Are MGAs’ Digital Capabilities Ready for the Distribution Revolution?

November 30 2021 | Mark Breading

It would not be an understatement to say that Managing General Agent (MGA) and Managing General Underwriter (MGU) business has exploded in the past five years. Today, MGAs and their MGU cousins account for approximately $60 billion in premium flow, up from $25 billion in 2012. Given agents and brokers need to partner with MGAs to deliver expert insurance solutions for their most complex and specialty clients, that growth is hardly a surprise.

MBBlog113021 350x250However, the agent/broker channel is experiencing record consolidation that may present new challenges to MGAs’ expansion plans. At the same time, changes across the insurance ecosystem, from an increase in direct-to-consumer models to disruptions caused by InsurTechs and new entrants, are poised to alter the distribution landscape. Without future-thinking strategies focused on technology innovation and investment, MGAs could face business roadblocks as distribution changes.

A recent SMA research report, “Distribution Technologies for MGAs and MGUs: Current State and Future Plans,” examines how MGAs are approaching technology innovation and investments to expand their market shares today. The five different digital sales-oriented capabilities and nine servicing capabilities analyzed in the report offer enterprise-wide insights on how technology solutions can help MGAs expand their business with new and existing distribution partners. Results from a survey of MGA executives also highlight critical areas impacting distribution plans, including the biggest challenges when implementing technology for partners, the types of offerings available in the market, and where MGAs are investing in digital capabilities today.

SMA’s research found that not only are MGAs anticipating distribution changes in the coming years, but they also are prioritizing investments to improve the customer experience for agents and brokers, including deploying new digital capabilities and enhancing existing ones. However, it is important to note that the level of satisfaction MGAs feel toward the performance of digital offerings vary, with mixed results across all the sales and servicing capabilities examined.

In some cases, most MGAs expressed more dissatisfaction than satisfaction with the capabilities offered to distribution partners. For example, on the servicing side, 29% of MGAs reported dissatisfaction with the billing – inquiry capabilities provided to distributors, whereas only 18% said the offering is satisfactory. The research results also shed light on opportunities for vendors to offer new capabilities not currently provided to MGAs.

Although investment and innovation challenges lie ahead, MGAs are in a unique position to embrace technology within both underwriting and distribution, with numerous opportunities to expand their footprints, enhance digital solutions, and strengthen relationships. But MGAs interested in growing their market share with new and existing distribution partners must understand that agents’ technological needs are changing. Fewer agents believe digital capabilities from partners are “nice to have” as more expect advanced capabilities to be the baseline for doing business.

For more information on MGA/MGU distribution expansion strategies and to learn more about our latest research in this area, please contact us.

SMA is also introducing a new research series with perspectives from the distributor viewpoint. A regular series of research reports will be published based on surveys and interviews of agencies, brokers, MGAs, and others in the distribution channel, including insights from ReSource Pro’s large footprint of distribution clients. Contact the authors for more information on this new research and advisory services offerings for distribution.

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To learn more, please contact:
Mark Breading
ReSource Pro