UK Managing General Agents (MGAs) have become more receptive to the potential benefits of greater InsurTech integration, but remain concerned about the impact of continuing uncertainties around Brexit, according to the latest MGAA Matters survey.
The survey, which represents a research based partnership between the Managing General Agents Association (MGAA) and Castel Underwriting Agencies Limited, found that respondents’ views on several key issues had changed significantly since October 2017, when the last survey was conducted.
For example, over 42% of respondents felt that InsurTech helps MGAs evolve their business model to be more customer-centric, compared with 22% in October, while 38% are now considering developing an InsurTech strategy for their company, an increase of 13 percentage points.
MGAs also appear to better recognise the benefits they can bring to InsurTech start-ups, with over 42% of survey respondents now saying that MGAs currently deliver expertise that is lacking, compared to 28% last year.
Moreover, less than 4% of respondents are now unclear about the benefits of InsurTech opportunities, compared to 12% last year, while the proportion that is not actively considering investing in InsurTech remained static at around 12%.
Mark Birrell, Chief Executive Officer (CEO) of Castel, said: “The survey shows a growing confidence and commitment from MGAs to harness the opportunities that InsurTech can bring. The future success of MGAs and InsurTech are interlinked and so the fact there is increased optimism in the sector has to be welcomed.”
Concerns around the affect of Brexit on MGAs were also highlighted by the survey, with 23% of respondents that wrote European business saying that the main impact would be on the availability of capacity or plans with capacity providers, while nearly 20% cited concerns about future regulation costs and compliance.
The detrimental impact of Brexit on pricing and product development was also mentioned by 15% of MGAs, while 12% were concerned about their subsequent ability to meet the needs of distribution partners, and 8% indicated they were currently unable to form growth or development plans.
Despite the uncertainty, the survey found that over 23% of MGA respondents already had a Brexit strategy in place, while 30% were working with their capacity providers on a plan. Less than 8% said they would wait for greater certainty regarding Brexit before developing a plan.
Additional findings stated that 57% of respondents expected the number of specialist and niche MGAs to increase over the next decade, while 38% felt that MGAs would be at the forefront of addressing emerging risks and new products over the same period.
38% also said they expected greater diversity of capacity provision over the next decade, while 31% predicted that consolidation would result in fewer MGAs and 35% expected InsurTech firms to begin the move to become MGAs.
Peter Staddon, Managing Director of the MGAA, commented: “This latest survey highlights how MGAs are willing and able to adapt to the new and emerging dynamics of the market. The uncertainty of Brexit and the shape of the future trading environment is a challenge for many.
“The government must take into consideration the significant investment in time and resources businesses are making in trying to prepare. Greater clarity around what the future will look like is important to ensure these actions have not been in vain.”
