Insurers traditionally turned to managing general agencies (MGAs) to help grow business, expand into new products and geographical areas, or fill gaps in underwriting expertise. MGAs allow insurers to take advantage of niche market expertise to expand their distribution without needing to build out the necessary infrastructure. MGA business (measured in premiums) is growing faster than property/casualty premiums. MGAs are exploring emerging technologies and Insuretechs to improve customer experience, grow their books of business, manage risk, and gain operational efficiencies.
When it comes to acquiring the technology to underwrite, bill and collect premium, and manage claims, the typical model has evolved over time. MGAs used to purchase their own core system technology; then, when the introduction of web-based systems made it easier for MGAs to access insurer systems directly, insurers started providing the technology to conduct business with MGAs. Now, the pendulum is swinging back toward MGAs owning their core system technology. Key drivers of this change include the need to compete with other technologically advanced MGAs, the increased value of data, and greater private equity and venture capital investments in MGAs.