MGA Q&A: MGAs need to add value to survive – Renovation Underwriting

As UK brokers respond to this year’s MGA Survey, Insurance Times catches up with the managing director of Renovation Underwriting, Douglas Brown, about the challenges MGAs are currently facing and what considerations MGAs need to keep an eye on moving forward.

Brokers can participate in 2022’s MGA Survey until midnight on 14 August 2022.

The 2022 MGA Survey investigates the service levels of MGAs over the last 12 months. How has your MGA adapted to the challenges it has faced over the last 12 months? 

We have invested heavily in technology to enable us to get the best from our underwriting team, who have also expanded to meet demand.

Premium growth in 2021 was around 100%, while growth in premium this year so far stands at around 40%, so the likelihood of us coping with this scale of growth without making any technology investment was small.

Demand for a quick turnaround of quotations and mid-term adjustments (MTAs) seems limitless, as the speed of business continues to increase. Having the right mix of human and IT resources to fulfil expectations is key to our proposition.

There has been a huge drive across the industry to ensure digital capabilities are in line with customer expectations. What changes has your firm made around digital innovation?

At Renovation Underwriting, there has been a significant increase in the use of bespoke software systems to develop a broker portal that delivers accuracy and speed.

For example, systems like WhatsApp can assist claims reporting and the transfer of information, particularly in picture format, which is often more helpful than the written word or trying to pass high res files by email.

Why should brokers stick with MGAs in an ongoing hard market?

MGAs need to add value to to survive. This comes in a number of ways:

• By providing access to risk placement that the traditional insurers find difficult or which is outside of their appetite.
• Offering the opportunity to combine markets to achieve a better result for the policyholder.
• Underwriting technical expertise that general insurers find hard to match.
• Providing broker support and education.
• Having differing lines of distribution that fit a number of market business models.

There continues to be broker concern around the potential reduction or removal of capacity from an MGA. What is your view on this?

Smart, and lucky, MGAs make money for their capacity providers through risk selection - in a hard market, this becomes even more important.

We have worked with the same capacity providers for the last 10 years. Whilst this doesn’t always mean we wring the highest level of brokerage out of them, it does mean that we have a stable base from which to operate.

In the dash for premium, many businesses forget that the more meaningful metric is profit. Though we cannot deliver that every year, if the propensity over time is that an MGA delivers a good return for its capacity provider, then it will survive.

Short-term goals seldom track well with a long-term business plan and it is the refusal to do what is expedient, rather than what is meaningful, that sets winning MGAs apart from those that appear more transient in nature or which are forced to look for partners to maintain their proposition.

Based on the insights of last year’s MGA Survey, and other research conducted, what has been the direct or indirect result on your business’ service or product developments? 

Our product set remains unaltered in the wholesale market, however our reinsurance proposition has expanded as a result of further considerations around distribution. Our service levels have been maintained and are market-leading in our arena.