This piece is by Kaj Pankhania, Director at DA Strategy and Chair of MGAA Next Gen. It puts the case for ambition, vision and innovation when it comes to designing MGA platforms.
The insurance landscape is in a constant state of evolution – market dynamics, regulatory pressures and shifting consumer demand – all have spurred innovation and transformation in our industry. Among the emerging trends, one that has gained significant momentum is the ambition of Managing General Agents (MGAs) to be “born global”. This strategic approach is marked by their intent to scale up swiftly and efficiently, with scalability embedded at the foundation of their design. It’s a visionary approach that requires market expertise, precision and expedited execution. MGAs are increasingly turning to MGA Design & Build platforms in achieving their ambitions.
MGAs are vital to a healthy insurance ecosystem, bridging the gap between unique customer demands and insurance capacity. They can play a crucial role in providing niche underwriting expertise, otherwise unobtainable product distribution with high levels of customer satisfaction. However, in today’s complex regulatory landscape, the obligations on compliance and the need for operational excellence are greater than ever before.
MGAs must navigate a web of international regulations and compliance requirements, establish strong carrier relationships and deliver products to market rapidly. Achieving success can seem like a formidable challenge for a small start-up MGA. Partnering with the right MGA Design & Build platform both at the start of the journey, and for the long term is essential for continuous growth.
MGA Design & Build: Enabling Ambitious Visions
The concept of a market-leading MGA Design & Build platform was created to address two primary objectives: to assist start-up MGAs in meeting the market’s evolving requirements and to empower the innovative entrepreneurs behind these entities to focus on what they do best. This unique service is designed to help MGAs to make their plans a reality. It goes beyond regulatory hosting and into partnering at each stage of the journey, offering a comprehensive set of services and catapulting the business towards success.
Creating a successful MGA begins with a robust roadmap, buy-in from all stakeholders and alignment on vision. Working with a leading platform provider, allows an MGA to leverage the experience gained from many launches over many years, and access to insight on the
characteristics that lead to success.
How do start up MGAs choose which MGA Design & Build platform they should partner up with?
My view has always been to partner with the right people first, opting for a team that prioritises speed to market and are deeply embedded in the market with strong connections to both DAS120 MGA Design & Build Editorial capacity and regulators. Lastly, and often most importantly, do not require an equity stake in your venture!
Good preparation is key
There are both insurance and non-insurance aspects to designing and building an MGA. It is important that a platform partner recognises this, providing a tailored roadmap that encompasses all aspects of a start up business, not just the MGA specific elements. On the insurance side, to tackle the complex regulatory environment, it is critical that the MGA works with a partner that is well-versed in the regulatory landscape. They ensure that MGAs are ticking all the right regulatory boxes, including establishing a pragmatic product governance framework for example as well as looking ahead to multi-territory regulatory needs as the business grows.
Once the regulatory hurdles are cleared, the focus shifts to setting up the right contracts, enabling MGAs to go live as quickly as possible. A swift market entry is crucial for MGAs’ success. To facilitate trading, for instance, an MGA needs to develop the Terms of Business
Agreements (TOBAs) which set the foundation for transactions and partnerships, these are often overlooked by keen underwriters whose primary focus is on obtaining the keystone agreement with capacity.
MGAs must be well prepared for the implementation of oversight procedures. Moreover, if the MGA is operating within the Lloyd’s environment, there are several notification procedures that need to be adhered to ensure that MGAs have a comprehensive understanding of this critical aspect.
The MGA Design & Build partner can also provide a strong reference point when selecting and implementing the right digital platform. With new and innovative MGA systems solutions coming to market regularly, finding the right option can be an overwhelming task. It goes without saying that MGA systems are essential for efficient underwriting, reporting and harnessing data. Therefore, the perspective of a platform provider who has seen many systems succeed, and indeed some fail, can help avoid costly mistakes. Changing underwriting platform ‘mid-stream’ can be expensive in both time and monetary terms, with each change or alteration costing the MGA dearly. “Born global” MGAs should aim to optimise their operations from the start, negotiating terms and ensuring that every aspect of the platform aligns with their long-term vision.
Beyond the intricacies of insurance, MGA Design & Build services should address noninsurance elements that are vital for success, including ensuring that day-to-day operations are streamlined for efficiency, which is critical for long-term success.
What is Driving the Ambition
The “born global” approach is rooted in the desire to be internationally competitive and successful from the outset. The insurance business landscape is no longer confined by geographical boundaries. Instead, MGAs are looking to capture opportunities on a multiterritory, multi-class scale, tapping into international markets and customer segments. With the rise of digital technology, customers are increasingly seeking insurance products and services online. The ability to reach a global audience is a strategic advantage that ambitious MGAs are keen to leverage.
At the same time, the best talent is not confined to a single location. MGAs with international ambitions and flexible working policies can access a diverse and skilled workforce from many different parts of the world. By expanding across regions and diversifying their risk, ‘born global’
MGAs can enhance their resilience and diversity.
International employment needs can be complex to manage but deliver significant benefits, a good MGA Design and Build team can
provide clear advice. As we look ahead to 2024, the insurance industry is poised for further dynamic growth driven by the pursuit of innovation and improving efficiency. There is a strong pipeline of new MGA opportunities which is set to grow further.
Those who have harnessed the knowledge and expertise of a strong MGA Design & Build platform are primed not only to navigate the complexities of a global insurance landscape but also to thrive. In this climate of unprecedented change, expertise and knowledge will be the
linchpin for a robust business and the catalyst for successful growth. The future of MGAs is one of boundless possibilities, those who seize opportunities presented and harness the knowledge networks around them are sure to reap the rewards. Successful MGAs will be those which balance knowledge and expertise with innovation and agility.