From manual to digital: boosting MGA & MGU efficiency with workflow automation

MGAs & MGUs play an integral role in the insurance distribution value chain, underwriting policies for carriers, managing claims processing, and acting as a go-between for the insurer and policyholder. 

By outsourcing many of their core operations, insurers can reduce operational costs while at the same time benefiting from the expertise of MGAs in terms of risk assessment and underwriting. In this role, the MGA will assess potential risks, establish appropriate coverage levels, calculate premiums, and provide customer service to policyholders.

The MGA typically earns income through a commission or fee-based system, receiving revenue either directly from an insurer or via an aggregator who bundles together multiple policies. This makes the quality of service and efficiency of operations an integral part of the MGA’s success.

MGA & MGU Outlook and Trends

The MGA business model faces numerous challenges in today's rapidly changing market. Finding ways to remain competitive has become more important than ever, bringing the need for digital transformation and the challenge of becoming more agile to the forefront of MGA priorities.

The agility challenge

As consumer demands change and technology evolves, companies must adapt quickly or risk losing market share. Additionally, insurance agencies must find ways to serve policyholders better while maintaining a profitable business model. In this difficult environment, MGAs and MGUs must leverage new technologies and strategies to succeed in a tough market.

The customer experience challenge

Customers today expect a more personalized and efficient experience from their insurance providers. However, the manual processes used by many MGAs and MGUs are inefficient. This can lead to delays in policy issuance or claims processing, resulting in customer dissatisfaction and unnecessary costs for the insurer, as a disjointed overall customer experience.

MGAs and MGUs must find ways to improve customer service while streamlining processes to create value.

The carrier relationship challenge

The biggest risk for an MGA remains the loss, or reduction, of an insurer relationship due to performance or insurers scaling back capacity.  While retail brokers may leverage hundreds of insurer relationships to source capacity, MGAs typically have two or three relationships per program. 

The agent and broker relationship challenge

MGAs rely on independent agents to source premiums. Continued market consolidation could increase competition among MGAs for talent. This brings agent experience to the forefront for MGAs as the source of competitive advantage.

Automation & Workflows: Driving Efficiency in MGAs & MGUs

The key to success in the modern insurance space is innovation, and digital transformation is essential for MGA and MGU organizations to remain competitive.

Automation and workflow efficiency are two of the most effective ways to maximize efficiency while maintaining customer service excellence. To remain competitive in today's market, MGAs must be able to process data quickly, analyze policyholder behavior and risk profiles, generate reports, and respond quickly to customer requests. Because their roles are complex, the ability of MGAs and MGUs to process data efficiently is essential for driving efficiency throughout the end-to-end policy lifecycle:

• By automating customer service processes like issuing quotes and responding to inquiries, MGAs can improve their speed and accuracy of response while at the same time reducing the need for manual input.
• Automation can also significantly streamline administrative tasks such as billing and collections.
• In addition, MGAs can also use workflow technologies to automate underwriting and policy issuance processes.
• Digital workflow automation also creates a more efficient system for documentation management by automating the process from start to finish.

Impact of automation on MGA and MGU profitability

The traditional manual-based systems used to process data are costly and time-consuming. With the increasing demand for speed and accuracy and rising costs of labor, digital workflow automation technology can address these challenges—allowing MGAs & MGUs to streamline their operations and reduce costs while improving customer experiences.

Workflow transformation leads to significant cost savings and improved quality of service, allowing MGAs to respond faster and more accurately to customers' needs. Automation can also help MGAs stay ahead of the competition by allowing them to anticipate customer demands better and operate in a more agile manner.

In the insurance sector, MGA and MGU add value by acting as essential links between carriers and policyholders by managing underwriting risk, facilitating claims adjudication, and providing customer support services.

Workflow automation helps MGAs and MGUs improve their cost structures and reduce operational costs. Automated processes can also improve the accuracy of data collection, analysis, and reporting, helping MGAs decrease errors and increase efficiency. In addition to reducing operational expenses, automation leads to better customer service and faster response times.

This in turn, will empower MGAs to build stronger relationships with carriers by impacting the key performance indicators such as:

1. Premium Volume: By leveraging digital data collection tools and workflow automation, MGAs can increase the visibility of their products, reach new audiences, and drive more sales. Digital data collection and analysis can help MGAs identify the most effective marketing strategies and channels, allowing them to optimize their marketing spend and increase their premium volume.
2. Loss Ratio: By leveraging data from various sources and automating their internal processes, MGAs can gain a more accurate and comprehensive understanding of the risks they are insuring. This can lead to more accurate pricing and underwriting decisions, resulting in lower loss ratios.
3. Service Standards: Workflow automation can help MGAs provide better and more personalized customer service. By collecting and analyzing data on customer behavior and preferences, MGAs can tailor their service offerings to meet the needs of individual customers. For example, they can offer personalized recommendations, targeted marketing messages, and 24/7 customer support.
4. Compliance: Digital data collection and workflow automation can help MGAs ensure compliance with regulatory requirements. By automating compliance checks and audits, MGAs can reduce the risk of errors and omissions and ensure that they meet all regulatory requirements.

The bottom line:

The MGA business model is still relevant in today’s insurance landscape, but it must evolve to keep pace with the changing market.

MGAs and MGUs must find ways to improve their customer service, remain competitive, and leverage digital technologies to succeed. As the insurance industry evolves, automation will become increasingly important for MGA's success.