In a monumental shift within the insurance sector, the anticipated transition from retail agencies to Managing General Agencies (MGAs) has gained momentum in 2023, marking an inevitable evolution. As the landscape reshapes, industry experts forecast two prevalent pathways for retail agents: embracing the transformation into MGAs by securing underwriting authority, or seeking acquisition by established MGAs. Conversely, the specter of losing business to these dynamic MGAs looms for those who remain resistant to change.
According to James Cooper, Chair of the Global Insurance Practice in the recent MGA Opinion Report 2023, by Clyde & Co, “Current capital market conditions mean that insurance – and the MGA model – remains an attractive place to invest. MGAs are in a position to really drive innovation and be nimble with regards to technology. We will definitely see some real innovation coming out of MGAs going forward.”
Of noteworthy significance is the role of startup MGAs, positioned as drivers of future industry trends, outpacing traditional legacy agencies. Their remarkable growth trajectory is often attributed to strategic acquisitions tailored to specific product and business line demands. As the industry continues to metamorphose, it is projected that by 2025, every retail agency will assume some MGA form. Furthermore, each existing MGA is slated to evolve into an insurtech entity, solidifying the fusion of insurance and technology.
1) Agents are exploring more technology-driven marketing strategies
Agents, brokers, and MGAs are undergoing a paradigm shift in their marketing approaches, channeling efforts toward tech platforms including job recruitment websites and auto-buying applications. This strategic pivot allows these entities to directly engage potential clients at the source, expediting the influx of new customers. To harness the potential of these platforms, MGAs must craft appropriate messaging and curate a risk product portfolio aligned with platform user needs, such as workers’ compensation insurance.
Industry trailblazers have already initiated this process, seamlessly guiding prospects from platforms onto their websites to explore insurance options. A robust technological framework, incorporating backend infrastructure and open API connectivity, emerges as a pivotal cornerstone for this approach.
2) Demand for more data scientists in the insurance industry
As both MGAs and agents capitalise on data analytics to enhance decision-making processes, the demand for proficient data scientists is on an upward trajectory.
Previously instrumental across industries including finance, retail, media, entertainment, and pharmaceuticals, data scientists are playing a pivotal role within the insurance sector in 2023. With agencies harbouring a wealth of historical data spanning years, if not decades, pertaining to customers and operations, the time has arrived for industry-specific data scientists to decode this information and unveil critical insights and trends.
3) Technology-driven transformation continues
The impending changes in the insurance sector are underscored by the integration of advanced technology tools. Automation, no-code/low-code platforms, and open API architectures are primed to aid retail agencies in navigating the shifting landscape. In the ensuing year, the imperative to invest in tools facilitating speed, agility, accessibility, and user-friendliness for both agency personnel and customers becomes more pronounced.
A salient shift toward modern, cloud-based insurance platforms is already happening, with more retail agencies migrating away from conventional agency management systems. This contemporary platform empowers agents to streamline internal processes, while concurrently enhancing the quality of customer interactions through online channels. The adoption of these technologies delineates the trajectory of the insurance industry’s future.
As 2023 progresses, the insurance sector stands poised at the crossroads of transformation. The transition from retail agencies to MGAs, a recalibration of marketing strategies, the ascendancy of data science, and technology-driven evolution are poised to reshape the industry’s landscape. These shifts signal not just a change, but a renaissance, in the way insurance business is conducted.
Stats on the MGA marketplace (from MGA Opinion Report 2023)
- 80% of MGAs are willing to invest in new technology
- 65% say their reliance on tech has been driven by the current economic climate
- 51% say that increased regulatory scrutiny is a barrier to start-ups, or those looking to enter new marketplaces
Report here:
Leading MGAs listed by CB Insights Top 50 Insurtechs List in 2023
Source: here
