Feedback from brokers at BrokerFest 2021 highlights lagging insurer service and a greater appetite to work with MGAs in their stead – will these businesses cash in on this gift-wrapped opportunity?

By Editor Katie Scott

One theme that rang loud and true across numerous sessions at this week’s BrokerFest 2021 conference, hosted by Insurance Times on Monday 11 October at etc.venues County Hall, is that insurer service for brokers has taken a serious nosedive.

Katie Scott_bw_path

Katie Scott

Brokers are attributing this to a myriad of reasons – primarily that insurers are still struggling to cope with homeworking regimes amid and beyond the Covid-19 pandemic, while an over-reliance on technology means getting access to and speaking with underwriters directly is like attempting to find a needle in a haystack through convoluted phone processes.

However, one solution that cropped up among panel discussions is the rise of the MGA and whether these businesses can capitalise on insurers’ service woes to promptly plug brokers’ service gaps. This was certainly the perspective of former Lockyers boss Jon Newall, who I interviewed in Monday’s high net worth stream.

He told me that MGAs are more nimble and are actively looking for volume when it comes to high net worth business, meaning they are more interested in delivering the needs of brokers to help achieve this end goal.

High net worth as a market is viewed as highly personalised, with excellent service ringfenced as the foundation for any proposition – Newall believes MGAs therefore have an opportunity to step up where insurers are failing.

Equally, Nick Houghton, group chief executive of JMG Group – who addressed delegates in an afternoon panel session – said “MGAs are thriving and produce some pretty impressive propositions” when it comes to addressing SME risks. With this in mind, he thinks “MGAs are the answer” when it comes to mitigating poor insurer service.

“Some insurers have lost sight of the ability to have a conversation and I think in the SME world, just because someone is classed as an SME, doesn’t mean they don’t have quite complex risks,” he said.

Insurer perspective

Richard Brooks, broker development director at Markel UK, who spoke alongside Houghton, added that “an insurer never wants to admit that an MGA can do it better”.

When looking to work with MGAs, Brooks said there are three main considerations for insurers. Firstly, scale and whether MGAs can “actually distribute products better and faster than we can”.

Secondly, the “inherent cost” to the insurer would need to be reviewed because “the ultimate net ratio has to be particularly good to make it a sustainable and long-term commitment”.

Lastly, Brooks noted that the “most interesting” consideration is around “distribution”.

He explained: “For us, it is very firmly about does the MGA enable us to connect with a type of distribution that, rightly or wrongly, our own proposition [is not] going to touch?”

Victim of own success

Despite this optimism around MGAs, these organisations can be “victims of their own success”, Houghton added.

He explained: “The challenge would be as they scale, can they keep it going because there’s good examples of MGAs being victims of their own success.

“You start small, you can be pretty efficient and get away with it. As you scale, it becomes an issue or more of a challenge.”

Specialist MGAs operating in niche market segments are certainly gaining traction in terms of their popularity with brokers – especially as brokers appear to remain unimpressed with insurer service (don’t forget to rate your insurers’ service via our latest Broker Service Survey here too).

It will be interesting to see how MGAs blossom and grow to fully grasp this opportunity and whether their market share will dramatically increase, or MGA startups multiply out of the woodwork. I imagine the market will also be keeping a beady eye on how insurers respond, tracking whether service levels improve or stay sadly static.

Brokers are willing to work with able partners – let’s see who steps up to the plate.

Covid-19 continues to provide service excuses

Branko Bjelobaba, managing director of Branko, tells me: “[The] FCA [is] looking at servicing issues if people continue [homeworking] or having some time in the office and [has] made it clear that employees could even have home visits.

”Insurers, by now, should have worked out levels of demand and how many people are needed to deliver an acceptable service. The [business interruption insurance] test case will have caused a lot of work for commercial claims departments, but this must have been expected and insurers should have ramped up. I don’t know how many staff have been furloughed but it would be most odd to furlough staff when a wall of claims are coming in.

”Clearly, with businesses suffering, I would have expected all available resources to be deployed, thus ensuring fair decisions and speedy settlements, but we still know that this is not the case with only 10% of expected claims having been made.

”However, there has been no precedent on this. Never in modern times have offices been forced to close and the government has said work from home if you can. To equip staff to [work from home] will have been difficult for many, especially in terms of IT and connectivity, but important lessons should have by now been learnt should something similar happen again.

”However, brokers and clients expect a service that has been paid for and excuses are not enough but, as we all know, Covid continues to provide many excuses for lots of people not get backing to normal.”