The insurance industry is one of the oldest and most straightforward businesses in the world. It’s a numbers game. Risk gets calculated, quantified and priced. If the odds work out, the house always wins.
Anything is insurable as long as it’s measurable.
In the insurance world, MGAs (managing general agents) partner with carriers to manage programs, working with brokers or offering insurance directly to the customer.
The majority of carriers and MGAs have been rather slow to spot opportunities to significantly improve the insurance lifecycle (rate, apply, bind, manage and renew), which is leaving room for competitors to move in.
In fact, the insurance startup Lemonade just made news for using AI to pay a claim in three seconds
. That is not a typo -- Lemonade took as long to pay a claim as it took you to read this sentence.
If you’re reading this, thinking, “well that’s renters; my programs are different” -- it’s time to wake up. This disruption is real. And it’s happening right now.
MGAs have a unique role in the insurance life cycle, and they will either innovate and evolve or be eliminated from the food chain.
To stay relevant, they will need to assess their strategy, place technology at the heart, improve the customer experience and remove inefficiency.
Large-Premium, Low-Volume MGA Programs
For MGAs that do high-dollar, low-volume sales through brokers, technology should be deployed to make the entire process more efficient, less time-consuming and easier for their brokers and customers.
Whereas a typical lifecycle interaction like an insurance application or a claim processing may take days or weeks with hours of human time involved, with technology it doesn’t.
MGAs of the future must create the fastest, most convenient experience for brokers to differentiate themselves and succeed in this new insurance economy. MGAs should identify and prioritize the areas in their lifecycle that cause the most friction between them and the broker and apply technology to improve the experience.
See also: MGAs 4.0: The Role Evolves Yet Again
As an example, if the turnaround time for rating policies is causing friction for your brokers, begin introducing cognitive AI to automatically rate a portion (e.g., 60%) of submitted policies. Then, over time, increase this percentage until your firm is able to rate all policies instantaneously with technology.
Ultimately, this will mean lower costs and more efficiency, which bodes well for consumers and sellers. This also means that customers will come to expect this level of service--they will no longer be willing to wait days or weeks for processes that your competitor can perform on the spot.
MGAs that fail to improve their processes and embrace technology will lose customers to those that do.
Here are the top 5 signs it’s time to wake up:
--Requests for quotes are submitted to your underwriters as PDFs
--Providing quotes and feedback takes more than an hour
--Policy issuance is manually generated
--Policy management or renewals are handled manually
--You are not applying cognitive analysis to your policyholder and claim data
If this sounds like your firm, then the time to act is now. Seek out digital solutions to these problems. Invest in technology before it’s too late.
Small-Premium, High-Volume MGA Programs
Much of the bulk and overhead of the insurance process comes from the layers and steps involved. For lower-premium, high-volume programs, the only way forward is to automate your program and either offer it directly to consumers or provide brokers with the keys.
Great insurance experiences are no longer limited to major lines.
As technology eases the entire process of selling, quoting and binding, there’s no need for a legion of brokers and agents to do the leg work. People can just sign up online in minutes and manage their policy directly through a web portal.
In fact, 67% of millennials
buy popular policies (auto, renters, etc) online, and this trend will permeate and grow into niche programs.
Great agencies have always differentiated themselves on service. In the modern insurance economy, technology will usher in the next level of service that customers already expect.
MGAs will cut the middlemen out of the equation and build branded, digital products to offer niche programs directly to consumers, controlling the entire experience to deliver a higher quality of service.
Additionally, MGAs that position their platforms to integrate with wholesale channels or online commerce will see dramatic growth.
Great agencies have always differentiated themselves on service. In the modern insurance economy, technology will usher in the next level of service that customers already expect. This all means better service, lower costs (read: better margins) and higher renewal rates.
Here are the top 5 signs it’s time to wake up:
--Customers cannot get an instant quote on all devices
--Policy issuance, management or renewal is manual
--Payment is not automated
--Your program brand is not a digital product
--Applications can be submitted with incomplete or inaccurate information
If your firm deals in low-cost, high-volume policies and is seeing these signs, then it’s time to start thinking about the innovation happening around you--building a competitive advantage through technology.
Bottom Line for MGAs
Regardless of the size or type of your program, technical innovation and advancement is your responsibility.
While carriers may provide portals, platforms or tools, it’s critically important to continually evaluate each of your customer, employee and broker touch points.
See also: M&A: the Outlook for Insurers
MGAs are in a unique situation right now. They’re at the precipice of an emerging wave of digital tools that will disrupt much of their business--from quote to renewal.
Those that succeed will be the ones that paddle toward the wave of change and adjust their business to use technology to better serve employees, clients and customers.
The question is: Will your business see the wave?