In the fast-paced world of insurance, Managing General Agents (MGAs) are constantly juggling a multitude of responsibilities. From product development to underwriting, claims management, and more, running an effective MGA requires mastering diverse skillset. While the administrative workload continues to grow in complexity, MGAs know their core value lies in their specialized expertise in selling insurance.

This leaves them facing a dilemma – how to offload the non-revenue-generating work while still delivering exceptional service. For many, the solution lies in strategic outsourcing. When done correctly, outsourcing enables MGAs to play to their strengths while accessing world-class capabilities in non-core areas. Read on to discover tips for MGAs looking to leverage outsourcing and unlock new levels of performance.

Identify Core Competencies

The first step in strategic outsourcing is to identify your core competencies. These are the functions that your MGA excels at and that create the most value for your clients. They could include areas such as underwriting, claims management, or customer service. Once you’ve identified your core competencies, you can focus on these areas and consider outsourcing the rest to specialists who can perform them more efficiently.

Assess Propriety and Commonality

As a next step, assess the proprietary value and commonality of each function. In order for your MGA’s function to have high proprietary value, it must be executed in a way that generates a substantial advantage over competitors, and if rivals attempt to imitate it, your MGA would suffer substantial strategic damage. In contrast, a function has high commonality if independent vendors can offer it to multiple insurance companies at a lower cost.

Functions with low proprietary value and high commonality are strong candidates for outsourcing. Among the many functions that MGAs outsource to experienced third parties are human resources, finance, and back-office processing. By doing so, they can reduce operating costs, increase efficiency, and focus on their core competencies.

Choose the Right Partners

Choosing the right outsourcing partners is critical. You should look for partners who have extensive experience in the insurance industry, a track record of delivering high-quality services, and the ability to adapt to your specific needs. Moreover, they should be able to demonstrate a deep understanding of the regulatory environment and industry trends.

You should also consider the financial stability of potential partners. A financially stable partner will be more likely to deliver consistent, reliable services over the long term. Finally, consider whether a potential partner can provide value-added services, such as analytics or automation, which could enhance your operations and provide a competitive edge.

Define Clear Expectations and Metrics

Once you’ve chosen your outsourcing partners, it’s crucial to define clear expectations and metrics. This includes specifying the scope of the services to be provided, setting performance targets, and establishing regular review processes. By doing so, you can ensure that your partners deliver the services you need while maintaining high standards of quality and efficiency.

Leverage Technology and Automation

Many third-party providers leverage technology and automation to deliver their services more efficiently. For example, they may use Robotic Process Automation (RPA) to automate repetitive tasks, such as data entry or policy issuance, thereby reducing errors and increasing productivity. They may also use analytics tools to provide insights into your operations, helping you identify opportunities for improvement.

By outsourcing to partners who leverage such technologies, you can gain the benefits of these technologies without having to invest in them directly. This can further reduce your costs and allow you to focus on your core competencies.

Keep Control Over Strategic Functions

While outsourcing can bring many benefits, it’s crucial to maintain control over strategic functions. These are functions that could differentiate your MGA if performed well. For example, while you might outsource the distribution of policies, you might choose to keep control over underwriting decisions, as this is a function where your expertise and judgment can create significant value.

By maintaining control over strategic functions, you can ensure that your MGA retains its competitive edge, even as you leverage the benefits of outsourcing.

Monitor and Review

Finally, it’s important to monitor and review your outsourcing arrangements regularly. This includes tracking performance against defined metrics, reviewing the quality of services provided, and assessing the financial stability of your partners. By doing so, you can ensure that your outsourcing arrangements continue to deliver value and adapt to changing needs and circumstances.

Conclusion

The insurance sector moves fast, and MGAs must keep pace. With the right outsourcing approach, MGAs can augment their in-house skills, reduce costs, and gain an unbeatable competitive edge. By being selective with outsourcing partners, keeping core functions in-house, and constantly reviewing arrangements, MGAs can seize the benefits of outsourcing without losing operational control. In a complex industry, outsourcing provides a potent strategy for MGAs to enhance their agility, productivity and focus on high-value tasks.

Partnering with specialized providers like IWFirstCall gives forward-thinking MGAs the platform to deliver on their true expertise – providing bespoke insurance solutions and unmatched service. The result is a resilient, responsive MGA primed for ongoing success. Contact the experts at IWFirstCall today to learn how outsourcing can transform your MGA.

FAQ

Why should MGAs outsource insurance business processes?

Outsourcing insurance business processes allows MGAs to focus on their core competencies and business goals while handing off the tedious and time-consuming back-office tasks to specialized BPOs. The right insurance outsourcing firm can provide MGAs with high-quality services, streamlined processes, and increased efficiency, which can lead to higher profitability.

What insurance processes can be outsourced by MGAs?

Multiple tasks such as premium calculations, new business acquisitions, quoting new business and renewals, logging submissions, claims processing, and even policy issuance can be outsourced by MGAs. The key is to find the right Insurance BPO service provider who understands the specific needs and goals of your insurance business.

Will outsourcing affect the control MGAs have over their operations?

Not at all. In fact, with a quality insurance BPO service provider, MGAs can gain better visibility and control over their operations. The BPOs offer data-driven insights and comprehensive reports, helping MGAs make informed business decisions and enhance their overall business strategy.

How can outsourcing help MGAs in enhancing client success?

Client success is vital for any business. By outsourcing back-office tasks and other insurance processes, MGAs can focus more on improving their products, developing relationships with insurance carriers and brokers, and serving clients better. BPO service providers specialized in insurance can help improve service quality and turnaround times, thereby enhancing client success.

How can MGAs ensure a successful outsourcing insurance business process?

For a successful insurance outsourcing, MGAs should clearly communicate their expectations and goals to the service provider. Regular meetings and updates can ensure alignment between the two parties. Reviewing their work periodically, providing constructive feedback, and maintaining a strong, open channel of communication are ways to ensure a successful partnership.