Insurers could distribute coverage through technology firms that adopt the managing general agent model, a Montreal expert for a venture capital fund observes.
We are seeing some technology startups are adopting the MGA model and partnering with a carrier or reinsurer to distribute their product,” said Corey Wick of InsureTech Trends.
Newer tech-driven MGAs are partnering with brokers to give those brokers access to faster policy distribution. We are seeing that in life and health. I could see that on both property and casualty side, especially with products that might not be easy to underwrite fast enough digitally.
How is technology changing distribution models and how will distribution models evolve going forward?
Carriers are developing a mobile app to offer usage-based auto insurance to consumers through an MGA model, Luge said in Status of the Canadian Insurtech Landscape, a report released in late 2020.
Luge Capital, which has offices in Montreal and Toronto, provided funding to insurtech and fintech startups. A few investors who provide the money to Luge Capital’s fintechs include Industrial Alliance, La Capitale, Sun Life and Desjardins.
The trend of digitization and digital distribution of insurance started a few years ago.
“Technology is assisting intermediaries automate more of their administrative workflow tasks that today require manual work. From billing the client, entering data, re-entering data on the back end or calling the underwriter. As technology automates more of those tasks, the brokers and other intermediaries will have more time to focus on sales and business development and also to act more as risk advisors to their clients,” says Mazhar.
The insurance industry is often described as “slow-moving” when it comes to innovation and digitalization as stated in our trends report. This is due in part to aging information technology infrastructure, high barriers to entering the industry, and heavy regulation.
In 2017, the broker channel contributed nearly 65% of the direct written premium in the P&C industry. As some insurers shift from legacy technology to newer infrastructure, increased flexibility of technology will allow them to distribute home insurance more easily.
Brokers could potentially free up a lot of time, which they currently spend on admin work, to instead act as a risk advisor to a client. That is how they would drive value to their clients and stay relevant.
