The premiums attributable to Delegated Underwriting Authority Enterprises (MGAs, MGUs, Program Managers, Lloyds coverholders and Underwriting Agencies) has been increasing over last 10 years at a rate higher than the other distribution channels. Research indicates that In US alone, the direct premium is north of $40B.
Traditionally, such MGAs offer the Carriers to grow across risk classes and geographical territories quickly and in a less expensive manner. The strength of the MGA is its deep understanding of customer segments in its territory, underwriting experiences of the risk class within the market segment, and efficient processes across customer management, sales and underwriting.
With agility being one of the key success factors, the MGAs have a need to be ahead in the technology curve. In today’s business climate, with pandemic and weather disasters influencing the way of doing business, many MGAs have automated / digitized the business transactions of collection of premiums, intimation of claims, routine question-answers and delivery of policy documents and endorsements. But it has been difficult to automate processes where solicitation is important viz. purchase process of additional coverage or comparison of quotations beyond premium. In the process of embracing online servicing, MGAs have been concerned about losing the exclusivity of their value proposition.
Simply put, the term “Digital MGA” is typically attributed to InsureTechs that are primarily operating in an “online” model, with most of processes not requiring any face to face interaction with the policyholders or prospects. But the drive to become a “Digital MGA” is present across the DUAEs for many years, and they have different levels of sophistication in their adaptation of technologies. Some have successfully leveraged the power of telematics, smart devices, blockchain and artificial intelligence to deliver their value propositions. But across the board, everyone feels the necessity to become a “Digital MGA”.
There are many different Agency Management Systems available for facilitating an infrastructure for a “Digital MGA”, Macaw is one such which possibly differentiates itself with its cradle-to-grave approach. Some of the MGAs using Macaw did not require a physical office even before the pandemic started.