First, let’s answer, “What is an MGA in insurance?”
An MGA (Managing General Agent) in insurance is a specialized type of insurance broker that, unlike traditional agents/brokers, is vested with authority in an insurance carrier. Accordingly, the MGA performs additional functions ordinarily handled only by insurers, such as plan and product development, underwriting and rates, appointing retail agents/agency downlines, and even settling claims.
In the Health Insurance industry, it is the highest level of carrier contract and recognition. It’s not just due to tenure, production, knowledge, consistency, persistency, growth, or premium; it’s all that and then the highest of a working relationship! There are many super successful health insurance professionals, though only a few are selected from each insurance carrier to take on this role.
Insurance is a business that deals with risk and operates based on the law of large numbers. Actuaries use statistical analysis to assess the risks involved in a particular geographic area over a certain period. However, it may only sometimes be feasible for insurance carriers to serve emerging or niche markets or to establish a presence in
remote areas. This is where MGAs come in, as they can provide the expertise and service capabilities needed to manage these markets on behalf of insurers. MGAs can sell directly to customers but also work with retail agents to achieve mutual growth and success.
Here are 7 ways an MGA in insurance can benefit you and your insurance agency:
1. Differentiation
Your typical agency will serve all consumers. Then other agencies will create a space for a specific target audience. Working with an MGA on a specialized niche or business model allows for a deeper understanding, shifting the process from a transactional to a consultative approach. Developing a reputation for this niche distinguishes it from other competitors.
2. Momentum
MGAs have been the key players in the insurance distribution system over recent years. Even in the face of pandemic disruption, the “Managing General Agent” and their programs continued upward in 2020. Studies saw significant premium growth and vertical downlines, showing industry-wide growth for new agent/agency development.
3. Access
Your everyday insurance agencies can capture a limited number of carrier appointments because of volume agreements, changing appetites, and underwriting guidelines. Many agencies need help to obtain high-level contracts for markers and maintain an active relationship over time. Not a managing general agent. By having an MGA at your side, an agency can have access to the best insurance carriers as well as authentic industry influencers.
4. Growth
You can see an increase in an agency’s sales and premiums with a trusted partner. A focused marketing approach can grow the bottom line with increased efficiencies and decreased administrative costs. You can also see increased conversions by implementing a better pitch for specific products.
By narrowing the scope of your marketing and client service efforts, you can expand your business without hiring additional staff or increasing your marketing and operations expenses.
5. Expertise
You can utilize an MGA with expert knowledge about a specific line of coverage (health, dental, vision, accident, critical illness, life, etc.) or a particular niche or product they serve. For example, Neil Schwabe, LUTCF, and MGA work with retail agencies to create long-term residual product growth, enhancing the quality and longevity of their book of business.
6. Technology
When working with an MGA in insurance, you often are given tools like online platforms and tools to automate and streamline processes for increased success. These tools offer faster quoting and renewals, better service processing, and numerous efficiencies in account administration, which positively affect persistence. Neil Schwabe is recognized perennially as having the highest persistency in the industry, bar none!
7. Sales & Marketing
Many MGAs provide various marketing and sales tools, including handouts and digital marketing resources. They can help initiate bonus programs to drive additional sales continuously and assist with agent growth for your agency. The goal should always be to build better agents to assist in the development and longevity of the agency.
Final Thoughts on MGAs In Insurance
Working with an MGA will deepen your industry knowledge and streamline your business which will help build your agency’s authority and reputation, increase referrals, and strengthen retention. They are the best at what they do and have helped protect the agent/broker through their authority and with their honed and tenured skills over time.
Want to work with an MGA? Neil Schwabe is your guy. Check out the careers page.