Insurance MGA Priority: Make it Easy for Agents
What does the future hold for insurance? If the words “direct to consumer” jump to mind, hold up. Despite the craze for direct insurance that we’ve been seeing in recent years, these days, the middleman is in higher demand than ever. The question is, how can that demand be met?
Insurance MGAs are essential industry players
Managing general agents (MGAs) are an important link between carrier and customer, and they serve a crucial role. “More and more companies continue to jump on the direct-to-consumer bandwagon,” said Dan Fash at Insurance Journal – but “the reality is, the future of commercial insurance belongs to the intermediaries.”
According to Fash, MGAs are writing $40 billion in gross annual premiums, and about half of them are writing more than $100 million a year. Because they have underwriting authority, MGAs can take on tasks that are normally only performed by insurers – such as appointing retail agents. And with thousands of appointed retail agents in the nation, the region, or even inside a single state, “MGAs bring distribution into the risk transfer chain,” Fash said.
Small independent agents may not be able to represent a given carrier on their own, but working with an MGA, they can significantly expand their reach:
- Gaining access to specific markets
- Adding product knowledge and niche expertise
- Getting fast, agile, efficient response
- Being able to trust the service relationship
- Acquiring greater ability without sacrificing independence
Those are just five examples of the benefits that MGAs can bring; there are a good 45 more, according to Insurance Journal. (You can see all 50 here.) And these benefits are not going out of style any time soon.
Talent is a different question
“Faced with an aging workforce, operators in the managing general agent (MGA) and wholesaler spheres face an ongoing battle to attract and retain technical underwriting and actuarial talent to meet the demand for niche insurance solutions,” said Antony Ireland at Risk & Insurance.
New insurance sales talent is hard to come by as well. Industry executives project that 25 percent of insurance professionals are expected to retire in three years, and 400,000 positions are projected to be unfilled by 2020. A study by Pew Research found that fewer than 5 percent of millennials are interested in working in the insurance industry.
Which brings us back to the question we led with: MGAs are in high demand, but how can that demand be met?
The secret to recruiting top agents is simple
The talent shortage won’t be solved overnight. PropertyCasualty360 suggests refreshing recruiting practices to appeal to younger audiences, promoting the variety and flexibility of insurance careers and positioning insurance careers as a community-minded opportunity to give back.
And, there is one more step that MGAs can take to overcome recruiting challenges. We call it the “let’s make this easy” approach.
The idea is to making writing business as easy as possible, so that even if you are facing talent gaps, you’ll be able to bridge those.
Let’s look at a case in point. In 2016, Quantum MGA was founded in Texas. The agency’s Founder and CEO Chuck McMillan needed to get business on the books as soon as he had reinsurance, which meant that his policy administration system had to start pulling its weight as fast as possible. By prioritizing simplicity and flexibility, McMillan got that result. In so doing, he was also able to make writing business very easy, positioning his agency to adapt quickly, change business rules on the fly, and get off the ground fast – even amid a difficult talent landscape.
“I’m a minimalist so I made it very easy,” McMillan said. “Someone with no insurance experience could actually write a policy.”
On that note, it’s worth mentioning that many MGAs offer digital products for faster quotes as well as digital platforms that can integrate with wholesale channels. These tools not only facilitate internal processes, but also improve the customer experience at the same time. It’s one more place where having the right policy administration system can mean the world.
To summarize, the “let’s make it easy” approach boils down to this:
- Easy, instant quoting and risk verification using a simple, intuitive MGA software
- Minimum paperwork
- Perks that customers love, such as digital apps
- Online servicing tools