio said. “You know, when you consider social inflation, nuclear verdicts, the reptile theory, the results that we’re seeing as cases are getting tried, especially in this post-COVID world – severity is the number-one issue. And in the specialty space, in order to combat severity, you need folks who live and breathe the industry that you are underwriting. I mean, having generalists handle specialty liability claims is a recipe for disaster.”
Blasio also said that dealing with the “Great Resignation” and the continued presence of COVID-19 can be a challenge for MGAs and MGUs, as there is “truly significant competition” for talent, along with staff needing time off for medical reasons.
“Having staff and keeping staff is really, really an issue for everybody in this business,” he said. “But particularly, you know, for MGAs and MGUs that tend not to have large claim departments. So the loss of one or more individuals can be very unsettling.”
Lastly, he said, data maintenance effectively is always a challenge.
“Whether you’re talking about using the data for evaluating risk that you want to continue to underwrite, whether you want to use the data and integrate it with risk mitigation efforts – which is oftentimes a calling card of MGAs and MGUs – the ability to work with their client insureds to develop risk mitigation efforts coming out of their claims data,” he said. “The enhanced regulatory environment also exacerbates this, because you need the technology that can deal with that.”