Harnessing Digital Technology for Increasing the Value of MGAs and Program Administrators

 

The value and purpose of Managing General Agents has varied throughout the years and today is as high as ever. MGAs originated 100+ years ago from east coast insurance companies expanding to the west without having to open offices there. As time progressed, the carriers did expand their resources – diminishing the roles of the MGAs.

Today, the role of MGAs has expanded. MGAs are typically vested with underwriting, binding, issuance and policy life cycle authority from the carrier(s). Most are involved in specialty lines and possess the underwriting expertise. MGAs benefit carriers with their expertise that may not be available within the company’s offices and would be more expensive to develop in-house.

Some MGAs and Program Administrators are striving to increase their worth in the insurance value chain. Some are seeking to diversify by developing new niche markets and implementing ratequote- bind and policy lifecycle processes that are in line with their customers’ needs. So who are the target customers and what are their needs?

THE ADVENT OF DIGITAL NATIVES
The world has changed. The Oxford Living Dictionary defines a digital native is a ‘person born or brought up during the age of digital technology and is familiar with computers and the internet at an early age’. This Millennial generation (born in the last two decades of the 1900s) now is the largest living generation in the US, with significant buying power and market influence. Millennials are the first generation to include people who don’t remember a time before the internet.

According to the US Census Bureau, the Millennial Generation – at 92M – is currently the largest demographic of the US population. These Millennials have grown up in a time of rapid change, giving them a set of priorities and expectations sharply different from previous generations. By 2020, 33% of small businesses will be owned by Millennials and 60% will be owned by Millennials & Gen Xers combined. Millennials constituted 34% of the workforce in 2015. These Millennials are always connected, always networked via social media, are multi-taskers, seek instant gratification and value personal and relevant interactions.

Whether these constitute the end insureds, or producers & employees, coverholders, MGAs & program administrators must account for their preferences if they want to be successful with this important demographic!

DIGITAL ENGAGEMENT IN THE ERA OF DIGITAL NATIVES
Coverholders, MGAs and Program Administrators must create relevant digital experiences for their distribution channels and employees keeping in mind the Millennials as a baseline. Some consider this as re-inventing themselves and making them easy to do business with. But they must keep in mind that just like everything else, the expectations have changed. Manual processes must be replaced by seamless digital experiences.

Digital is radically transforming the way P/C insurance industry operates today. The recent proliferation of digital channels and devices are influencing buying behavior faster than the insurance industry can keep up with. Agents, employees and insureds have been conditioned in their day-to-day lives to expect seamless and consistent digital experiences personalized to their needs when interacting with their service providers online.

“Digital is radically transforming the way P/C insurance industry operates today. The recent proliferation of digital channels and devices are influencing buying behavior faster than the insurance industry can keep up with. Agents, employees and insureds have been conditioned in their day-to-day lives to expect seamless and consistent digital experiences personalized to their needs when interacting with their service providers online.”

HOW TECHNOLOGY GOT US HERE
We’ve talked about how MGAs and Program Administrators have evolved. Now let’s see how technology has evolved to get us where we are today and how the intersection of technology and MGA capabilities is moving forward.

The advancement in computing capabilities over the last few decades and widespread accessibility has made paradigm shifts in how companies do business. It all started with the remarkable rise of personal computers in the 80s. Since then, there has been an exponential growth in computing power accompanied by rapid drop in personal computer prices bringing computing capability to millions of households. Then came the mobile phone and changed the way people communicate forever.

We soon have billions of people walking around with smartphones, as powerful as PCs, which provide unprecedented ability to access communication channels anytime, anyplace. The most recent technological innovation, which is transforming businesses, is the Internet of Things, where computing capability is extended to trillions of physical ‘things’ like buildings, cars, machines, wearables, etc., indicating unfolding of a new era of connected devices.

Digitally innovative companies are leveraging this highly prevalent computing capability to their advantage and brought waves of innovations to businesses disrupting the traditional models. The wave they brought first was in the form of Internet that provided easy access of information to everyone. Then came ecommerce that leveraged mobile and internet based-technologies, and revolutionized the way products can be bought or sold virtually all around the globe.

And in the most recent time, there is the social media networking wave allowing people to connect with other people. These innovative companies are now leveraging Digital to bring innovations to the insurance industry. Digital is empowering them to bond with their customers, partners, and employees. This bonding is helping them to provide meaningful information to customers, serve them even better, deliver more benefits & advisories, and establish longstanding relationships.

To thrive in the digital economy, it is pivotal that MGAs need to digitally engage the customers, agents, and employees whenever and wherever they want, across all touchpoints. This enables them to effectively compete and thrive in the insurance marketplace. So what are key capabilities required to digitally engage customers, agents and employees?

LAUNCHING NICHE PRODUCTS AND ENABLING SEAMLESS RATE-QUOTEBIND EXPERIENCES
Whether coverholders, MGAs or Program Administrators are seeking to launch products based on ISO/ NCCI/AAIS or implement rate plans provided by their carrier markets or Lloyds syndicates, these need to be extended digitally to agents, brokers and employees. This requires modern rating systems that have out-of-the-box support for the bureaus, the ability to rapidly setup rate plans and modify these plans.

ENABLING CUSTOMERS, AGENTS AND EMPLOYEES TO BE ABLE TO DIGITALLY ACCESS THESE PRODUCTS AND MARKETS
Further, these products and plans need to be extended to any channel or device sought by agents, customers and employees to provide a truly omni-channel experience – that is seamless across devices and channels. Let’s look at this a bit closely – an agent may be at the point of sale capturing details about a business, and may seek to submit directly to the agency of choice or convenience. Or the agent may seek to email an ACORD application. The agency’s employees must then have ready access to the submission without having to rekey the data – and today’s technologies easily allow extracting the data from ACORD submissions into electronic forms that can prefill the rate-quote- Continued From Pg 33 HARNESSING DIGITAL TECH bind systems for faster turnaround of quotes. Another key expectation from digital natives and others alike is that they want to be guided through the rate-quote-bind process – such that marketing content, help and information associated with insurance concepts can be surfaced during the process and not be available in a separate static website with brochures. They may want to check appetite upfront, understand what coverages are ideal for a risk type, get recommendations for coverages and limits, and so on. Finally, preparing quotes and sending these quotes electronically in the channel they want is also a key expectation, with a mechanism for them to share with their customer to electronically sign a proposal. CONCLUSION Savvy coverholders, MGAs and program administrators will recognize that they must harness technology to effectively increase the value of targeting niches, marketing to them, engaging them through the buying journey and servicing them in the manner they want. Cloud-based modern software is readily available today for rapid deployment to meet some of these needs and importantly, should be able to evolve to meet these ever changing expectations fueled by rapidly changing technology.

About the Author:
Abhijeet Jhaveri is Chief Marketing Officer at ValueMomentum and leads ValueMomentum’s software-as-a-service business targeted at the MGA, Program Administrator and Coverholder markets. Abhijeet and his team works with MGAs, Program Administrators and Coverholders to deploy ValueMomentum’s iFoundry rating software with support for ISO, NCCI, AAIS and proprietary rate plans and extend these to agents, customers and employees with ValueMomentum’s BizDynamics Digital Experience Solution and App2Data ACORD forms processing Solution.

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