Are you a recognized expert in selling to a specific insurance product niche? Are you immersed in a unique industry or field? Maybe you are a retail agent with a book of business and you’re ready to launch out as a Managing General Agency (MGA) or program administrator. If so, you’ve probably identified a volume of business that will attract carriers to you to write that specialty line.
A program is an insurance product targeted to a niche market, a territory or a class of business that generally represents a group of similar risks, placed with one carrier. For example, you may have a program with coverage and pricing tailored to amusement parks and concert venues. Programs these days can be created to cover a wide range of business categories: from dog walkers to day spas, party equipment rentals to non-profit associations, workers’ compensation for temporary staffing to product liability coverage for cannabis producers – the sky’s the limit.
As an MGA or program administrator, you can provide coverage custom-designed for the specific needs of the program niche with expert underwriting, competitive pricing and focused risk management, all in partnership with your carrier and retail agencies and brokerages. The TMPAA State of Program Business Study reports that program business is growing more quickly than the overall commercial insurance marketplace. You may read the most recent report here.
Program administrators, MGAs or general agencies come in all flavors. Some are the sales arm of the carrier, focusing on rating and quoting policies. Most underwrite, bind and issue policies. Other MGAs may even provide ongoing claims and loss control support to the insureds, as well all types of statutory and compliance reporting. Whatever the flavor, you need a plan to get started in this growing market.
Before you jump in with both feet, do some research on the niche in which you are interested. Questions to consider:
- How passionate are you about this niche?
- What approach will distinguish your firm from your competitors?
- Can you identify a couple of quality carrier partners that can create a program for your target market – with excellent coverages at competitive prices without channel conflicts?
- Do you have in-house knowledge in this industry? Are your producers and underwriters experts in the field?
- What distribution channel will you use? Will you sell exclusively through retail agencies and brokerages, or maybe have your own sales staff, too?
- What type of online self-service presence do you want to have?
There are templates and suggested plan formats online. When you Google ‘business plan,’ you will find lots of free advice to get you started. Your plan will most likely include sections such as:
- Executive summary to capture attention and provide a good, concise overview
- Discussion of the business opportunity you are considering
- Organizational structure of the program administrator
- Products and services you plan to market
- Marketing and sales plan including an analysis of the competition
- Financial projection, including start-up and ongoing costs, plus revenue projections. If you do not have historical data, it will be necessary to gather external statistics regarding the loss projections for your anticipated book of business to support your financial projections. Most actuarial departments require statistics to support projections.
- Discussion of the technology that you require to operate efficiently and get products to market as quickly and profitably as possible.
Even though this is a section of your business plan, you probably also need an expanded and tactical guideline for marketing your new program business. This plan should include information such as:
- Generating and managing leads
- Identifying industry events and trade publications that may assist you
- Updating your website to feature your new program business
- Uses of social media to support your marketing efforts
Be sure you have the correct team to sell, quote, underwrite and service your new program business.
This includes defining coverages, rates, forms, carrier-specific underwriting questions, commissions and any other pertinent items as you enter in the carrier agreement. You should, of course, focus on a carrier that has a quality reputation and solid experience in the industry. Keep in mind that carriers want your partnership. They recognize the importance of program administrators as a distribution channel, providing capacity to quickly grow. Also, with your experience in the industry, carriers appreciate that you will carefully underwrite the business.
As your sales arm, you may need an introduction to new or additional retail agencies and brokerages. Check out Neilson Marketing, neilsonmarketing.com, and Program Business, programbusiness.com, two good resources to quickly identify candidates.
Today’s flourishing businesses depend on technology, and insurance is no exception. You’ll need a software solution to manage your:
- policy issuance
- payables and receivables
MGA Systems offers a software platform custom-built with everything you need to run your insurance business and no investment in components you don’t need. With our feature-rich Insurance Management System (IMS), which integrates seamlessly with NetRate, our ISO®-based rating solution, we provide a single-source solution for all your automation needs.
MGA Systems understands that no two MGAs or program administrators are alike, so we customize and enhance the software to support your unique business model. With real-world experience, our goal is to get you to market quickly, while timing your investment in technology with proven success. And, MGA Systems offers Professional Services to assist you in implementing your automation solution so you can more quickly start generating revenue.
For more than 20 years, carrier partners have recognized that MGA Systems is the ‘go to system’ when looking to work with MGAs and program administrators. As you take the steps necessary to build a successful business as an MGA or program administrator, MGA Systems’ team of experts is here to talk with you about implementing the tools and technology you need. Please give us a call at (877) 790‑1114 to discover how MGA Systems can provide you with the solutions and customization you need to achieve your goals.
About The Author
With more than 150 clients worldwide, the core of MGA Systems’ products include rating, quoting, binding, issuing, accounting, claims, document management and reporting. Understanding the nuances of the MGA, program administrator and carrier market, we modify, customize, and enhance our software to support how you do business. Having been a leader in the insurance ma rketplace for more than 20 years, we combine technology expertise, innovation capabilities and deep domain knowledge. Our feature-rich Insurance Management System (IMS) integrates seamlessly with NetRate, our ISO®-based rating application. Each product is also offered independently to integrate with third-party applications. Visit us at mgasystems.com to learn more about how we can help you unleash your value as an MGA, carrier or program administrator.