MGA Marketplace Update Q&A with James Thom and John Bennis MGAs are in a period of tremendous growth, but there are potential challenges on the horizon. Vertafore's experts weigh in on the MGA marketplace and what Vertafore's recent acquisition of MGA Systems means for the industry. Q How would you describe today's MGA landscape? James: It's an amazing time in the MGA market. The latest Conning Insurance Research report shows there's a tremendous amount of premium flowing through this space and it keeps growing. And that is coming from two factors. First is the continued hardening of the insurance market and related challenges in securing coverage for clients. That's giving rise to the need for intermediaries to support agencies to get the right coverage. And second, we're seeing continued need for and growth in specialized products, like the massive increase in cyber insurance, for example. distribution channel. So, they need a solution with core functionality that can be altered based on their individual needs. James: MGAs are really the entrepreneurial sector of the insurance space. They needed a core policy administration system that helps them run their business, but they need additional solutions to help them grow faster-things like tools to gather and distribute third-party knowledge as well as solutions to aid connectivity with their retail agencies and connectivity as carriers. To John's point, that strategy empowers individual MGAs to run their business the way they need to, while tapping into the efficiencies and growth potential that those tools can create. John: Absolutely. On the flip side of this growth, we're seeing a bigger push for efficiency. At the end of the day insureds are looking for the best coverage at the lowest price. To be competitive, MGAs are thinking about how to make their operations as efficient as possible-where it's appropriate-while still having the flexibility and agility to respond to market needs. Q Vertafore recently acquired MGA Systems. How did that happen and what does it mean for MGAs? John: MGA Systems was exceptionally successful. But to scale it to the next level, we needed a partner. And with any partnership, you want someone who brings more than just capital to the table. In our case, we wanted someone who would embrace our product and our philosophies of what we do as a company. We felt very strongly that Vertafore's culture and values aligned with ours. And we felt we could leverage Vertafore's experience and infrastructure to take a superior offering and bring it to the fore of the insurance marketplace. Q What do MGAs need to have on their radar right now? James: There are interesting times ahead for the industry with the recessionary pressures we're facing. We're also seeing a lot of consolidation amongst retail brokerages, with a growing appetite for them to buy MGUs and stand up their own programs. That's true on the carrier front, too-they are acquiring MGAs to bring that expertise in-house. This heavy investment is shaping the space and needs to be a strategic consideration for MGAs, whether they want to compete as a standalone or set themselves up for acquisition down the road. James: With any acquisition, we're looking at three things: culture, product, and people. MGA Systems ticked all the boxes. We knew we wanted to grow our investment to deliver on our vision for simpler, smarter insurance distribution. And we knew the quality of MGA Systems' solutions. The key was the depth of talent and knowledge John and the whole MGA Systems team bring. They have such a unique perspective on how to solve these problems and how to create real value for MGAs. Our shared vision is really how can we bring a more connected experience for our MGA customers. There is so much that we can do together and with the talent that comes in as part of this acquisition. John: One trend we're seeing: MGAs looking for a consolidated underwriting workstation, so to speak, that allow underwriters to aggregate relevant data. Let's say you have a restaurant book of business and you are trying to determine the risk, based specific information about the quality of their food and how well they run their operation by looking up reviews on social media. The underwriter might need to go to multiple sources and vendors to get this information and bring it together. But by aggregating that information in one place, along with exposure information and other application data, the underwriter can quickly say this is a good risk or a bad risk and price it accordingly. It comes back to efficiency, which ultimately influences profitably and competitiveness. Q How is the approach to lnsurTech different for MGAs? John: Early on at MGA Systems we learned that every MGA is completely different: the way they conduct their business, the products they offer, and just the way they approach underwriting. At the same time, they still have to process insurance like every other part of the John Bennis, vice president of MGA Systems at Vertafore James Thom, chief product officer at Vertafore