Managing general agents (MGAs) do not exist in India as of today, although they may be allowed in the future (the IRDAI is reportedly considering enabling these entities in the insurance industry).
However, there is no denying the impact of MGAs on risk assessment and management in the Indian insurance sector along with potential opportunities for MGAs’ underwriting capabilities. Let us take a closer look at how these entities can streamline these two aspects of the insurance sector.
Underwriting and Risk Management in Indian Insurance- How MGAs Stand Out
The impact of MGAs on risk assessment and management along with underwriting can be gauged through the following aspects.
MGAs are also continually updating their knowledge base due to a fast-changing world and evolving risks. From climate change and cyber-security to other emerging risks, MGAs are adaptable and offer specialist underwriting and risk evaluation abilities for insurance carriers or reinsurers.
MGA’s underwriting capabilities come to the fore, focusing on specialist lines and niche markets, enabling more accurate policy pricing and a better balance between rewards and risks.
The surplus from profitable underwriting can be reinvested into technological expansion, research, and expanding markets. MGAs can indirectly spur growth throughout the sector by ensuring higher profitability. They are also skilled at making sure that risks are balanced better throughout the entire spectrum and effectively enable the management of aggregation limits.
They ensure that any single catastrophe or disaster does not lead to a spiralling or domino impact, thereby protecting the financial health of reinsurers and insurance carriers alike. Real-time data is also leveraged by MGAs for gaining more insights and forecasting trends along with making informed decisions.
They also thrive on analysing market trends and data while being positioned ideally to build policies that offer maximum and specialised coverage at comparatively affordable rates.
Hence, through the combination of more profitable underwriting and risk management with an emphasis on specialist knowledge and dynamic market responses, MGAs are perfectly placed to deliver greater value to the Indian insurance industry in the future.
FAQs
What impact have MGAs had on risk management practices in the Indian insurance industry?
MGAs have had a major impact on risk management practices in the Indian insurance industry. Some of their plus points include specialist knowledge and focus on business lines which help price policies more competitively and accurately while evaluating risks better from a micro standpoint. At the same time, MGAs are also leveraging technology for risk estimation and management.
How have MGAs influenced underwriting practices in the Indian insurance industry?
MGAs have greatly influenced underwriting practices throughout the Indian insurance sector, making them streamlined and more technology-driven with accurate risk estimation and management. They have specialist knowledge of particular business lines and bring this into play while underwriting policies and enabling quicker turnarounds.
