Navigating the Evolving Landscape of MGA Core Systems

MGAs play a pivotal role in driving growth and innovation in the fast-evolving world of property and casualty insurance.

Managing general agencies (MGAs) play a pivotal role in driving growth and innovation in the fast-evolving world of property and casualty insurance. To understand the ever-changing MGA core system market landscape, Datos Insights conducted an in-depth analysis that offers crucial insights for senior business executives, IT professionals, and MGA core system providers. Here are the key findings from this report: 

  • Rapid market expansion: The MGA industry has experienced a significant surge in solution providers, with a notable increase since 2019. Datos Insights previously covered 10 solution providers, but this report includes a staggering 27. This growth underscores the industry’s attractiveness, supported by a notable increase in MGA merger and acquisition (M&A) activity.
  • Tailored solutions for MGAs: A clear distinction is emerging between MGA clients and insurer clients. MGAs prioritize speed to market, pricing, and simplicity, driving many solution providers to tailor their offerings accordingly. This market shift is reflected in the strategies employed by key players.
  • Diverse core system options: MGAs can choose from traditional insurer core systems adapted for MGAs or core systems designed exclusively for MGAs. This choice impacts the functionality integrated into the core system, such as the inclusion of general ledger or accounting features.
  • Comprehensive MGA system capabilities: Some MGA systems offer a broad spectrum of capabilities, including policy administration, account and risk clearance, underwriter workbench, billing, claims processing, general ledger/corporate accounting, agent and customer portals, customer relationship management, bordereaux management, document handling, and agent upload/download capabilities.
  • Affiliated and non-affiliated MGAs: MGAs can be affiliated with insurance carriers or operate independently. Non-affiliated MGAs are increasingly investing in core technology solutions to enhance their competitiveness, driven by private equity and venture capital support.
  • Business agility for carriers: Carriers that own MGAs (I.e., affiliated MGAs) are simplifying their business operations by allowing MGAs to acquire and manage their own technology. This approach enhances business agility, attracts new business, and reduces potential future divestiture risks.
  • Vendor M&A activity: The MGA core system market has witnessed vendor M&A activity, with some notable acquisitions in recent years. This trend has implications for both MGAs and insurers.
  • Increased data control: MGAs that own their core systems gain greater control over data, enhancing their ability to compete. Private equity firms also recognize the value of data gathered by MGAs.
  • Cost-effective solutions: Core technology options designed specifically for MGAs have become more cost-effective, providing MGAs with solution options that extend beyond quoting/binding needs, such as general ledger.
  • Architecture trends: MGA core systems now offer cloud and Software-as-a-Service options, providing flexibility and cost savings. There is also a growing emphasis on integration APIs to facilitate data exchange within the insurance ecosystem. 

In an industry marked by rapid change and innovation, staying informed about the evolving MGA core system landscape is essential for success. Datos Insights’ report offers invaluable insights to insurers, distributors, MGAs, and IT professionals, helping them navigate this dynamic market and make informed decisions for the future. As the MGA industry continues to expand and adapt, being equipped with the right information is key to staying ahead of the curve.  

If you’d like to discuss our key findings in the MGA core systems space, please read our new report, Property/Casualty MGA Core Systems: Overview and Solution Providers, or contact Martin Higgins or me to continue the conversation.