INSURANCEBUSINESS.CO.UK ISSUE 3.01
BROKERS ON MGAs Brokers name the best MGAs in the industry THE NEXT WAVE OF TECH
How AI, Big Data and more could shape the industry in 2018
WINNING THE TALENT WAR
Cunningham Lindsey’s Jane Tutoki on what insurance can do to attract job-seekers
WILL AMAZON GET INTO INSURANCE?
And if so, how would the online retail giant’s presence impact brokers?
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UPFRONT
EDITORIAL
www.insurancebusiness.co.uk EDITORIAL Editor Paul Lucas Journalists Lucy Hook, Bethan Moorcraft, Heather Turner Editorial Researcher Hannah Go Production Editor Clare Alexander
CONTRIBUTORS Philipp Kristian Diekhöner
ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Traffic Manager Ella Dayandante
SALES & MARKETING Vice President of Sales John Mackenzie Business Development Manager Nathan Beach Sales Manager Dane Taylor Mktg & Comms Manager Lisa Narroway Marketing Executive Emma Kemmery
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Tim Duce Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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New year, new industry?
A
new year has arrived, and insurance professionals across the UK won’t just be hoping to fulfil their personal resolutions – they’ll also be looking to implement plans to reach new business goals. Aside from enhancing revenue and boosting customer service, what are the issues that the industry at large must look to address in 2018? Two of the major complexities facing insurance are attracting new talent and implementing and capitalising on the latest technology – and the two could go hand-in-hand. “Technology is a hot topic in the insurance industry all around the world,” Robert Sanders Jr., president and founder of Preferred Specialty, told Insurance Business UK. “From a technology standpoint, millennials tend to be fresh with ideas and fairly savvy. We all know the insurance industry has a technology challenge that has to be addressed. So why not ask the incoming millennial workforce to help us take our established business to the next level with technology?”
“Why not ask the incoming millennial workforce to help us take our established business to the next level with technology?” The reality is that insurance is a hotbed for new technology – so much so that ‘insurtech’ has become its own term, separate from the ‘fintech’ label that is slapped on most startups in the financial sector. It’s not just disruptors like Lemonade or smart home tech companies like Roost, either – most mainstream insurers have digital offerings and are increasingly delving into areas such as artificial intelligence and chatbots. For brokers, the challenge is keeping up. “My main piece of advice is for insurance companies and brokers to start small,” Bob Mozeika, Munich Reinsurance America’s innovation executive, told IBUK. “You must start somewhere – and right now. This is not the time to be a fast follower, because that means everyone else is one step ahead. You’ve got to start using technology to collect new data and build a broader knowledge base to move your company on.” So on your to-do list for 2018, put ‘embrace technology’ at the top – and while you’re doing it, shout about it. Moving your business one step forward will attract the talent to help you leap ahead of the competition. The team at Insurance Business UK
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UPFRONT
STATISTICS
A world of peril Predictive modelling of natural disasters reveals the fact that, even now, too much remains uninsured THE NATURAL disasters witnessed over the past year provide a powerful reminder that the insurance industry can’t afford to be complacent. Hurricane season brought recordbreaking rainfall and massive flooding to the US Gulf Coast and parts of the Caribbean, and Hurricane Ophelia even made landfall in the UK. Two major earthquakes struck in Mexico in September; the same month, India, Nepal and Bangladesh experienced the worst monsoon floods in a decade. Summer and
22%
Percentage of catastropherelated economic losses estimated to be insured in Europe
19%
Percentage of economic losses estimated to be insured worldwide
autumn also saw wildfires raging through California, Portugal and northern Spain. It’s not just developing nations that exhibit a troublesome gap between what could be insured and what actually is: Global loss metrics revealed that much of the damage caused in Texas by Harvey’s flooding was uninsured. Similarly, models show that if a major earthquake should strike California, an overwhelming proportion of the expected damage would be uninsured.
86%
NORTH AMERICA Insured $208.56bn Uninsured $340.28bn
WHAT’S AT RISK GLOBALLY? According to AIR Worldwide’s modelling of extreme event risks – which include estimates of damage to roads, bridges, railways and sewers, as well as global electrical and telecommunications networks and other infrastructure – uninsured losses remain a major exposure worldwide, particularly in Latin America and Asia.
$343.6bn
Estimated average annual losses due to catastrophic events worldwide
Percentage of global insured losses attributable to catastrophic events
Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
LOSSES ON THE RISE
MAPPING THE INSURANCE GAP
Projected average annual insured losses have increased worldwide since 2012, reflecting both the number and value of properties in high-hazard areas, as well as new modelling capabilities.
The difference between insured and insurable loss tends to be most pronounced in regions where insurance penetration remains very low, such as Asia. However, in regions with generally high insurance penetration, such as North America, there’s still a worryingly large insurance gap.
$80bn
$60bn
Asia
$11.0bn
Europe
$11.1bn
$47.2bn
$17.8bn $4.8bn $8.9bn
Latin America
$40bn
$48.8bn
$67.4bn
$72.6bn
$74.4bn
$80.0bn
$78.7bn
$0
$59.3bn
North America $20bn
2012
2013
2014
2015
2016
2017
Average annual loss Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
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$89.9bn $3.0bn $3.4bn
Oceania $0
$10bn
$20bn
$30bn
Insured
$40bn
$50bn
$60bn
$70bn
$80bn
$90bn
Insurable Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
ASIA-PACIFIC Insured $61.09bn Uninsured $617.79bn
EUROPE Insured $61.51bn Uninsured $218.08bn
LATIN AMERICA Insured $39.69bn Uninsured $243.81bn
OCEANIA Insured $23.85bn Uninsured $40.61bn
Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
THE LION’S SHARE OF LOSSES
THE GREATEST PERILS
According to AIR’s models, which cover natural disasters in more than 100 countries, catastrophes contributed to an average of 86% of insured losses between 2000 and 2016. The real numbers, however, tend to be higher, owing to unexpected events (like severe thunderstorms in Western Europe in 2016) that weren’t included in models.
Severe storms and hurricanes are responsible for nearly two-thirds of the expected catastropherelated insured annual losses modelled by AIR.
PERCENTAGE OF INSURED LOSSES ATTRIBUTABLE TO NATURAL DISASTERS 100%
Severe storms* 32% Tropical cyclone 32% Earthquake 15% Crop 12% Flood** 4% Wildfire 3% Terrorism 2%
90% 80% 70% 60% 50%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
*Includes extratropical cyclones, severe thunderstorms and winter storms **Excludes US inland flood Source: 2017 Global Modeled Catastrophe Losses, AIR Worldwide
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UPFRONT
HEAD TO HEAD
How would Amazon entering the industry affect brokers? The online retail giant has started making moves toward offering insurance. Is this potential disruption a pro or con for brokers?
Geoff Stooke
Managing director Modern Risk Solutions “My business would look forward to the prospect of working with Amazon on highly customised insurance solutions for clients across the technology sphere. Most of our clients are technology-enabled and have existing relationships with Amazon through Amazon Web Services [AWS]. In that space, Amazon has been a proven provider of affordable virtual servers that offer scale and active customer and managed services. I am also enamoured of the fact that Amazon has a history of intermediating their services in AWS through their Amazon Partner Network – perhaps Amazon would intermediate their insurance distribution through such partnerships.”
Deepak Soni
Director of commercial intermediary AXA Insurance “Both brokers and insurers, especially volume-based personal lines providers, could be impacted by Amazon’s possible entrance into the insurance market. Amazon is renowned for cutting the cost of products and distribution and taking a customer-centric approach built on trust, transparency and convenience, and that is an approach the insurance industry needs to focus on. Any move by Amazon into the industry should be seen as an opportunity. Tough competition, especially from a company with a strong track record, is an opportunity for us to look at our own operating models and how we can evolve in the future.”
Scott Guse
Partner, audit assurance and risk consulting KPMG “When you hear the word ‘Amazon,’ you immediately think disruption. I may be going out on a limb here, but I don’t think Amazon’s entrance to the insurance market will cause any major issues for brokers. A broker’s clients are not retail clients, which are an easier insurance sell; they are SME and larger corporates. Provided the broker is doing their job properly – advising, assisting and adding value to their clients – I would expect their clients will remain loyal. The retail/direct insurers … well, that’s a different question. Yes, it will certainly impact them.”
APPETITE FOR DISRUPTION Speculation abounds about Amazon’s designs on the insurance industry after news broke that the online retailer had been recruiting insurance professionals in London. In addition, the company launched Amazon Protect, its own-brand product covering damage, breakdown and theft for purchases made on its site, in mid-2016. Any entry into the insurance market by Amazon is likely to equal disruption, according to Capgemini EVP and insurance lead Seth Rachlin. “There’s no digital property that is more pervasive from a retail perspective than Amazon,” he told Insurance Business UK late last year. “If they do something beyond the warranty business, then it’s likely to be disruptive because people will notice and pay attention.”
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email editor@insurancebusiness.co.uk
The digitisation of trust Clients won’t stop relying on your advice, writes Philipp Kristian Diekhöner, but you can expect them to seek it out online IN RECENT years, tech companies have created a plethora of new platforms to facilitate every conceivable aspect of our daily lives – from how we discover information (Google) to how we communicate (Facebook), date (Tinder), buy (Amazon), travel (Airbnb) and commute (Uber). In recent years, this wave has extended to financial services by providing new ways to invest (Acorns), budget (Mint), bank (N26) and insure (Lemonade). What all these platforms have in common is that they have successfully won over our trust, convincing us to take care of important aspects of our lives in entirely new ways. Technology is becoming the greatest ally in this trust-building challenge. This continuous, beneficial, largely free innovation powered by the internet has rewired us to trust in new ways – and never has our default trust in technology been stronger than it is today. For most of our daily decisions, researching online has become the default option. It’s where your clients refresh their knowledge, try to understand what’s out there and expect to find a balanced overview of the market. In fact, the picture will be skewed toward brokers who understand the value of online impressions and their effect in nurturing your reputation as the right business partner. Making it easy for clients to find whatever information they are looking for at any given moment is extremely important. You should no longer expect them to reach for their phones to make a call – instead, they’ll open a tab on their mobile browser to find what they’re looking for. It’s the same for prospects
looking for the right partner – whomever they find and are likely to trust online already has a significant edge. Advice, experience and the human touch may not be entirely digitised yet, but digital channels are where we look for it. Digital is a part of the purchase journey, irrespective of how the deal is done. And because our brains are made for habit, we can assume these behavioural patterns are here to stay. Beyond understanding the pivotal role digital channels play in purchase decisions and sourcing for solution providers,
tion spans, digital platforms provide instant information and are easily perceived to offer a balanced and impartial perspective. This doesn’t mean your clients will necessarily stop relying on your advice, but you can expect them to take note of what they find online and be influenced by it. It’s paramount to view digital outreach as a way of augmenting existing communication and distribution avenues. The choice isn’t whether to prioritise a digital presence over established channels, but how to make the most of them. Mastering trust-building in a digital context may seem like a huge ordeal without much immediate return, but that’s only true if we do the minimum. Companies that natively understand digital and its role in building trust with today’s buyers end up having the edge, simply because our yardstick on what to trust has changed. It’s an exercise in futureproofing your business and the only way to avoid being left in the wake of the trust shift we are witnessing. Make no mistake: Trust will always be a key asset and value driver in any business relationship. That’s why doctors, lawyers and skilled salespeople will remain generously compensated. It is not without question,
“As digital platforms increasingly enable various aspects of our lives, it makes sense to establish an eminent presence in the context in which so much of our daily interactions already happen” it’s important to appreciate the nature of this shift. As digital platforms increasingly enable various aspects of our social lives and commercial activities, it makes sense to establish an eminent presence in the context in which so much of our daily interactions already happen. Our default channel for purchase decisions has shifted online, and insurance isn’t exempt from this. A lack of digital presence is becoming a major friction point for clients, because it’s where they look first and maybe last. In a world of ever-shortening atten-
though, that they will need to adjust their strategy. As digital technology transforms how and what we trust, our purchase behaviour is evolving with it – and so should your approach to building and maintaining trust with your clientele.
Philipp Kristian Diekhöner is a leading innovation practitioner, keynote speaker and author of The Trust Economy. Based in Singapore, he travels extensively in Asia, shaping the future of startups, corporations and markets.
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UPFRONT
NEWS ANALYSIS
The insurance landscape in 2018 From next-generation underwriting to AI-driven automation, how will technology change the industry in the coming year?
THE INSURANCE industry will get smarter and faster in 2018 with the help of a technological toolkit. Everything from the fundamental process of underwriting to better engagement with customers is on the table, as long as the industry can get its ducks in a row when it comes to taking advantage of emerging technologies and existing data. According to Frederic Valluet, solutions director for insurance at MarkLogic, 2018 is the year that next-generation underwriting will start to spread across the industry. Text mining, machine learning, algorithms and AI will all become more prevalent as methods of analysis and will help provide consistent, highly contextualised information
geospatial and economic drivers – which are all available in data and documents they have accumulated over years, and that they don’t currently leverage.” Emerging risks in particular are an area where the industry has much to gain from getting a grip on data, says Keith Stonell, regional managing director at Guidewire Software. “Protecting people and businesses from cyber risk seems like an obvious insurance opportunity,” he says, “especially with cyberattacks becoming commonplace.” He adds that analysing nontraditional data, which is crucial to underwriting new cyber risks, had been considered dark magic, but the tide is beginning to turn.
“There is a new way to evaluate and price risks, based ... on historical data, relevant insights, geospatial and economic drivers” Frederic Valluet, MarkLogic to underwriters, which will increase their decision-making speed. “Companies will realise that there is a new way to evaluate and price risks,” Valluet says, “based not only on experienced people, but also on historical data, relevant insights,
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“Insurers are working overtime to mine data that delivers personalised experiences and products, like Amazon and Facebook do every day,” he says, “but the industry will mature this year around how it formalises data listening of external sources to evaluate
and price new kinds of risks.” In addition to building a more diverse arsenal when it comes to assessing risk, data has the power to better inform insurers about what customers want, as well as how and when. “Insurance has been a data analysis business since the first actuaries scratched on their parchments,” Stonell says, “so to say data analytics will matter in 2018 is no surprise. But what is going to become a differentiator is how insurers will rely on live analytics to support more personalised engagements in line with individual customer needs.” Stonell adds that while digital transformation thus far has typically been about faster transactions, this year, the goal will be making core insurance systems smarter. These systems will not only allow customers to self-serve more through web and mobile apps, but will also allow providers to ultimately shave down costs. To do that, though, they will need to rely on algorithms to deter-
FAST FACTS: EMERGING TECHNOLOGY
34
employees were laid off by Japanese firm Fukoku Mutual Life Insurance in 2017 in favour of an AI system
75%
of insurance executives believe that AI will transform the industry over the next three years
69
of the top 100 insurance CEOs say they plan to invest in digital infrastructure over the coming years
mine, for instance, whether an application or claim is accepted. “Companies have to streamline their existing processes, which are currently based on different specialised tools, to evolve toward a single operational view,” Valluet says. While insurtech has dominated head-
it has generated. “The future for insurtech and other expressions of industry innovation will lie in how well they are plugged into the mainstream,” he says. “Undoubtedly, it is generating some great ideas and business models, many of which are going to change the industry, but I see that more through assimi-
“Insurers are working overtime to mine data that delivers personalised experiences and products” Keith Stonell, Guidewire Software lines and attracted serious amounts of cash in recent years, it could be facing higher levels of scrutiny and pressure this year. Stonell predicts 2018 will see the sector having to prove that it can justify the “huge amount” of investment and media interest
lation than outright disruption.” Last year, Japanese firm Fukoku Mutual Life Insurance made headlines around the world when it laid off 34 employees, replacing them with an AI system. Fukoku said it believed the move would increase
$283 million
was invested in insurtech firms globally during the first quarter of 2017 Sources: The Guardian, Accenture, KPMG, PwC Insurtech Insights
productivity by 30% and predicted it would see a return on its investment in less than two years. But while most experts agree that AI has a crucial role to play in the industry, Stonell says the focus will be on how AI will automate tasks and elevate insurance work, rather than automating human judgement and eliminating personnel. “In freeing up staff from menial tasks, they can become better engaged with solving their customers’ needs,” he says, adding that a number of new developments are combining predictive data analytics with machine learning around behavioural analysis, which could result in AI that helps staff be more empathetic. “That’s a natural fit for the insurance sector and customer management.”
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PEOPLE
INDUSTRY ICON
AN ADVOCATE FOR INSURANCE Cunningham Lindsey’s Jane Tutoki talks about the recent Sedgwick acquisition and why she’s proud to belong to the insurance industry
JANE TUTOKI is passionate about the insurance industry and the opportunities it can offer. “There are so many good things going on in our industry,” she says, “and I don’t think we brag about it enough. I don’t think this industry is really making all the noise we can about what wonderful places these insurance companies and associated service companies are to work.” The global CEO of loss adjusting and claims management giant Cunningham Lindsey, Tutoki joined the organisation in 2014 from AIG, where she was global head of claims operations. Before that, she held a number of senior roles with Xchanging and Zurich Financial Services. Tutoki began her career as a trial attorney, undertaking defence work for insurance companies. “I consider myself more of a manager than an attorney,” she says. “I started managing employees while I was still in college. So once I became a litigator and represented insurance companies, it didn’t take long until one of them asked me to come in and manage [the] staff counsel office. “My path led me into the management of claim departments,” she continues, “but other attorneys I know have gone into underwriting, stayed in staff counsel or moved to the general counsel office. The insurance industry is an excellent place to develop skills within traditional legal careers or less traditional career paths.” Like many insurance professionals,
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Tutoki believes the industry has plenty of room for improvement when it comes to self-promotion. “We need to make more paying internships available to entice talented young students to choose insurance as a career,” she says. “We also need to share our excitement around the careers we’ve had in insurance. It’s a very challenging and lucrative career path, but I don’t think we insurance professionals have been vocal enough in sharing that with prospective employees.”
The claims experience While the industry has seen many changes during Tutoki’s tenure, she believes the challenges in claims have remained the same, in that most claims experience issues arise from a lack of communication with insureds and a failure to appropriately explain the claims process. “We do best when we empathise with our clients and set their expectations appropriately,” she says. “When it comes to individuals, many people have not had claims expe-
“We need to share our excitement around the careers we’ve had in insurance. It’s a very challenging and lucrative career path, but I don’t think we insurance professionals have been vocal enough in sharing that with prospective employees” For her part, Tutoki is grateful to have been able to enjoy an insurance career that has spanned more than three decades in the claims space. “I’m proud of it, and I would gladly tell anyone else to join me in this career,” she says. “It’s a great industry because you get to help people get back to where they need to be after bad things happen. It’s an honour to be a part of it.”
rience and need to be walked through the process in an empathetic and sympathetic manner. Although commercial customers may be more savvy when it comes to claims experience, they too need to have realistic expectations and proactive communication about the status of their claims.” Reflecting on her time in the industry, Tutoki says there have been many highlights, but the work she’s done to help others
PROFILE Name: Jane Tutoki Company: Cunningham Lindsey Title: Global CEO Based in: Tampa, Florida Previous role: Global head of claims operations at AIG Fast fact: Tutoki holds a law degree from the University of Pittsburgh and is admitted to practice law before the US Supreme Court
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PEOPLE
INDUSTRY ICON
achieve their own goals stands out above the rest. “I’m most proud when individuals I have mentored and coached over the years get promoted into executive positions in various parts of the industry,” she says. Tutoki advises those she mentors to never stop developing their skills, including their proficiency with new technology. “You have to keep pushing those skills and looking for more opportunities to become relevant and valuable to companies,” she says.
The Sedgwick acquisition In terms of her greatest career challenge, Tutoki cites her current role as CEO of Cunningham Lindsey and, more specifically, her experience leading the company through a financial turnaround.
That acquisition – the purchase of Cunningham Lindsey by rival global claims giant Sedgwick Claims Management Services for an undisclosed amount – was announced in December and is expected to close early this year. “This is very exciting for Cunningham Lindsey and its customers,” Tutoki says. “We are two very complementary companies, and we are very excited to better serve our clients with our combined talent base of 21,000 colleagues across the globe.” As for what the transaction will mean for Cunningham Lindsey’s broker partners and insureds, Tutoki says it will not only give them more scale, but also a more diverse, end-to-end product offering. “Because Sedgwick has such a large and
“We do best when we empathise with our clients and set their expectations appropriately … Many people have not had claims experience and need to be walked through the process in an empathetic and sympathetic manner” “We had to transform this business and make some major changes,” she says. “I’m proud of the way my colleagues responded, and we have emerged as a stronger, more profitable company. But it was a challenge that we all managed with a vision, strategic outlook and by doing what was needed for this turnaround journey. All the teams in many different countries worked so hard to get us to this better place, where we were able to be acquired because we were in very good shape.”
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well established TPA business, and we have such a large footprint and very well developed loss adjusting footprint, along with some ancillary businesses, it’s a wonderful fit between the two,” she says. “There’s really very little overlap of services, so it gives us a lot of green fields and a lot more ways to service our clients in a much deeper and better way. We are excited about the next step in this journey with Sedgwick and Vericlaim to offer a truly global path to transform the way we provide our services together.”
CUNNINGHAM LINDSEY BY THE NUMBERS
1923
Year when the business was established in Ontario by retired bank manager Manley B. Morden
1999
Year when the organisation became known as Cunningham Lindsey
60+
Countries where Cunningham Lindsey serves clients
600
Approximate number of Cunningham Lindsey offices around the world
6,000+
Number of Cunningham Lindsey employees globally
TWENTY
BIBA 18 MANCHESTER CENTRAL MAY 16/17
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n o i t a rm
Four keynotes, six seminars, the latest in InsurTech and Europe’s largest insurance exhibition. Featuring the ‘BIBA hackathon – the innovation challenge’ where technology experts will battle to solve the challenges that brokers face. If you’re looking to do business, extend your knowledge and make new contacts, then BIBA 2018 is the only place to be.
o f n I te
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Speakers include:
Andrew Bailey Chief Executive, Financial Conduct Authority
Inga Beale DBE CEO, Lloyd’s and President, CII
Martha Lane Fox Co-founder lastminute.com
Including
ybd
YOUNG BROKER DAY
#BIBA2018
Chris Hadfield Astronaut
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biba2018.co.uk www.insurancebusiness.co.uk
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SPECIAL REPORT
BROKERS ON MGAs
BROKERS ON MGAs 2018 Insurance Business UK unveils the MGAs that brokers feel stand out above the rest AT THE time of writing this foreward to the 2018 Brokers on MGAs report, the growth of the UK economy in the final quarter of 2017 has just exceeded expectations. GDP grew by 0.6%, beating the expected 0.5% growth figure. This means that UK growth for 2017 is estimated to reach 1.8% – great news for UK businesses. A significant contributor to this growth came from the manufacturing sector, which
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expanded by 0.4% – its best performance on a three-month average in a decade – and heralded the longest period of rising output in 23 years. The role and contribution of the insurance industry in facilitating this success shouldn’t be underestimated. To deliberately misquote the tagline of Castrol motor oil, the industry is “liquid support” for the sector. By providing manufacturers, both existing and new, with
cost-effective, high-quality insurance coverage and risk-transfer support, insurance allows the sector to surge forward and turn problems into opportunities. We should be there to support and advise on how to protect the ever-increasing exposures they face, from property and liability risks to transport and credit protection. After all, it is estimated that UK export growth will reach 2.4% this year.
WHAT ARE THE MOST IMPORTANT THINGS YOU LOOK FOR IN AN MGA PARTNER?
HOW WELL DID MGAs PERFORM ON AVERAGE?
IBUK asked brokers to select the top three qualities they look for in a MGA. Here’s what they said:
For the most part, MGAs are excelling in the areas that matter most to brokers.
Underwriting responsiveness/turnaround time
Customer service
8.36
93%
Underwriting responsiveness/turnaround time
Premium pricing
8.33
69%
Claims support
Claims support
8.05
41%
Premium pricing
Customer service
7.98
40%
Compensation (commission, bonuses, profit share, etc.)
Range of insurers/schemes
7.77
15% Online services and capabilities
Range of insurers/schemes
15%
7.68
Compensation (commission, bonuses, profit share, etc.)
8% Marketing support
5%
In today’s business environment, managing general agents are at the forefront of innovation. From their use of technology to the fact they can provide access to new and niche markets, to their experienced and responsive underwriting, they can reduce costs for producing brokers. MGAs are investing significantly in providing their supporting brokers with the products and services they need to support their customer
Marketing support
7.10 Online services and capabilities
6.89
base, alleviating their concerns over risk coverage, placement and price. They are writing more than 13.5m consumer policies, and this number is increasing as customers’ need for asset and liability protection evolves and grows. MGAs are a source of high-quality, cost-effective insurance products, which all brokers can access to the benefit of their clients. MGAs are, rightly, an established and
growing presence in the UK. Their range of expertise and experience, entrepreneurial flair, and increasing market share are all evidence of their relevance in the risk-transfer landscape.
Peter Staddon managing director managing general agents’ association
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BRO K
SPECIAL REPORT
BROKERS ON MGAs For retail brokers, MGAs perform the essential function of giving them the specialised skill and access they require to service their clients’ every need. This year, brokers rallied together to rate the performance of their MGA partners in Insurance Business UK’s second annual Brokers on MGAs survey. Using a scale of 1 (poor) to 10 (excellent), brokers weighed in on their MGAs’ performance in eight critical categories: Customer service Underwriting responsiveness/ turnaround time
Claims support Premium pricing Compensation (commission, bonuses, profit share, etc.) Range of insurers/schemes Marketing support Online services and capabilities Brokers also offered suggestions on how their MGA partners could improve their service in each of those key areas.
This year, 11 MGAs scored an 8 or greater in at least one category, earning them a five-star rating in recognition of their outstanding service to brokers. IBUK also added a category for compensation to our ratings queue this time around, garnering a wide response from brokers. Meanwhile, claims support was refined to only include ratings from brokers who had experienced their MGA’s claims services. Two MGAs stood above the rest this year, gaining five-star ratings across all categories, while several others earned five-star status in multiple categories. Read on to find out how MGAs performed this year.
FIVE-STAR MGAs BY CATEGORY
MGA
Customer service
Underwriting responsiveness/ turnaround time
Claims support
Premium pricing
Compensation
Range of insurers/ schemes
Online Marketing services and support capabilities
Aqueous Underwriting ARAG Ascent Underwriting BEECH Underwriting DUAL Geo Underwriting (Towergate Underwriting) Gresham Underwriting Manchester Underwriting Management ONE Commercial Touchstone Underwriting Vantage Insurance Services Denotes an All-Star MGA 14
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MAXIMUM SERVICE MINIMUM FUSS Our Insurance Brokers’ Products are specifically designed to provide practical, real protection to brokers. It’s more than just insurance. It’s a business support service too.
A little bit different
Call us on 01494 770700 for a chat with one of our experts or visit our website: www.manchesterunderwriting.com
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BRO K
SPECIAL REPORT
BROKERS ON MGAs CUSTOMER SERVICE
UNDERWRITING RESPONSIVENESS AND TURNAROUND TIME
FIVE-STAR MGAs
FIVE-STAR MGAs
ARAG
Aqueous Underwriting
BEECH Underwriting
ARAG
DUAL
BEECH Underwriting
Geo Underwriting
DUAL
Gresham Underwriting
Gresham Underwriting
Manchester Underwriting Management
Manchester Underwriting Management
Touchstone Underwriting
ONE Commercial
Vantage Insurance Services
Touchstone Underwriting Importance to brokers MGA performance
4th 1st
Average MGA score
Vantage Insurance Services
Importance to brokers MGA performance
8.36 It’s safe to say that MGAs know how to put their best foot forward, if the rating for customer service is any indication. The category had the highest score in terms of MGA performance, averaging 8.36 out of 10, with eight MGAs earning a five-star rating. Although brokers selected it behind claims support, premium pricing and underwriting responsiveness in terms of importance, it’s fair to say that good customer service is foundational to any MGA’s success in the long run. In some ways, customer service can be viewed as an umbrella term that covers other categories as well. For one broker, it’s all about demonstrating knowledge and expertise: “Customer service is second to none. They know their products, which is very important for an MGA.” Another broker talked about the level of dedication on the underwriters’ part, how they “go the extra mile to ensure both our satisfaction and the customers’”. For others, it’s as simple as always getting a call back. Ultimately, building good customer service hinges on having a culture that’s always looking for ways to improve; one broker explained how his MGA excelled in this aspect: “[It’s about] innovative and flexible ideas, and implementation into underwriting each risk individually. Continuous improvement is constantly looked at, with regular feedback and underwriter visits.” Actively adopting new tools and capabilities is also indicative of good customer service when it helps brokers better manage underwriting requirements.
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1st 2nd
Average MGA score
8.33 As with previous years, underwriting responsiveness and turnaround time continues to top the list for brokers as the most important aspect of MGA service. In turn, MGAs did their best to deliver, scoring an average of 8.33 in this category, making it the second highest scoring category this year, although a few points lower than last year’s 8.77. In addition, nine MGAs garnered a five-star rating, the most out of any other category besides claims support. The majority of brokers remain pleased with turnaround times, though for a few it’s “sometimes hit and miss”. MGAs that are doing well in this aspect are able to respond consistently: “99% of the time, we receive the required terms within 48 hours,” said one broker. There are also those that have “a great system for turning around coverholder enquiries” and offer “quick responses – especially on the portal”. Nevertheless, ‘the sooner, the better’ is always the general mindset. With all the technology available today, it’s difficult to accept delays, especially ones exacerbated by poor communication, as one broker pointed out. Some brokers also recognise that slow turnaround times may mean an MGA simply needs to “invest in more resource as they clearly grow”. One broker elaborated: “Sometimes there’s an urgent enquiry and only one underwriter is in on that day, so [they’re] unable to quote the risk due to the workload.”
THE
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BRO K
SPECIAL REPORT
BROKERS ON MGAs CLAIMS SUPPORT
PREMIUM PRICING
FIVE-STAR MGAs
FIVE-STAR MGAs
ARAG
ARAG
Ascent Underwriting
BEECH Underwriting
BEECH Underwriting
DUAL
Geo Underwriting
Geo Underwriting
Gresham Underwriting
Gresham Underwriting
Manchester Underwriting Management
ONE Commercial
ONE Commercial Touchstone Underwriting
Touchstone Underwriting
Vantage Insurance Services
Vantage Insurance Services
Importance to brokers MGA performance
3rd 3rd
Average MGA score
8.05 For this year’s Brokers on MGAs survey, IBUK wanted to truly hone in on the brokers who could accurately assess their MGA’s claims support. Brokers were first asked if they had any claims experience with their MGA; if so, they were then asked to rate the support they received. As a result, nine MGAs earned a five-star rating in this category, which tied with underwriting responsiveness for the most five-star MGAs. Performance-wise, claims support maintained the third-place spot, though the average score did drop a few points from last year, from 8.26 to 8.05. WHAT BROKERS WANT
Importance to brokers MGA performance
2nd 4th
Average MGA score
7.98 Compared to last year’s ranking in terms of importance, premium pricing moved from third to second, while MGAs’ performance has taken a dip, from 8.69 last year to 7.98 this year. The combination of these two factors points to price fluctuations that might have left some brokers struggling to offer better solutions. That’s not to say all brokers were unhappy with pricing. Those who gave high scores in this category mentioned that premiums were “very competitive” and “spot on” for the most part. “We would have liked [the MGAs] to have been cheaper; however, when we went to market for WHAT BROKERS WANT
“Quicker response times and a slicker claims service”
“Provide firm quotations on a more efficient basis”
Of the 78% of brokers who had experienced the claims services offered by their MGAs, 23% of this group gave their MGAs high marks, commending them for having “good claims teams with strong support and quick response”, displaying “excellent knowledge and extremely quick turnaround times”, and ensuring “good customer service [with] processes explained thoroughly throughout”. Suggestions for improvement included providing more details for claims feedback and prodding insurers to improve their response times.
alternative quotes, they remained the most competitive by a significant margin,” one broker admitted. A couple of other brokers said they appreciated that their MGAs “acknowledge reasons for reductions as well as for increases” – even though there seemed to be more of the latter. Still, some brokers believe MGAs can do better, suggesting they reduce service fees, offer better options on certain classes and improve renewal pricing. One broker commented that there was “still too much cherry-picking” and that “a supporting MGA should differentiate itself ”.
18
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SPECIAL REPORT
BROKERS ON MGAs COMPENSATION
RANGE OF INSURERS/ SCHEMES
FIVE-STAR MGAs
FIVE-STAR MGAs
ARAG
Aqueous Underwriting
Ascent Underwriting
ARAG
BEECH Underwriting
BEECH Underwriting
Geo Underwriting
DUAL
Gresham Underwriting Manchester Underwriting Management
Geo Underwriting
ONE Commercial
Gresham Underwriting
Touchstone Underwriting
ONE Commercial
Vantage Insurance Services
Touchstone Underwriting
Importance to brokers MGA performance
7 5th th
Average MGA score
7.77 One broker succinctly summed up the general sentiment about this category: “Could always give more commission!” MGAs’ compensation performance was less than impressive, coming in fifth overall with an average score of 7.77 out of 10. Although brokers put compensation low on their priority list of MGA offerings, they had a lot to say about how their MGAs could do better. “[Compensation] is lower in comparison to the majority of our MGAs,” WHAT BROKERS WANT
“Improve communication and treat brokers as customers, knowing that they have an obligation to clients” a broker said about one of his MGA partners. “An end-of-year bonus would be good based on premium written and claims ratios,” suggested another broker. There were a few brokers that praised their MGAs’ compensation model; one commented that his MGA had “excellent [commission] with no profit share”.
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Vantage Insurance Services
Importance to brokers MGA performance
5th 6th
Average MGA score
7.68 In comparison to other categories such as underwriting responsiveness and premium pricing, the range of insurers and schemes offered by MGAs came in a distant fifth on brokers’ list of priorities – only 15% of respondents rated it among their top three considerations. WHAT BROKERS WANT
“Support more online DA schemes” Overall, most brokers seem content with the selection of insurers and schemes provided by their MGAs (“They do everything they can,” one broker commented), evident by the eight MGAs that received fivestar ratings in the category. One broker named stand-alone cyber policies as a product he felt his MGA lacked, while another called for more niche products to allow him to better compete in today’s marketplace. That opinion was echoed by other brokers, who responded with suggestions like “more scheme offerings, replicating the efficiency of their existing schemes”, “more exclusive broker schemes” and “it would be beneficial if they had a few additional markets”.
MARKETING SUPPORT
ONLINE SERVICES AND CAPABILITIES FIVE-STAR MGAs
FIVE-STAR MGAs
Aqueous Underwriting
ARAG
ARAG
BEECH Underwriting
BEECH Underwriting
DUAL
DUAL
Geo Underwriting
Gresham Underwriting
Vantage Insurance Services Importance to brokers MGA performance
ONE Commercial
8th 7th
Average MGA score
Touchstone Underwriting Importance to brokers MGA performance
7.10 In line with last year’s results, marketing support is still the least important area for brokers when choosing an MGA. MGA performance in this category, meanwhile, improved just slightly, with an average score of 7.10, up from 6.91 in 2017. However, the fewest amount of MGAs earned a five-star rating in marketing support this year – only five companies made the list. For the most part, brokers were indifferent about their MGAs’ marketing support, either expressing satisfaction with the support they receive or admitting it’s a service they rarely use. “We have not used this much, but we are aware it is available,” said one broker. “Don’t receive or require marketing support,” said another. In general, brokers seem to take their marketing efforts into their own hands rather than using
6th 8th
Average MGA score
6.89 Even with all the talk about digital disruption and increased technology use across all areas of insurance, MGAs still turned in a lacklustre performance in terms of online services and capabilities. The worst-rated category in this year’s survey, MGAs received an average score of just 6.89 out of 10, although seven MGAs made the five-star list, suggesting that there are some MGAs getting it right in this area. Brokers had a lot to say about what their MGAs did and didn’t offer in terms of online capabilities. “Very little capability in this area,” said one, while another complained that his MGA’s “online system is a little cumbersome”.
WHAT BROKERS WANT
“Improve communication and treat brokers as customers, knowing that they have an obligation to clients” the marketing tools at their disposal through their MGA. However, the few brokers who do use MGA marketing support pointed out how marketing could be upgraded: “[Our MGA] could work much harder in helping move a broker’s broking strategy,” one said, while another requested “more white-labelled products or delegated broker schemes”. Another advised his MGA to focus on creating product marketing collateral aimed at clients, not brokers.
A majority of brokers’ critiques came down to lack of speed and sophistication. “Slow” was a common refrain in many responses, and a few brokers suggested ways to modernise online services, including adding an online claims portal, creating online facilities for smaller risks and adding auto-fill trade lists to forms to better streamline the process. One broker requested an online quote system that would give them the ability to produce quotes if an underwriter is absent, improving the customer experience. Yet there are still a few brokers who prefer old-school means of interaction. “The online portal is all right,” one wrote, “but it is no replacement for an underwriter’s proper review.”
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