Why smaller is better for MGAs looking to innovate

Sometimes even simple technological changes can help managing general agencies (MGAs) become more innovative, a software provider said last week at Insurance-Canada.ca’s MGA Technology Symposium in Toronto.

“What everybody should be thinking about critically is where is my company today and what sort of [technology] aspects can I improve to gain some benefit?” said Märtin Kosk, commercial manager at Insly, a London, UK-based software provider for MGAs, insurers and brokers. “Think where you are and what you can do. Don’t try to do everything at once, just pick something and get going.”

For example, say your MGA’s employees have data stored in folders on their computers. “The solution is quite simple,” Kosk said. “Get some kind of system, preferably an online system, so you can have all that data stored centrally.”

What if you have a system, but are still using a lot of manual processes in quoting, binding and creating policy documentation? “Then the logical next step would be to add some quote-and-bind element to the system you are using or another system that does that. Try to really make the simple processes you do day-to-day more efficient.”

But let’s say your MGA has already made all of those standard processes more efficient and is selling online through broker or customer portals. Where do you go from there? Data would be key, Kosk said. “Data warehouse solutions and analytics solutions come in handy in fully understand what it is you are writing,” he said. “We see that if you have flexible rating tools and you have an analytics tool based on the insight you get from the analytics tool, you are able to adapt your rates, for example, to be more competitive, profitable and so on.”

If an insurance company were to take all their processes and make them completely digital, they could reduce their combined ratio by 21%, according to one study. “A strong argument for innovation: saving on the operational expenses.”

Kosk pointed to the recent Canada Post strike as an example of how reliant the industry is on paper-based processes. “Back home in Estonia, I’ve never purchased an insurance policy anywhere else than online and I’ve never had policy documents to me delivered in any other way than electronic,” he said. “I remember a few months ago you had a lot of talk in the local insurance media about the Canada Post strike; there were concerns surrounding that. To me, that seemed a little bit weird because I just never had that problem personally.”

Imagine if instead of asking 50 questions from a customer to get a quote, it could be based only on postal code. One company that Insly worked with managed to do so.

“Turn it around a bit and ask, ‘how would Amazon or Uber look like if it was on the same level with today’s insurance experience online?’” Kosk said. “Probably we would be filling out two-page forms for buying something or ordering a taxi.”