MGAs are running out of road with digital self-built platforms; but as Jonathan Stewart, Root, suggests, for those looking to scale up their operations there is another option outside the traditional "build or buy" dichotomy…
MGAs are revered for their knowledge and experience of niche, specialist insurance lines. Their ability to access diverse customer groups and unique risk data further adds to their attraction, as does their use of progressive technology, which has enabled them to move away from the constraints of traditional legacy systems.
With such qualities, it is hardly surprising that investors and carriers are confident in the current MGA model - a point highlighted in a recent Clyde & Co report. Such praises are testament to the MGA market and their ability to meet specific, and sometimes challenging, carrier requirements.
Times, however, are changing. Regulatory overhauls are on the horizon, claims are on the increase, and new opportunities for expansion into Europe and beyond are opening up. For many MGAs, their digital self-built platforms are pushing five, even six years old, and to meet these upcoming challenges and opportunities they will need the right tech behind them. The time has therefore come for many to either build or improve an insurance platform, or to opt for an off-the-shelf solution.
Naturally, there are pros and cons to both these options. To “build” an insurance platform from scratch, for instance, will mean MGAs can customise their offerings to their heart’s content; however, to deliver a full build is a time-consuming and resource-intensive process, one which may divert an MGAs focus from doing their actual day job - innovating for their customers.
The option to “buy” an off-the-shelf solution might appear to resolve these drawbacks; however, the ability to customise products and processes is often impacted, thereby hindering an MGAs efforts to differentiate themselves in a competitive market.
It would seem that neither the option to build, or to buy, offers a solution for the modern-day MGA.
The best of both worlds
While Shakespeare's Hamlet may have been faced with all but two options in his famous soliloquy, for those MGAs looking to scale up, happily there is a third option open to them: to partner with a modern, low-code cloud insurance platform provider.
Drawing on the positive aspects of both build and buy options, platform partnerships provide MGAs with access to core performance capabilities as building blocks, which allows them to develop and distribute innovative insurance products that are tailored to their customers’ needs, all while avoiding excessive development times and resources. By choosing the “partner” approach, MGAs can focus their efforts on their unique value proposition and actually build on those all important differentiators that set them apart in the market.
But partnering up isn’t all just about time savings and increasing speed to market; it’s about ensuring MGAs have a continuously improving platform, ongoing maintenance, and skilled support - three key deliverables which here at Root we are proud to offer.
By moving away from the traditional "build or buy" dichotomy and working with a flexible low-code platform service provider instead, MGAs can create, customise and differentiate their insurance offerings - without building (and maintaining) core functionality from scratch. In short, only through a partnership can they deliver customer-centric experiences and rapidly seize market opportunities before somebody else does.
