Recipes for success in a specialised market

The market has got more specialised, but become less entrepreneurial, note guests in the latest Voice of Insurance podcast, offering some lessons for success in the broking and MGA space.

The latest guests of the Voice of Insurance Podcast were Craig Kingaby, CEO of Meridian Risk Solutions, and Mark Heath is CEO of Acies MGU. Together they run a London-based diversified specialist insurance business, with differentiated broking and MGA arms.

Both have worked for much larger organisations, AIG in Heath’s case, Aon for Kingaby. Their new business is largely self-funded and wholly management controlled. It has big growth plans, focused on building a generational business.

MGA tech

Kingaby shared one of the primary reasons MGA groups have struggled or failed in recent years was a tendency to “over promise and under deliver” on technology, before underwriters got into the business, leading to later delays and disappointments.

“A lot of them were quick out of the box, because they hired some people with income quickly,” Kingaby said. “But they got to a certain size and they had to scrap everything and start again because the minute the underwriters turned up within the business, they realised their systems were awful and didn’t do what they needed them to do.”

The result, he said, was that such MGAs risked becoming “a very people intensive business” to make up for misfiring technology. Instead, the two of them decided to “spend a lot of time” building an MGA technology platform, something they acknowledged could only be done in a management controlled firm.

“The agreement that Mark and I had before he joined the business is that the first thing we would do would not be to hire a single underwriter until we had built the [technology] platform that we knew could be scaled,” he said.

Built in-house

Heath revealed it took more than a year to build an underwriting technology platform, with some third party help, to serve the Acies MGU portfolio of MGAs, each with their own different underwriting specialisms.

“We’re not developers or program managers,” he said. “What we do know is how the technology should function, and how to apply the technology to what it needs to do.”

Off-the-shelf advantages of speed can be fast negated if a software solution is not sufficiently tailored to meet the specific and different requirements of those MGAs, Heath suggested.

Building something bespoke was therefore a focus, as was the desire to not manage multiple technology supplier relationships.

“If you’ve developed something, it’s not then going to be on general release to everyone else, and you’ve also got the ability to build an end-to-end solution rather than buying bits and pieces,” Heath added.

Plugs and sockets

“It is not rocket science to get a good technology platform, but it takes time,” Heath said. “Once you’ve got a digital plug, part of your partnership is figuring out who’s got a digital socket.”

Bordereau – an alien term beyond the insurance market – is likely obsolete as a concept, he suggested, but insurance companies are still relying on them to transmit management information in a format they recognise, and are unlikely to wean themselves off soon.

“We provide all of our inshore partners with a live dashboard to see our data and the performance of the portfolios. We still provide them with the bordereau because that’s the way our market asks for it,” Heath said.

APIs have been around for at least a decade, but many insurance partners, from carriers to loss adjusters, still do not have mature APIs in place, he emphasised. However, this can become an opportunity for partnering firms.

“If you’re in the position to deploy APIs very quickly, and if you’re dealing with someone that hasn’t got a digital socket, but actually has the right attitude and wants to get to that place, they’re exactly the sort of partner that we can work with,” he added.