January 17, 2020 by Greg Meckbach
Technology could make it easier to start up new managing general agents – which is good news for some and bad news for others, panelists suggested during a recent webinar.
“If you [as an MGA] are sitting there thinking, ‘Oh I do this through my 30 years of expertise and the relationships I have built up,’ then what is going to happen … is slowly, people who are using technology are going to start picking away at what you do and they will start by picking away at those areas that are most valuable to you,” said Paolo Cuomo, London-based principal at Boston Consulting Group.
“Ultimately, if someone in the insurance space does not embrace technology, they will be in big trouble in a few years’ time,” Cuomo said during the A.M. Best Company Inc. webinar, MGAs Leveraging Insurtech to Transform Operations, Drive Business.
Cuomo is co-founder of InsTech London, an insurtech association. Cuomo was asked by webinar moderator John Weber whether insurtech is a “game changer” for managing general agents.
While MGAs make complex underwriting decisions, they do not actually hold the capital, noted Cuomo.
Also on the panel was Travis MacMillan, chief business officer at Bermuda-based Xceedance, which offers technology and consulting services to the insurance industry.
Xceedance meets with five to six new managing general agencies every week, said MacMillan.
Weber asked MacMillan why there are so many new MGAs emerging.
“It’s a speed thing,” said MacMillan, referring to technology changes over the past five years. “Today, everything is instantaneous and I think it creates a lot of positive disruption.”
Added MacMillan: “When you combine insurtech technology with MGA program expertise, it’s really a recipe for success and today I think with the advent of all the technology opportunities that are out there for MGAs to leverage, you need a lot less capital to get one started off the ground.”
MacMillan contrasts today’s technology with how things worked when he started in the industry in the early 1980s.
“Everything was paper. So an MGA would send a bordereaux via snail mail. A carrier would have to take that and go through and do all the coding of that.”