The role of the broker and MGA in the current market have both been called into question in addressing the mushrooming cost base of the London market.  It is right that the traditional methodology of risk and reward based on flat commissions is being called into question but equally, the way that business is conducted is also worth looking at too.

I have seen many players in the MGA space argue that theirs is a ‘unique’ offering, brokers arguing that they add value to the relationships between MGA and carrier but how often do these statements stand up to scrutiny?  One thing that is clear to me, based on too many years’ experience in the London market, is that each party has a clear role to play and each brings special skills to bear in producing a book of sustainable and profitable business.  One of the key differentiators for me is the use of technology in any party being able to demonstrate this. 

We have, in the past, looked at technology as being an enabler to see data, both risk, premium and claims , delivered in real time and patted ourselves on the back as a job well done.  It is true, speedy acquisition and transmission of data is a real benefit but is only one instrument that we can use to make ourselves a leaner and more efficient market.  I would argue that we need to look at the whole spectrum of risk, rather than simply the excess of premium over claims, that the MGA has ticked all the regulatory and compliance boxes or is financially solvent.  The whole spectrum of risk needs to be considered holistically and the interrelationships between its constituent parts to be able to effectively manage the relationship.  Good oversight of every aspect of the MGA business by the carrier, combined with constructive feedback, will enable a relationship to grow, underperforming books of business to be turned around, new lines of business introduced to mutual benefit and unnecessary costs to be taken out of all links in the transaction chain.

There is some great technology out there in various places such as DA SATS to manage data and Risk management software to look at that aspect plus regulatory and compliance tools.  All of these can be purchased at very reasonable  price but at the end of the day, they will only provide a fragmented view of each aspect unless they can be combined into a single view/dashboard.  This is where the carrier, broker and MGA need to have a sound underlying IT platform that allows them to incorporate the ‘best of class’ technology solutions and to give them that single view that is so desperately required.  There are some great systems out there and great vendors too but to paraphrase William Golding ‘All vendors are created equal, but some are more equal than others’!