MGA Poll Shows Appetite For More Prominent Role In Insurance Claims Process
19 November 2015
MGAs are keen to be more involved in the claims process; they view claims as a core competence and recognise its intrinsic link with underwriting according to the latest MGAA Matters Survey1.
The fourth survey looks at the current role of MGAs in the claims process and their future plans to develop their claims functions and processes, plus it highlights issues the sector faces in gaining more prominence and participation in the claims process.
MGAs are clear about the need to have a role in claims; nearly 53% said claims are integral to underwriting so they need to be more involved and close to 24% saw themselves as enablers, ensuring the delivery of appropriate outcomes. Their position is further affirmed by the fact no respondents said claims is not a core competence for MGAs or that claims are the sole domain of the broker and carrier.
MGAs have the foundations in place to facilitate greater claims involvement; 40% have a dedicated claims team or nominated individual and 30% outsource the claims function to a third party or carrier nominated supplier. Expanding their claims operations is planned with a third saying growth either strategically or to support the expansion of business will be a focus over the next three years. Relations with carriers will also be a focus with over 30% saying they will be working more closely with their capacity providers to help develop the process.
Enabling MGAs to have a more prominent role in claims will require specific factors to be addressed. Survey respondents highlighted the need for more co-ordination between all parties in the claims process (44%), greater access to claims data (34%), better use of technology (31%) and the sharing of claims best practice (28%) as the key factors. A quarter said there would also need to be a greater investment in acquiring and developing in-house claims talent.
Despite the increased regulatory scrutiny and outcomes from the FCA’s thematic review into SME claims handling conducted earlier in the year, the majority of MGAs were confident in their processes with over 60% saying they had no plans to make changes or that their systems and controls were robust enough to address any concerns. Under 25% indicated they had implemented changes as a result of the thematic review and just over 15% said their carrier had addressed any matters required.
MGAs concede there are certain barriers to increased participation; over 70% said there needed to be greater clarity of their claims role and a change in perceptions around the value of their involvement. Other barriers to participation were; more accessibility to data (27%), claims not being notified to MGAs (24%) and the lack of a standard data capture vehicle for carriers (21%).
MGAA Matters is a research-based partnership between the Managing General Agents’ Association (MGAA) and MGA start-up specialists Castel Underwriting Agencies (Castel). It was launched in 2014 to identify and raise awareness of the issues currently impacting the growth and success of UK MGAs.
Commenting on the MGAA Matters survey results, Mark Birrell, chief executive officer of Castel said:“Participation in claims is a prerequisite of underwriting and MGAA members make this point clear in their responses to our latest survey. With MGAs keen to expand their claims role, and recognising the need for their businesses to have the appropriate systems and talent, access to data, and best practice approach in place, an enhanced position will not only benefit customer outcomes but also their underwriting, carrier and distribution relationships.”
Peter Staddon, managing director of the MGAA concludes: “The fact that MGAs want a more prominent role in the claims process should be welcomed by insurers and brokers. Their call for more co-ordination amongst all parties to the claim, rather than adding to the process, will help to ensure more appropriate customers outcomes.
“With this increased prominence comes the need to address potential inhibitors. The need for greater clarity of the MGA’s role and tackling perceptions around whether they should have a claims role at all are important to address, and the Association will continue to highlight the contribution MGA can and do bring to claims. I welcome the opportunity to engender greater debate on this topic.”
For further information, please contact:
Alex Wise, Concise PR
M: 07710 665 615
T:020 7100 3960
Francesca Breeze, Concise PR
M:07710 963 838
T: 020 7100 3960
Notes to editors:
1 The fourth MGAA Matters survey took during October 2015. A total of 34 Full MGAA Members responded.
Full survey responses are below (statistics highlighted in the press release have been rounded up or down to the nearest decimal place):
What role does your MGA currently have in the claims process for delegated authority binder business?
We have a dedicated claims team but we do not have delegated authority on all binders: 23.3%
We outsource the claims function to a third party
such as TPA, lawyer, claims firm or loss adjustor: 20.0%
We have a nominated claims manager/person: 16.7%
Our carrier/s drive the management of the claims process: 13.3%
Our role differs depending on the class of business:13.3%
We use a third party provided by our carrier/s: 10.0%
We will only be involved where there are issues or
Which of the following statements best represents your view about the role an MGA should play in the claims process?
Claims are an integral part of the underwriting process so MGAs need to be involved in the process: 52.9%
MGAs are an enabler ensuring the claims process delivers appropriate customer outcomes: 23.5%
MGAs should only be involved if they add value to the process 8.8%
MGAs must ensure they deliver integrity of their carrier’s business so need to know what is happening in the claims process: 8.8%
The claims process can only work efficiently if there is total transparency for all parties involved: 5.9%
Claims are not a core competence for MGAs: 0.0%
Claims are the broker and carrier domain: 0.0%
Looking ahead over the next three years, which of the following best describes how your role in the claims process may change?
Do not envisage any change: 33.3%
We will work closely with our carriers to develop how the process operates: 30.3%
Our business strategy includes investing in an expanded role in claims: 21.2%
Our role will expand as our business grows and resources are needed:12.1%
We will see a significant increase in our role to address the regulator’s concerns: 3.1%
What are the most important factors that need to be addressed so MGAs can have a prominent role in the claims process? Select at least one option.
A more coordinated process amongst carriers, brokers, outsource providers and MGA to manage claims: 34.4%
Greater use of technology: 31.2%
MGA market-wide drive for best claims practice: 28.1%
More investment in acquiring and developing in-house claims talent: 25.0%
Increased regulatory focus on claims: 12.5%
Increased use of outsourced claims services: 6.3%
MGAs do not need a more prominent role: 3.1%
Introduction of new initiatives such as the London Market
Group Target Operating Model (TOM): 0.0%
Has the FCA thematic review into SME claims had any impact on claims processes and procedures?
Our systems and controls are robust enough to address any of
the regulator’s concerns: 51.5%
Yes, we have made changes as a result of the review: 24.2%
Our carrier/s have addressed these matters: 15.2%
We have no plans to make changes: 9.1%
What are the two main issues MGAs face in participating in the claims process?
Clarity of the role of the MGA in claims: 39.4%
Perception that the MGA does not have/need a role in claims: 33.3%
Being able to access claims data: 27.3%
Claims not actually being notified to the MGA: 24.2%
No standard data capture process for carriers: 21.2%
Lack of willingness on the part of the broker/carrier to involve the MGA 12.1%
Access to view files on the Lloyd’s ECF system: 12.1%
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 106 full members representing over £3.6bn of underwriting capacity. They are joined by 37 market practitioner (insurer) members and 26 supplier members.
A board of directors have been elected to lead 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 mgaa.co.uk and on Twitter @UKMGAA