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Unveiling the Opportunities for MGAs in India’s Expanding Insurance Market
Insurance

Unveiling the Opportunities for MGAs in India’s Expanding Insurance Market

By Rajarshi February 05, 2024 - 98 views

MGAs (managing general agents) play vital roles in the entire distribution chain of insurance. Taking the ever-expanding insurance market in India into account, it can be said that there are several untapped insurance opportunities that MGAs can successfully harness in the future. Yet, while they are not yet existent in India, they may have a crucial role to play in the future.

Knowing more About MGAs

MGAs (Managing General Agents) are insurance intermediaries which can get authority from their insurance partners to quote and bind policies that may fit within the agreed-upon parameters of risk of their insurance company relationships. Many MGAs also build differentiators with expertise in niche, nonstandard, or specialty insurance lines, and also through possessing privileged access to particular segments of customers.

What are the Opportunities for MGAs Ahead?

From diversification of insurance products to further leveraging untapped insurance opportunities and expanding insurance market in India, MGAs have several opportunities to fulfill in the future. The market gap currently results from the fact that where insurers can delegate distribution authority to corporate agents, platforms, and brokers, there are no regulatory provisions for delegating underwriting authority. At the same time, one of the biggest challenges that distribution networks face in the country is lower penetration of coverage in semi-urban and rural zones.

Here are some of the ways in which MGAs can fill up the gap:

  • MGAs can fill up gaps in the present system of distribution through tapping resources and expertise in specific business lines. This will help them offer personalized insurance solutions to their customers which are not always accessible through traditional channels of distribution. There is always an opportunity for diversification of insurance products and to fill up distribution gaps with specialized solutions, expanding channels for distribution, and the usage of technology to boost customer experiences and offer value-added services.
  • An MGA can offer specialized insurance products which cater to particular niche market needs and those which are not presently being met by conventional insurers. These may include everything from travel insurance and even cancellation insurance to cyber insurance.
  • MGAs can also look at untapped insurance opportunities in terms of leveraging their distribution network to expand the overall reach of insurance products to customers in un/under-served areas and remote zones. This can be enabled through partnerships with local brokers, banks, or agents to increase insurance access in specific regions.
  • MGAs can also tap technology for simplification of insurance purchase procedures and also use digital platforms to help customers research, compare, and buy policies while offering value-added services like claims assistance and risk management for improving customer experiences. They can also play a key role in customer education and awareness.

Why MGAs are Needed in India

Being an insurance intermediary between the policyholders and insurers, MGAs will automatically bolster customer experiences through taking care of underwriting policies and offering smoother and faster policy administration and claims handling. They can also take care of risk management in turn. India’s massive population always means that there is a huge untapped market for more insurance products. A few large players currently dominate the market and MGAs can help level the playing arena by enabling smaller insurance companies to access the market or expand in several areas without the setting-up and infrastructure-building costs involved.

By offering more targeted insurance solutions, MGAs (Managing General Agents) can also enhance overall insurance penetration in the country. They can create insurance solutions tailored to the requirements of particular regions or industries. Just 3.76% of the Indian population had insurance coverage in any form in 2019 and by March 2020, only the top five insurers in the country accounted for a whopping 63.5% in terms of market share. This makes a compelling case for the introduction of MGAs in the market, something that the IRDAI is reportedly considering at the moment. MGAs will not just extend coverage to under-served and rural areas where traditional insurers have limited presence, but also enable partnerships with brokers and local agents for meeting specific community needs in this regard. They can also cater to niche segments like startups, high-net-worth individuals, and small and medium-sized enterprises (SMEs). These segments often require specialization solutions that traditional insurers may not always be in a position to provide. MGAs can also work with insurtech and fintech players to tap their distribution networks while offering their expertise in claims management and underwriting.

Here are some other ways in which MGAs can help:

  • Expanding the number of carriers through which customers can get insurance.
  • Better policy quotation, underwriting, and management technologies along with easier claims management.
  • Sophistication in underwriting for particular business lines including cyber risks and more.
  • Easier market entry for bigger insurance players without any infrastructure development or high costs being required.
  • Expertise with demographics, pricing strategies and models, and sourcing other relevant external data.
  • Coverage for evolving and emerging risks.
  • Targeting specific end-consumers with digital MGA models.

Hence, as can be seen, there is a strong case for the introduction of MGAs in the Indian market. They will not only expand the reach and distribution of coverage throughout the country, but also bring many other benefits for insurance companies in turn.

FAQs

What are the key opportunities for MGAs in India’s expanding insurance market?

There are several opportunities for MGAs in India’s expanding insurance market. These include expanding the reach of bigger insurance firms in several regions at lower costs, offering expertise for specific lines of business, taking on underwriting authority, claims management, and policy handling, offering personalized insurance solutions to customers, and more.

What are some examples of successful MGAs in India?

There are no examples to cite currently for successful MGAs in India. The country has not officially introduced MGAs into the insurance industry. However, the IRDAI is reportedly considering the feasibility of allowing MGAs to operate within the sector and a decision on this aspect could be announced in the future.

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