MGA Q&A: MGAs must continue to invest in AI and data enrichment - Mike Keating

As UK brokers respond to this year’s MGA Survey, Insurance Times catches up with Mike Keating, chief executive of the Managing General Agents’ Association (MGAA), about the challenges facing MGA members both now and in the future.

Brokers can still take part in 2022’s MGA Survey - click here to complete the survey before it closes on 14 August 2022.

The 2022 MGA Survey aims to investigate MGAs’ service levels over the last 12 months. Where do you think MGAs have excelled over the last 12 months? What challenges are you proud to see MGAs facing?

One of the great things MGAs have done over the last 12 months is to continue offering a platinum level of service to their broker partners during such economic uncertainty, giving confidence to brokers around timely renewals, timely responses on new business and working closely with them on some really challenging risks.

MGAs have demonstrated they can and will get involved in difficult claims, to ensure customers are properly protected.

There has been a huge drive across the industry to ensure digital capabilities are in line with customer expectations. What changes are you witnessing from MGA members that have impressed you?

There are a number of ways in which MGAs have begun to adopt technology that have impressed me.

Operationally, we’ve seen the adoption of artificial intelligence (AI) technology to ensure MGAs can access key risk data they need and provide quotes much quicker.

AI acts effectively as a triage tool, which can ignore information that isn’t relevant to the quote while only including data that is relevant, increasing the overall accuracy and quality of the work MGAs are doing.

Our members have also continued to invest in data enrichment to be able to price and underwrite risks more accurately, which benefits everyone involved in the process.

Generally, MGAs have been on the front foot in terms of using technology to remove frictional costs and adopt back office systems that allow them to focus on what they’re experts in, which is providing an excellent service to their broker partners.

I’m also very pleased with the profile of the MGAA’s supplier membership - these businesses are first-class in working with our MGA members to provide technology services.

Why should brokers stick with MGAs in an ongoing hard market?

My advice would be that brokers should stick with MGAs regardless of the market cycle.

If the sector is in a hard market, MGAs are crucial in allowing brokers to navigate the challenging premium increases which are associated with this part of the market cycle. Brokers have shown loyalty to MGAs throughout various market cycles and it benefits them to continue doing so.

If you take market conditions out of the equation, it’s about being able to offer customers access to the products they need, which MGAs enable brokers to do.

There continues to be concerns from brokers about the potential reduction or removal of capacity from an MGA. What do you feel has been done to remove this concern and what challenges remain in this area?

I’d say it’s more about what MGAs can do to avoid the scenario of a reduction or removal of capacity from their business.

My first and foremost piece of advice would be that MGAs need to make sure they have an excellent stream of data that paints an accurate and in-depth picture of the business’ performance. If you have this from the start, you immediately gain the confidence of your capital provider because you can talk authoritatively about performance using clear and concise insights, underpinned by underwriting expertise.

Capacity will always be the number one concern for MGAs because without capacity, they don’t have a business. So, it’s very important that MGAs look after their capacity and they need to be proactive and transparent in doing that.

They need to share good data and they need to work with their capacity provider to deliver joint aims. I’m very encouraged to see, certainly through our membership, that the behaviours MGAs need to display to secure capacity - both existing and new - are being demonstrated far more robustly than previously.

In addition to the use of data and demonstrating underwriting expertise, MGAs must also have excellent governance, a clear risk appetite and a clear target customer group. If an MGA has all of these things, then they can take market conditions out of the equation - there will always be insurers and capital providers willing to partner with businesses that demonstrate these core competencies.

What are some of the other major challenges facing MGAs?

There will, of course, always be challenges.

Specifically in regards to capacity, one of the main challenges is - and will continue to be - ensuring that the capacity provider and the MGA are aligned in terms of their joint objectives. Failing to have a united purpose can immediately cause issues for any partnership.

Across the market more broadly, there’s still issues in terms of the speed of onboarding new business - that’s something the MGA community is definitely working hard to address.

Another challenge is claims inflation, which is undoubtedly the elephant in the room at the moment.

Although it’s a hard rate environment, these rates are tailing off slightly and there’s a sense that rate increases across many product lines will still not meet claims inflation, which will present a big challenge for MGAs to overcome.

The final big challenge I see for MGAs going forward is the increasing amount of regulation being placed on them, which will certainly have an impact across our membership.

What has the MGAA been working on?

We conducted a comprehensive membership survey in July 2021 and everything we’ve done since has been centred around the feedback from that survey.

We’ve introduced a personal lines forum for our personal lines members, a technical underwriting forum and a technical claims forum, which was something we wanted to test with the membership.

Our membership asked for more support around technical services - the first step was the appointment of a new technical services manager, Tim Richards, this June. He will look at ways in which we can improve the technical support and insights our members want. 

We’re also investing in upgrading our website over the next year or so, which is very important to us, but even more critical to the membership and their access to information. We’ve also been very successful in trying to grow the membership and attracting new members over the past year.

The MGA market continues to grow and become more innovative each year. What innovations do you want to see MGAs leading the way in?

I would like to see MGAs continue to invest in AI and data enrichment first and foremost - this will have a huge impact on their overall operations and allow them to offer even better service to broker partners.

We’re also likely to see the introduction of some quite interesting capital capacity models and it will be good to see how MGAs adapt to them.

We’ll also continue to see MGAs introducing new products that mirror what their broker partners require - particularly around the customer journey and how claims are made.