If you’re an MGA that has been putting off the ‘technology conversation’, then chances are you’ve reached a tipping point already: either you embrace digital innovation and scale your business with a more sustainable ecosystem, or accept that any growth plans for the near future are likely to be ambitious at best, and ill-advised at worst.
Should you find yourself in this position, you’ll be glad to hear that the insurtech scene is thriving now more than ever. You won’t be short of options to take your business to the next level. Worldwide insurtech funding reached an all-time high in 2021 with around $15.4 billion across 566 deals, more than double funding in 2020.
In this article, we will outline the ‘tipping point’ for MGAs and how to overcome the challenges you face as your business grows so that you can find the best possible insurtech solution.
In general terms, a ‘tipping point’ is the point at which a series of small changes or incidents becomes significant enough to cause a larger, more important change.
From an MGA’s perspective, a tipping point is the moment you realize that to grow your business further, you need to adopt a more comprehensive technology solution (amongst other things) to underpin your operations.
This kind of pivotal moment can come at any time and depends on the layout of your current processes, the size and capabilities of your team, and the in-house culture you have created.
Drawing on our experience of the MGA market, the ‘tipping point’ is most commonly seen roughly 3-5 years after an MGA has launched, and once they are writing approximately $5-10 million Gross Written Premium (GWP).
At this point, the organization tends to be out of ‘start up’ mode, and looking to bring new business on board in a slightly more structured and calculated fashion. As proprietary solutions creak at their seams — and the workload associated with manual policy administration becomes unaffordable — many MGAs will find themselves going to market for a more comprehensive technology solution to support and accelerate the next phase of their lifecycle.
For a lot of MGAs, the tipping point does not occur overnight, and they will have been aware of the impending need for a more modern software solution for some time.
Fortunately, with new generations of innovative SaaS insurtechs becoming more economically viable, the suite of services available to the MGA market is continually improving. There are now a plethora of solutions targeted at helping these businesses minimize reliance on rigid in-house solutions, spreadsheets and manual communication trails.
INSTANDA is here to help you find an insurtech platform that keeps you ahead of the curve, giving your teams the ability to innovate at scale and deliver new propositions to modern marketplaces at lightning speed.
Cultivating innovation and entrepreneurship in an industry that is risk-averse by nature can undoubtedly be tricky, but putting it off risks harming market competitiveness and operational efficiency.
The most common issues that typically lead an MGA to their tipping point are as follows:
Without the correct software in place, the underwriting and quotation process can be drawn-out and time-consuming — even for risks that are traditionally less complex. From emailing brokers and double-keying risks, to managing policy information and navigating between spreadsheets to calculate premiums, it’s easy for important information to be lost or displaced.
In today’s world, underwriting doesn’t have to be this way. Underwriters don't even need to be pulled into every application. Insurtech has the capacity to issue instant outputs that could otherwise take hours, if not days to complete with manual processing. In a competitive market, this can be the difference between winning and losing new business.
Studies have shown that 47% of internet users will leave a page if it doesn’t load in 2 seconds or less, so it’s no surprise that insurance customers expect to receive a personalized and affordable quote from their providers quickly and digitally.
Upon binding in the INSTANDA platform, custom policies and declaration pages are delivered instantly, with payments scheduled and collected through ACH resulting in electronic audit trails for speed and ease of premium accounting, broker and carrier remittance, and painless renewals.
Policy Administration Systems (PAS) are the fundamental foundations that underpin an insurance company’s digital strategy. The capabilities provided by a policy administration system can enable an insurer or MGA to fundamentally shift its ability to compete in an evolving digital insurance landscape.
The right PAS is value-efficient, as error-free as possible, and gives insurance organizations the resources they need to tweak existing propositions and ensure their product portfolio remains relevant.
Broker and customer experiences are also improved by the automation of key processes and the freedom to access new distribution channels.
Scaling a business without a refined PAS (Policy Administration System) — for example, creating new products, onboarding new brokers, and sourcing new clients — can be something of a nightmare.
A PAS forms the primary system of record for the vast majority of insurance organizations, regardless of business class or specialty. Maintaining a proprietary in-house PAS (particularly one that wasn’t built in the last 5-10 years) often comes with elongated lead-times for any significant change or progression, and a huge overhead financially given the cost of software engineering talent.
The key to meeting today’s market challenges lies in moving to a flexible ecosystem, of which an integratable PAS will form part of. To achieve high business value from a successful PAS transformation, you will need to look at fresh ideas to combat market pressures, and make tough business transformation decisions along the way.
PAS systems guide internal resources to easily complete the policy administration life cycle, only stepping into the process where their skills or expertise are absolutely required. Customers are led through the price quote and application journey with simple and clear questions, allowing the MGA to repeat these processes for each new customer.
The cumulative benefits of installing PAS systems boils down to having the ability — and the freedom — to spin up and implement new products easily and at pace. No-code platforms like INSTANDA provide reliability, availability and security, with the flexibility to roll-out new propositions at will, and rapidly make tweaks to existing ones.
Having the ability to grow your business without worrying about the effect on proprietary tech solutions, or the additional expense of bringing in new developers, allows MGAs and team members to focus on doing what they’re best at — whether that be in underwriting, internal collaboration or fostering relationships with clients.
Most importantly, PAS systems stand as a ‘single view of the truth’, ensuring that data is readily available whenever needed. Secure and accessible storage of information lets MGAs regularly analyze performance, forecast their future, and monitor customer treatment, expectations and outcomes.
Repetitive failure to deliver the correct data to the correct stakeholders (e.g. carriers, customers and regulators) will create a very real barrier to an MGA’s success over time. As such, maintaining proper audit trails should be at the forefront of any digital innovation plan — especially when looking ahead to a period of substantial growth.
Insurers and MGAs also rely on their software solutions to help ensure full and effective compliance with growing regulatory demands.
Insurtech proposes a reasonable degree of regulatory flexibility combined with continued regulator focus on maintaining consumer protection and risk mitigation.
Agile product testing can be achieved with INSTANDA under such circumstances, letting MGAs conceive a product, deploy it within weeks and then distribute it to multiple channels in different ways. This enables companies to crystallize the product strategy in a fraction of the time that traditional systems take, without sacrificing any of the security measures that are needed to ensure a product is watertight before it is taken to market.
85% of insurance CEOs believe that the speed of technological change is threatening their company’s growth prospects. It’s time to start innovating and operating like a tech company: quickly, simply and nimbly.
Utilizing insurtech’s automated underwriting services as you grow your business holds the promise of enhanced agency communications, improved tracking, more consistent underwriting decisions and faster throughput — all leading to increased ROI.
These are 5 key features an MGA should look out for when they reach their tipping point and begin searching for technology solutions:
Ease of integration
Truly cloud native
No-code (i.e. ability to configure products without developers)
Flexible workflows and distribution channels
A business culture that aligns with their own
INSTANDA is the digital SaaS solution for the future of insurance; a comprehensive platform made for insurance experts by insurance experts. MGAs can use INSTANDA to create, build and implement complex insurance products in a matter of weeks or months.
One platform, thousands of possibilities, trusted by industry trailblazers worldwide. Book a free demo today to find out why insurance organizations of every shape and size have chosen INSTANDA to innovate their business.