How to Become a Specialized Insurance Intermediary: A Guide for Startups
Are you an entrepreneur or work for a startup? Do you have expertise in a niche sector and access to real-time data? Then you might be missing out on a huge opportunity in the insurance industry. Insurers are increasingly turning to big data to help them navigate rapidly shifting global challenges, and they need specialized insurance intermediaries known as Managing General Agents (MGAs) to help them develop innovative products and solutions.
In this guide, we’ll explain everything you need to know about MGAs, including what they are, why insurers want to work with them, and how startups can become MGAs themselves with the help of Howden Ventures.
What is an MGA?
MGAs are a special type of insurance intermediary with more authority than usual to quote and bind policies and develop insurance products. They are often distinguished by having deep expertise in specialty or niche sectors, creating tailored insurance policies for their clients. MGAs are growing in popularity because of their versatility as a business model, and their ability to introduce new products and product modifications in a fraction of the time of traditional markets.
How big is the MGA market?
The US MGA market, the biggest in the world, more than doubled in size in two years. Between 2020—2022, it grew from $15bn of premium underwritten by MGAs not affiliated with insurance companies to almost $33bn.
Why do insurers want to work with MGAs?
There’s growing interest among insurers in partnering with MGAs to leverage the specialized knowledge and skills they bring to the table. MGAs’ expertise in niche areas offers clients deep, unique and specialized solutions to needs that may be challenging for larger insurers to address. Insurers also want access to technology expertise and digital tools, which historically haven’t played a major role in the sector – particularly in automation, pricing, risk assessment and analytics. What’s more, integrating MGA technology enhances operational efficiency for insurance companies.
What’s the opportunity for startups?
In recent years, MGAs have been collaborating with insurtech startups, combining specialist knowledge with tech infrastructure to develop innovative new approaches. Howden Ventures is accelerating this groundbreaking trend by helping tech startups with exciting applications to become MGAs themselves.
What are the benefits of being an MGA?
By becoming MGAs, startups can focus on delivering quality products to niche clients, in niche territories, without concerns about solvency. That’s why this model has a track record of delivering consistent growth of earnings, frequently outperforming both the stock market and the traditional balance sheet.
How can startups become MGAs?
Regulatory compliance, underwriting expertise, capital requirements, risk management, distribution channels – all of these can make it challenging for startups to become MGAs on their own. That’s where Howden Ventures comes in. We help tech startups with exciting applications to become MGAs themselves, providing the expertise and support they need to succeed.
With Riskwolf, you can turn real-time data into insurance. Using unique real-time data and dynamic risk modeling, we enable insurers to build and operate parametric insurance at scale. Simple. Reliable. Fast. Contact us today to learn more about how we can help you become a specialized insurance intermediary and take advantage of the hidden opportunity in insurance for data startups.
Source: The hidden opportunity in insurance for data startups: what is an MGA?