Open GI: Adapting to change with technology 

We don’t need to tell seasoned MGAs that the insurance world, despite its reputation, is dynamic, tech-led and innovative.

And we don’t need to tell our MGA partners that their customers, insurance brokers, are always looking at how specialising and technology can help them to gain a competitive advantage. MGAs must be ready to understand and adapt to these challenges in order to best serve their brokers and grow their books.

With that in mind, we recently surveyed the insurance community to understand more about how they feel the industry is going to change in future and where they believe technology is going to play a key role.

Our research, unsurprisingly, revealed that 95% of brokers believe that the distribution of insurance is going to change over the coming years. Phone and online via websites are the most common broker distribution channels, with over 60% of brokers using them respectively. In-person also remains popular, utilised by 59% of respondents. In-person will remain popular but the balance will shift with some customers preferring more digital trading options over the next ten years.

Importantly, for MGAs, placement trends are also developing.

In personal lines, most brokers reported that they did not expect to see growth. In home, while 55% of brokers said they currently sell home insurance, only 44% expected to complete more business in this space in the future. However, high net worth, bucked this trend with 44% expecting to grow their volume over the next 10 years (29% of brokers surveyed already sell HNW).

In commercial brokers are seeing opportunities for growth across the majority of product lines.

Liability was the most common commercial insurance offered by brokers surveyed (55%), with 45% expecting to complete more business in this area in the future. However, 10% told us they did not expect liability business to increase.

The survey showed 52% of those surveyed offer Commercial Property Insurance with 94% of those already offering that product expecting to complete even more business over the next ten years. Brokers further predicted larger growth in smaller or more niche sectors including Marine & Aviation, Wholesale & MGA and Sports & Entertainment, with niche segments particularly fertile ground for MGAs. For example, the number of brokers currently selling Marine & Aviation insurance is 17% but 30% expected growth in this market.

Open GI CEO, Simon Badley commented: “It’s clear our broker partners are at the sharp end of market changes in terms of placement and distribution trends. As aggregators and direct players continue to challenge the market brokers will focus on niche lines and specialisms and differentiate on trust, transparency and user experience.

“This is an opportunity for technology partners to help brokers and MGAs increase efficiency and gain better understanding of data. It’s also an opportunity for niche and specialist MGAs to really show their value in a competitive market place.” 

Almost a quarter of brokers (23%) predict a shift to increased use of AI and automation in the future and a third (29% – analysed through qualitative data responses) of those surveyed recognised the requirement to adapt through innovation and technology to meet customer needs.

Brokers were also asked about the role AI could play in broking over the next ten years, yielding a mixed bag of predictions:

The Role of AI in the future of broking… according to brokers

• Efficiency & Automation 49%
• Customer Service 14%
• Decision making 15%
• Personalisation 11%
• Job Losses 9%
• Lack of ‘human touch’ 3%
• Not yet ready 2%
• Negative Customer Service 1%

Badley noted: “Open GI’s job is to be a true specialist technology partner to brokers and MGAs and that means adapting to how they want to implement AI and sharing our expertise on the most effective ways the new tool can be used. 

“MGAs must adapt in a similar way to support brokers partners who are exploring how AI and automation can elevate their business. It’s also set to be an essential tool to help providers transform underwriting with Machine Learning supporting MGAs and brokers to write higher-quality business and reduce claims.”

Indeed, data is the lifeblood of underwriting for MGAs and brokers are increasingly realising the value of a deeper understanding of the data they hold too. Our survey showed that 17% of brokers are already describing data as an ‘unmet need’.

The use of this data in real time to make informed decisions is also now a requirement for brokers and MGAs rather than a choice. This allows distributors to identify changes immediately, make decisions and implement changes, resulting in increased operational efficiency and minimised business risks.

Damian Baxter, Director of New Business at Open GI, commented: “The insurance industry talks a good game about data but, ultimately, many operators still rely on fairly blunt instruments such as, historical averages, rating factors, and human judgement. 

“However, that is starting to change as the industry gets to grips with machine learning which is poised to redefine underwriting and has the potential to drive more accurate pricing, reduced loss ratios, and a better alignment between risk and premium.”

Badley concluded: “Ultimately, we are here to help our partners make the most of the technology that is available to them. We’re here to back MGA partners to get the best from their underwriting and also help to work in the modern way brokers now demand. Simply keeping up with tech change is no longer an option, MGAs must choose the right partners to get ahead in an increasingly tech-enabled world.”

To learn more about how Open GI can support MGAs with their placement, data and technology needs, and help them to support their broker partners, please get in touch at respond@opengi.co.uk