Four AI trends impacting MGAs in 2024 and beyond

Speed to market is paramount for MGAs. They must stand up products quickly and often deliver the full spectrum of customer experience from underwriting to issuing policies to claims, often with limited teams.

AI technologies can help them achieve these business objectives. AI enables MGAs to bring new products to the market faster and elevate their customer experience, all while keeping costs in check. AI can assist in various areas, including expediting and automating underwriting and claims processes, enhancing pricing models and providing on-demand service through online customer portals.

As AI continues to transform the insurance sector, here are four trends that MGAs should be aware of:

A cautiously optimistic approach to AI. AI has been a hot topic for the past year, and this focus will continue. There is a sense of cautious optimism around its benefits to MGA operations. MGAs have already seen tremendous value from certain forms of AI, such as machine learning and natural language processing. These tools have increased speed and accuracy for processing data in documents such as loss run reports.

MGAs see an opportunity in the content generation capabilities of generative AI to boost productivity. For example, it can help with code generation, making it easier for MGAs to program new products into their policy platforms. But with gen AI comes risks – such as hallucinations and false information. MGAs have lean staff and often less bandwidth to test and evaluate these tools themselves to ensure accuracy. They usually rely on the companies they partner with to test for them. MGAs will be looking to team up with solution providers with deep industry knowledge, transparency into the data used to determine output, and the ability to validate the accuracy of the content delivered.

Greater specialisation. MGAs have long capitalised on niche sectors, including renewable energy and cyber risk, to name just two. However, with the ability to use AI to analyse market trends and customer needs, MGAs can now create hyper-niche products such as coverage for autonomous vehicles and drones.

Beyond product development, AI will also enable MGAs to build highly specialised distribution networks. Instead of broadly marketing, AI can use available sources to create lists of retail brokers interested in a particular program. AI solutions can also assist in generating content for marketing campaigns, enabling them to quickly develop customised communications for each key target.

Closing the talent gap. Underwriting is an art, not a science. The same is true for claims assessments. MGAs can program their underwriting and claims guidelines into AI platforms to help provide a more uniform assessment for similar risks and reduce volatility.

Using AI to assist with underwriting and claims can also help solve issues with talent. Older professionals are retiring, and those just entering the industry lack experience. Gen AI tools can be taught by those with more industry experience and used by newer employees to assist in their assessments as they work to build their knowledge base.

Humans aren’t going anywhere. According to a CNBC survey, a quarter of respondents fear that AI will replace their jobs. But that’s just not happening. At MGAs, in particular, human expertise is critical, especially regarding exceptions. While AI can quickly determine risks that are clearly in appetite or out, when there are significant grey areas, industry professionals need to utilise their experience to analyse the nuances. However, by using gen AI tools, MGAs can eliminate the need for team members to review clear-cut in or out-of-appetite risks so they can focus their time on more complex cases.

MGAs continue to live up to their reputation as innovators and will look for ways to incorporate AI into their workflows. From bringing new products to market to processing submissions and claims, gen AI solutions will boost MGA capacity, enabling them to handle more business with their limited teams. To ensure they get the most value from AI technology and avoid the risks that come with it, MGAs will have to be selective in the technology providers they partner with, ensuring they not only have a suitable insurance knowledge base but are also providing transparency so MGAs can be confident in information generated by AI.

By Michael Parcelli, SVP – client partner, MGAs/MGUs/brokers at Xceedance