Are relationships enough?
Success in insurance is all about how well you manage your numbers.
MGAs, by and large, do that really well when it comes to staffing, quoting and writing business.
Are there some numbers that aren’t being questioned? Numbers that could be costing them opportunities.
Numbers around distribution.
Let’s have a look.
Imagine a healthy MGA with 10 underwriters. They’re doing well, writing £240m in GWP, with each underwriter doing business with between 10 and 20 brokers this year. Assuming no overlap, let’s average it out at 15 unique broker relationships each. That’s 150 different points of distribution for the MGA.
Assuming each underwriter is leveraging their broker network as best they can, how does the MGA grow? After all each underwriter can only maintain so many relationships.
The go-to answer is to acquire a new underwriting team and add another 15 points of distribution for a 10% YOY growth.
Nothing wrong with it.
But the CEO might be asking how many more teams it will take before the business achieves that critical mass where overhead and income are no longer joined by a linear line that keeps combined operating ratios stubbornly fixed?
Of course, there are gains that can be made operationally to make things more efficient, and InsureTech certainly has a part to play. But that’s mostly geared to driving down the cost of doing existing business, and not directly linked to stimulating top line growth.
There is also the M&A option, and we look more closely at that in another blog, M&A, The Fastest Road to Riches?
But is there another, more organic way to grow distribution beyond existing personal relationships?
It happens when the MGA takes steps to flip its route to market: Broker in, rather than underwriter out.
It happens when the MGA becomes more than just a place where underwriters are given a pen and a stamp.
It happens when the business becomes bigger than the personalities.
In short, it happens when the MGA is no longer just a business, but a brand.
A brand that stands for something.
And against something.
A business with a declared mission and philosophy that is powerful enough to attract and retain broker business independently of personal relationships. And that, as a result, leaves the MGA less susceptible to business following an underwriter out the door.
Like the current outbound underwriter marketing model, the inbound brand marketing model requires an investment (albeit significantly less). True, it cannot deliver the immediacy of hiring an underwriter today and writing business tomorrow. But done right, and implemented as a strategy for growth over 12, 24, 36 months, it has the potential to outperform any team’s network, and become a powerful business development engine that drives efficient growth.
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