MGAs see InsurTech as route to more customer-centric business models

18 July 2018

MGAs see InsurTech as route to more customer-centric business models

18 July 2018  –  Managing General Agents (MGAs) are increasing looking to work with InsurTech firms to enable their businesses to become more customer-centric according to the latest MGAA Matters survey1; the research-based partnership between the Managing General Agents’ Association and MGA formation platform Castel Underwriting Agencies Limited (Castel). 

The survey of MGAA members, conducted in June 2018, focused on MGAs’ views on the opportunities and relationship with InsurTech, the potential impact of continuing uncertainties around Brexit, and the future shape of the MGA sector over the next decade.

MGAs view of InsurTech has seen marked changes when compared to those revealed in an earlier MGAA Matters survey conducted in October 2017. Over 42% now feel InsurTech helps MGAs evolve their business model to be more customer-centric, a leap of over 20 percentage points from 2017.

Also, their view on the benefits that MGAs can bring InsurTech start-ups has strengthened with just over 42% of respondents now saying MGAs deliver underwriting expertise that is still lacking, this compares with just over 28% last year.

The number of MGAs considering the development of an InsurTech strategy has increased by 13 percentage points from 25% in 2017 to over 38% in the latest survey.

Levels of understanding about the opportunities that InsurTech offers has also increased. Less than 4% say they are not clear on the opportunities, compared to over 12% last year. The numbers who are not actively considering investing in InsurTech remained static at around 12%.

Respondents were asked how the continuing uncertainty around the UK’s Brexit plan was impacting MGAs. Just over 23% of those writing European business said the availability of capacity or plans with capacity providers was the main impact. Nearly 20% cited concerns about future regulation costs and compliance. The detrimental impact on pricing and product development was mentioned by 15% of MGAs.  The concerns of distribution partners about MGAs ability to meet their needs post Brexit was identified by nearly 12% of respondents. Just under 8% indicated they were delaying or unable to make decisions on growth or development plans.

Despite the uncertainty, many MGAs have already prepared for Brexit. Over 23% of respondents indicated they already had a Brexit strategy in place and over 30% said they were working with their capacity provider(s) on a plan. Less than 8% said they would wait until there was greater certainty on Brexit before developing a strategy.

Looking to the future, and reflecting the theme of this year’s MGAA conference, MGAs were asked for their views on what the main features of the sector might be over the next decade. There was optimism about growth potential with over 57% saying they expected the number of specialist and niche MGAs would increase. More than 38% felt MGAs would be at the forefront of addressing emerging risk and new products. The same number said there would be a greater diversity of capacity provision. The move by InsurTech firms to become MGAs would be a feature according to nearly 35%. While close to 31% said consolidation in the sector would see fewer MGAs.

Commenting on the survey findings, Peter Staddon, managing director of the MGAA, said: “This latest survey highlights how MGAs are willing and able to adapt to the new and emerging dynamics of the market. The uncertainty of Brexit and the shape of the future trading environment is a challenge for many. The government must take into consideration the significant investment in time and resources businesses are making in trying to prepare. Greater clarity around what the future will look like is important to ensure these actions have not been in vain.”

Mark Birrell, chief executive officer of Castel, concluded: “The survey shows a growing confidence and commitment from MGAs to harness the opportunities that InsurTech can bring. The future success of MGAs and InsurTech are interlinked and so the fact there is increased optimism in the sector has to be welcomed.” 

ENDS

For further information, please contact:

Alex Wise, Full Circle Communications

M 07710 665 615
T 020 7265 7887
E awise@fullcirclecomms.co.uk

Notes to editors:

The 9th MGAA Matters survey took place during June 2018.  A total of 26 MGA respondents completed the survey.

Full survey responses are below (statistics highlighted in the press release have been rounded up or down to the nearest decimal place).

Questions 3 and 4 include a comparison with the results from an MGAA Matters survey conducted in October 2017.

1. Does your MGA have a strategy for Brexit?

 

Jun 2018

We have a strategy in place

23.08%

We do not write European business

42.31%

We are working with our capacity provider(s) on a Brexit strategy

30.77%

We do not currently have a strategy but will have one

0%

We will wait until we have more certainty on Brexit before developing a strategy

7.69%

Other (please specify)

0%

2. Is the continuing uncertainty around Brexit having an impact on your MGA? (select all that apply)

It may have a detrimental impact on pricing and product development

15.38%

We do not write European business, so has limited direct impact

46.15%

We are delaying or unable to make decisions on our growth and development plans

7.69%

We already have a strategy and are moving our plans forward regardless of Brexit

11.54%

The impact on capacity availability and our plans with capacity providers

23.08%

Distribution partners’ concerns about our ability to support their needs post Brexit

11.54%

Concerns about costs and compliance with future regulatory regimes

19.23%

Other (please specify)

11.54%

3. Which of the following statements best describes your view of InsurTech and MGAs?

 

Jun 2018

Oct 2017

InsurTech is simply an extension of MGAs technology-focus

19.23%

18.75%

MGAs deliver underwriting expertise that InsurTech start-ups still lack

42.31%

28.13%

InsurTech is a threat to the sector as it can provide capacity providers with alternative distribution opportunities

19.23%

18.75%

InsurTech helps MGAs to evolve their business models to become more customer-centric

42.31%

21.88%

InsurTech is primarily a personal lines opportunity so has limited impact on the business of MGAs

3.85%

3.13%

Other (please specify)

7.69%

9.38%

4. Does your MGA have an InsurTech business strategy?

 

Jun 2018

Oct 2017

Yes, InsurTech is a core part of our business

23.08%

25.00%

We are considering developing a strategy and assessing the opportunities

38.46%

25.00%

We are not clear on the opportunities InsurTech will provide

3.85%

12.50%

No, we are not actively considering investing in InsurTech as part of business

11.54%

18.75%

InsurTech is not a strategic focus for us

15.38%

12.50%

Other (please specify)

7.69%

6.25%

5. Looking ahead, which of the following areas do you think will be the main features of the MGA sector in 2028? (select all that apply)

Access to more diverse capacity provision

38.46%

A consolidated market with fewer MGAs

30.77%

InsurTech companies operating as MGAs

34.62%

An increased number of specialist and niche MGAs

57.69%

More MGAs becoming risk carriers/insurers

19.23%

More insurers launching MGAs to maximise the opportunities from niche classes

19.23%

Fewer InsurTech start-ups with more MGAs maximising technology

7.69%

A greater diversity of distribution partners for MGAs

23.08%

A more responsive regulatory regime for the MGA sector

19.23%

MGAs at the forefront of addressing emerging risk and new products

38.46%

More direct to consumer MGA providers

19.23%

Other (please specify)

0%

MGAA 

The Managing General Agents' Association (MGAA) is a UK-based not for profit organisation dedicated to representing true MGAs.

Formed in 2011, the MGAA also aims to provide a better understanding of what MGAs are and the contribution they make to the insurance industry.

The MGAA currently has 136 full members representing in excess of £5bn underwriting capacity. They are joined by 39 market practitioner members and 55 supplier members.

The board of elected directors leads the organisation. In addition, five separate committees deliver benefits for members with a clear aim of shaping the future of delegated underwriting.

More information can be found at www.mgaa.co.uk and on Twitter @UKMGAA.

Castel

Castel Underwriting Agencies Limited, part of Barbican Insurance Group, is a managing general agent (MGA) and club-style MGA formation platform focused on achieving success and driving innovation through collaboration.  It provides experienced and entrepreneurial underwriters with stable capacity and a fast-track route to creating their own businesses. London-based Castel has a branch office in Amsterdam. Castel is authorised and regulated by the Financial Conduct Authority. Learn more about Castel at www.castelmga.com.

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