Here are more insurtech solutions available than ever before, but if you’ve evolved to the point where they’re useful, how do you choose? James Elliott, MGA Lead at Instanda, offers timely advice
If you’re an MGA who’s been postponing the ‘tech conversation’, chances are you’ve reached a tipping point – the point at which a series of small changes or mishaps become significant enough to cause a larger change. and more importantly. From an MGA’s perspective, it’s when you realize that in order to grow your business further, you need to adopt a more comprehensive technology solution (among other things) to support your operations. What and when depends on your current process layout, the size and capabilities of your team, and the internal culture you have created.
In our experience of the MGA market, the “tipping point” is most often seen three to five years after an MGA has launched, and once it writes approximately $5-10 million in written premiums gross (GWP). At this stage, the organization tends to get out of “start-up” mode and seek to integrate new activities in a more structured way. As proprietary solutions cringe – and the workload associated with manual policy administration becomes unaffordable – many MGAs are finding themselves in the market for a more comprehensive technology solution to support and accelerate the next phase of their life cycle.
WHAT TO DO WHEN YOU REACH A “TIPPER POINT”
“Many MGAs have been aware of the impending need for a more modern software solution for some time. The most common issues that typically drive an MGA to its tipping point include: Manual Underwriting Workflows Without the right software in place, the underwriting and quoting process can be long and tedious, even for risks that are traditionally less complex.
Whether it’s emailing brokers and double-entering risks, managing policy information, or navigating between spreadsheets to calculate premiums, it’s easy to lose or move important information.
In today’s world, underwriting doesn’t have to be that way. Underwriters don’t even have to be involved in every application. Insurtech has the ability to issue instant outputs that could otherwise take hours or even days with manual processing. In a competitive market, this can mean the difference between winning and losing new business.
Studies have shown that 47% of internet users will leave a page if it doesn’t load in two seconds or less. It’s no surprise, then, that insurance customers expect to receive a personalized and affordable quote from their providers, quickly and digitally. When linked into the Instanda platform, custom policies and reporting pages are delivered instantly, with payments scheduled and collected through the Automated Clearinghouse (ACH), resulting in electronic audit trails for the speed and ease of accounting for premiums, paying brokers and carriers and painless renewals. .
Policy Administration Systems (PAS)
These are the foundations that underpin an insurance company’s digital strategy. The capabilities provided by a policy administration system can enable an insurer or MGA to fundamentally alter its ability to compete in an evolving digital insurance landscape. The right PAS is value-efficient, as error-free as possible, and gives insurers the resources they need to modify existing proposals and ensure their product portfolio remains relevant. Broker and client experiences are also enhanced through the automation of key processes and the freedom to access new distribution channels.
Scaling a business without refined PAS — for example, creating new products, onboarding new brokers, and finding new customers — can be a nightmare. A PAS is the primary system of record for the vast majority of insurance organizations, regardless of business class or specialty. Maintaining a proprietary internal SAP (especially one that hasn’t been built in the past five to ten years) often comes with lengthy timelines for any significant changes or progress, and huge overhead, considering the cost of software engineering. Talent.
The key to meeting today’s market challenges lies in moving to a flexible ecosystem, of which an integrable PAS will be a part. To achieve high business value from a successful PAS transformation, you will need to explore new ideas to combat market pressures and make tough business transformation decisions along the way.
Digital PAS systems guide internal resources to easily complete the policy administration lifecycle, only intervening in the process where their skills or expertise are absolutely necessary. Clients are guided through the quote and application journey with simple, clear questions, allowing MGA to repeat these processes for each new client. The cumulative benefits of installing such modern external PAS systems boil down to the ability – and freedom – to launch and implement new products easily and quickly.
No-code platforms like Instanda offer reliability, availability, and security, with the flexibility to deploy new offerings at will and quickly make changes to existing ones. Having the ability to grow your business without worrying about the effect on proprietary technology solutions, or the added expense of hiring new developers, allows MGAs and team members to focus on what they do their best – whether it’s underwriting, internal collaboration or fostering client relationships.
Most importantly, PAS systems provide a single view of the truth, ensuring data is readily available when needed. Secure and accessible storage of information allows AGs to regularly analyze performance, forecast their future, and monitor client treatment, expectations, and results.
Payment and delivery
The repeated failure to provide the right data to the right stakeholders (eg carriers, customers and regulators) will create a very real barrier to the success of an MGA over time. As such, maintaining proper audit trails should be at the forefront of any digital innovation plan, especially when considering a period of substantial growth.
Insurers and MGAs also rely on their software solutions to ensure full and efficient compliance with increasing regulatory requirements, maintaining consumer protection and risk mitigation. Agile product testing, like that which can be done with Instanda, allows MGAs to design a product, deploy it in weeks, and then distribute it across multiple channels in different ways. This allows companies to crystallize their product strategies in a fraction of the time required by traditional systems, without sacrificing any of the security measures necessary to ensure a product is sealed before it is released to market.
So what should MGAs be looking for?
Here are five key features an MGA should have on their shopping list when they reach their tipping point and start looking for technology solutions:
- Ease of integration
- Truly Cloud Native
- No code (i.e. ability to configure products without developers)
- Flexible workflows and distribution channels
- A corporate culture that aligns with theirs.
Fortunately, with new generations of innovative software-as-a-service (SaaS) insurtechs becoming more economically viable, the choices available to MGAs are continually improving. Global insurtech funding hit an all-time high in 2021, with around $15.4 billion across 566 deals, more than double the total funding for 2020. There are now a plethora of solutions that aim to help these companies to minimize their reliance on rigid information. homemade solutions, spreadsheets and manual communication leads.
Cultivating innovation and entrepreneurship in an industry that is inherently risk averse can undoubtedly be tricky, but putting it aside could harm your market competitiveness and operational efficiency. Using an insurtech’s automated underwriting services as you grow your business promises improved agency communications, better tracking, more consistent underwriting decisions and faster throughput, all resulting in a increased return on investment.
Eighty-five percent of insurance CEOs believe that rapid technological change threatens their company’s growth prospects. It’s time to start innovating and operating like a technology company: quickly, simply and with agility
This article originally appeared in The Insurtech Magazine #08, Page 22-23