In my previous blog article, I examined the current capacity issues managing general agents (MGAs) are facing as well as the many factors contributing to these challenges. In part two of the series, I take a closer look at a possible solution: how the right technology platform can transform MGAs’ pricing strategies. You’ll also see how technology can help MGAs improve accuracy, efficiency, and overall competitiveness – giving MGAs a critical advantage in a tightening market.
The Hidden Costs of Outdated Pricing Models
Consider the example of an MGA specialising in commercial property insurance. In this case, the MGA currently relies on outdated legacy technology and a mostly manual process for pricing. Here are some of the key issues:
Manual data collection and entry: Many MGAs still use spreadsheets or siloed systems to gather and input important data, which wastes time and contributes to too many errors.
Siloed systems: They also still use disparate applications and systems that can’t integrate with carrier partners, brokers, or third-party data providers, creating more inefficiencies in the pricing process.
Limited or no use of real-time data: MGAs also still rely on historical trends or static indicators, such as loss data, historical claims, credit scores, and demographic data. Instead, they should be taking advantage of real-time insights generated from IoT, telematics, or valuable third-party data.
Rigid pricing and rating models: Traditional pricing and rating models may not adapt well to new or emerging risks, leading to the possibility of overpricing or underpricing policies.
Slow decisions and time to market: Without automation, pricing teams spend too much time attempting to update pricing models or reviewing policies.
All of the challenges add up to put the MGA at a significant disadvantage. Competitors using advanced models are able to generate extremely precise quotes in hours, even minutes, allowing them to secure business much faster.
Further challenges arise when insurer partners request justification for the MGA’s pricing decisions. Without real-time data insights, the MGA struggles to provide full transparency. In many cases, insurers become too wary of potential losses and may reduce capacity allocations, making it harder for the MGA to maintain its book of business. In a tightening market, inefficiencies like these can threaten long-term sustainability.
How Technology Transforms MGA Pricing
Investing in advanced technological platforms – such as AI-driven analytics, machine learning models, and real-time data monitoring – helps MGAs develop better pricing strategies, identify possible early warning signs of deteriorating performance, and improve risk prediction. All of this gives them the ability to give insurers more detailed insights into the overall health of their portfolio, which in turn makes them more attractive capacity partners.
By using innovative new technology platforms with AI-driven analytics, machine learning models, and real-time data monitoring, MGAs can move beyond inefficient, manual pricing processes to a more data-driven, automated, and competitive approach.
For example, instead of relying solely on historical trends, MGAs can turn to AI-powered platforms to integrate real-time risk signals from IoT devices, satellite imagery, economic indicators, and even social sentiment data to refine their pricing decisions. This helps MGAs to price their policies with greater accuracy and adaptability, reducing the risk of overpricing or underpricing coverage.
Another significant benefit comes by eliminating data siloes through the new use of cloud-based, API-driven platforms that can connect seamlessly with insurers, brokers, and third-party data sources. This gives pricing teams access to updated, centralised risk data, eliminating the inefficiencies caused by legacy systems or spreadsheet-based workflows. Additionally, automated data ingestion and AI-enhanced modeling can flag anomalies, suggest adjustments, and help MGAs quickly update pricing in response to shifts in the market.
With these tools in place, pricing decisions inevitably become more transparent and justifiable to insurer partners. Instead of struggling to explain how prices (or rates) are determined, MGAs can now provide detailed risk breakdowns backed by live data and predictive analytics. Not only does this help MGAs maintain stronger capacity relationships, but it improves trust with insurers and customers, ensuring more stable long-term profitability.
Finally, workflow automation and instant decisioning help MGAs operate at the speed of the market. AI-powered underwriting engines can automatically approve lower-risk policies, freeing human pricing team members to focus on complex, high-value cases.
The Future of MGA Pricing: Smarter, Faster, and More Competitive
By embracing all of these innovations – through the use of technology – MGAs can fully modernise their pricing processes, enhancing themselves as data-driven insurance leaders. In an increasingly competitive market, using AI, real-time data, and automation isn’t just an advantage – it’s a necessity for overcoming capacity constraints and achieving long-term growth and stability.
To find out how we can help you achieve this, contact us to find out more.