MGAA Matters: MGAs and the Insurance Act - engaged and prepared
5 August 2016
On the eve of the Insurance Act coming into force, the latest MGAA Matters, the research-based partnership between the Managing General Agents’ Association and MGA start-up specialists Castel Underwriting Agencies (Castel), asks MGAs about how prepared they are for its implementation on 12 August 2016.
The snapshot survey of 25 MGAs with gross written premium of up to £20m conducted in July, showed high levels of preparedness and engagement with capacity and distribution partners focused on the requirements and impact of the Act.
All of the respondents to the survey said they were not contracting out of any of the terms of the Act, and that decision had not changed in the previous six months.
Reviewing and updating Terms of Business Agreements (TOBAs) with distribution partners was an important area for MGAs preparing for the Act’s implementation. 36% said they did not need to make any changes to their TOBAs to reflect the requirements of the Act and 40% said they had already updated their TOBAs. A further 12% indicated they were planning to update them. Only 3 of the 25 MGAs said they had not yet reviewed their TOBAs.
MGAs were also asked about updating claims authorities and guidance. Over half (52%) said that claims were handled by their carrier of a third party administrator. Of the remainder, 24% said they had reviewed their authorities and guidance and confirmed these reflected the Act’s requirements and 12% said they had not yet reviewed them.
Communication and engagement were key aspects of the drive to ensure MGAs are ready for the Act’s arrival. 62.5% in the snapshot survey said their capacity provider/s had advised them of their position. Just over 33% said they were in communication with their capacity provider but had not yet had clarification. Only one said they had had no communication from their carrier.
Mark Birrell, chief executive officer of Castel Underwriting Agencies, said: “The picture painted by this snapshot of MGA businesses is one of an engaged sector focused on ensuring the impact of the Insurance Act is understood and prepared for. Across the key areas, from TOBAs to claims, we see MGAs are in a strong position to ensure a smooth introduction of the Act.”
MGAA Managing Director, Peter Staddon said: “The Association has actively supported members in understanding and preparing for the Insurance Act with workshops, briefings and a dedicated implementation guide.
“As we enter the final days before implementation, many MGAs have taken the necessary steps and engaged with their capacity providers to address the requirements of the Act. Having taken this level of responsibility, the focus must be on the brokers and distribution partners to meet their obligations and be prepared to ensure the Act achieves what it is designed to do.”
MGAA Matters was launched in 2014 to identify and raise awareness of the issues currently impacting the growth and success of UK MGAs.