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- Tech is no longer a differentiator for MGAs. What matters is the right tech - tech that adapts to, integrates with and supports your business strategy.
- Using carrier systems is cost-effective but limiting, especially if you work with multiple carriers.
- Agency Management Systems offer simplicity but rarely scale. They fall short on third-party integration, flexibility and supporting complex growth.
- API-first core insurance platforms offer MGAs flexibility, speed and scale. They allow you to build tailored, future-proof tech stacks that grow with your MGA.
- Choosing the right tech strategy means aligning with your business goals. Clarify your priorities - whether growth, efficiency or CX - then choose the tech that moves those priorities forward.
Technology is no longer an MGA’s strategic advantage
The prevailing industry discourse is that technology is an MGA’s differentiator.
However, as the rate of technology adoption by MGAs increases, that advantage is shrinking at an increasing speed.
The conversation should no longer be about having technology - rather, it should be about having the right technology.
The right technology will enhance your underwriting precision, streamline operations, and help you deliver superior products and experiences to customers. The wrong technology will be a barrier to testing and iterating new product lines, introduce inefficiencies and not enable you to easily integrate with other systems.
Your tech strategy should not only support your business. It should adapt to your business and amplify your strategic advantages.
Technology adoption strategies for MGAs
MGAs can adopt at least 3 different strategies when integrating technology into their operations.
The approach you ultimately choose should reflect your specific business model, growth aspirations, and operational needs:
1. Carrier Systems
Advantage: Cost-effective
Affiliated MGAs often use the technology infrastructure of their parent insurance carriers. This may well be the most cost-effective and simplest approach where the carrier has already vetted the insurance software and the MGA works with a single carrier.
The major benefit is that integrations between the MGA’s operations and the carrier may already exist, in which case there is limited work required to integrate your systems.
Disadvantage: Limited flexibility
Carrier systems will typically be designed for a range of applications and may lack the configurability that MGAs require for niche markets and tailored products. Without the flexibility to customise tech for specific products and distribution channels, an MGA’s ability to quickly test and iterate is stifled.
Disadvantage: Legacy
Modifying legacy carrier systems to respond to market changes and bespoke requirements can be slow and cumbersome (if possible at all), hindering the agility that MGAs depend on to survive.
Although cost-effective initially, this model may not support long-term innovation and responsiveness.
Disadvantage: Multiple carriers
This model is also not feasible where an MGA works with multiple carriers, where each carrier has its own unique system and integrations. Data consistency will be a challenge and streamlining operations across carriers will be difficult.
2. Agency Management Systems (AMS)
Agency Management Systems (AMS) handle policy sales, but also allow agencies to manage other aspects of the customer lifecycle. They typically compete with CRMs.
Depending on the AMS, the functionality offered may extend to policy management (rating, quoting, renewals etc.), customer communications, automation, reporting, analytics and payments. Some MGAs, particularly those who have evolved from traditional agencies, may wish to retain their existing AMS platforms to manage client relationships and policy administration.
Advantage: Simplicity
Compared to modern core insurance software that handles the full range of insurance operations, AMS’ are primarily focused on customer relationship management.
Their basic functionality may make them more suitable for managing simple, standard lines of business and maintaining customer records. However, AMS platforms may fall short in areas critical to MGAs.
Disadvantage: Interoperability
Connecting with third-party data sources or advanced analytics tools can be challenging. Without robust APIs, it is significantly more difficult to integrate legacy AMS platforms with external systems.
Disadvantage: Growth
As you expand into new programs or develop more complex products, an AMS may not support your increased business demands.
If your MGA has ambitious growth plans or you are looking to diversify your offering across multiple business lines, adopting an AMS may necessitate managing multiple systems, leading to increased complexity and costs.
3. API-first core insurance software
MGAs wanting to future-proof their businesses are increasingly investing in modern, API-first core insurance software.
Advantage: Flexibility
A flexible and configurable policy administration system will adapt to your underwriting requirements, tailored products and distribution models.
This will enable you to quickly develop, test and iterate products so you can respond immediately to customer and market demands. You should be able to add custom fields, workflows and set up reports that can be easily configured to meet your requirements.
Advantage: Integration
This strategy recognises that a single solution will not meet all of your business’s needs - in fact, having a single system can be a disadvantage.
Core insurance software with mature, robust APIs will allow you to seamlessly connect with third-party data providers, analytics tools, distribution portals, ratings software, claims front-ends and more. This allows you to tailor your tech stack to your needs, tapping into the efficiencies and value that using right-sized tools for specific jobs brings.
Advantage: Scalability
Modern, cloud-based insurance software will scale with your needs - on demand. This will allow you to support distributed teams without the extra overhead and cost of maintaining your own infrastructure and hardware.
In short, your technology and costs scale in-line with your business needs.
Disadvantage: Customisability
Most modern core insurance platforms offer a standard, cloud-based solution that serves multiple clients, and that can be configured to meet individual clients’ needs. This means you are less likely to be able to customise your infrastructure and technology to precisely fit your exact unique business requirements.
Customisability isn’t necessarily a good thing though - it can often be expensive and time-consuming.
Selecting flexible, modern insurance software that meets your business’s primary needs is crucial.
If you need guidance on whether to build or buy core insurance software, read this blog post to find out which option is best for your business.
Which technology strategy is right for your MGA?
Choosing the right technology adoption strategy for your MGA is not a one-size-fits-all decision.
It’s crucial to first understand and then prioritise your business’s objectives. Are you prioritising:
- Market expansion?
- Product expansion and diversification?
- Adding distribution channels?
- Elevating customer experience?
- Improving operational efficiency?
Once your business's key objectives are clearly established, assess your team’s internal capability to manage and maintain technology systems.
Then, once you have conducted a thorough analysis of these factors, you can develop a tech strategy for your MGA that not only supports but propels your business forward. Find out more here about how we support MGAs, schemes and other intermediaries to implement their technology strategies.
If you’re unsure whether adopting an API-first core insurance platform is the right strategy for your business, schedule a call with one of our experts to find out more about how we can help your MGA achieve its objectives.
