Category: Blog Post

A New Kind of Insurance Infrastructure

In today’s insurance market, capacity is moving—and with it, new models are appearing. As traditional insurers pull back from volatile and emerging risks, hybrid fronting carriers are emerging as essential players, especially for MGAs looking to launch specialist programmes at speed.

What Sets Hybrid Insurers Apart

Hybrid fronting carriers are fully licensed insurers that offer rated paper to MGAs, MGUs, and programme partners. But unlike traditional fronting models, they keep a meaningful share of the risk on their own books—usually between 5% and 30%. That retained risk drives tighter alignment with reinsurers and capital partners and positions hybrid fronts as not just enablers, but committed participants in the value chain.

UK Growth Is Gaining Ground

While the hybrid fronting model originated in the U.S., momentum in the UK is building fast. U.S.-based MGAs wrote more than $100 billion in premium in 2024 alone—with hybrid fronting carriers responsible for over $28 billion of that total, a 26% jump from the year before. In the UK, MGAs now account for over £47 billion in premium volume, with more than 300 active players. The arrival of carriers like Bridgehaven—PRA-authorised and backed by PE investor Flexpoint Ford—marks a significant shift in how capacity is being delivered. According to Bridgepoint (which just acquired SureStone Insurance DAC to ‘unlock EU MGA market’), the European MGA market is expected to grow to £50bn premium over the next three to five years

Why Capital Alone Isn’t Enough

Private equity and ILS investors see the opportunity—and are funding hybrid insurers to seize it. But capital, while critical, isn’t the whole story. Retaining risk, managing delegated authority, and scaling global demands robust operational infrastructure. Without the right systems, the very complexity that makes the hybrid model valuable can quickly become a liability.

Supporting Delegated Authority at Scale

Many hybrid fronting carriers work closely with MGAs that write under delegated authority, often from multiple capacity providers. This adds layers of operational pressure: onboarding, binder management, bordereaux reporting, and regulatory oversight must all work seamlessly across partners and jurisdictions.

What the Most Successful Fronting Carriers Have in Common

To keep pace, carriers need to modernise how they operate. That means investing in infrastructure designed specifically for the scale and complexity of delegated programme business:

• Real-time dashboards to monitor MGA, programme, and portfolio performance — enabling proactive management and underwriting agility
• Automated bordereaux and compliance workflows — reducing risk and manual effort, while staying audit-ready
• Scalable architecture for multi-entity, multi-jurisdiction business — supporting both growth and governance
• Seamless integration with reinsurers, TPAs, and third-party platforms — streamlining coordination across the insurance value chain
• Data transparency across all stakeholders — building trust with regulators, capital partners, and reinsurers alike

Technology That Unlocks Growth

Ultimately, the goal isn’t just compliance—it’s confidence. Confidence to expand into new markets, to support more MGAs, to offer more capacity, with less friction. For hybrid fronting carriers, the right infrastructure is what transforms capital into scalable, sustainable impact.

A Model Built for the Future

As the UK market continues to shift, hybrid fronting carriers are becoming a central piece of the programme insurance ecosystem. Those companies that combine strong capital with strong capabilities will be best placed to lead—not just respond to—what’s next.

Reach out for a chat with our hybrid fronting experts.

A 2024 Novidea survey found that 41% of insurance professionals admit their core systems haven’t been updated in over five years. Even more concerning, 76% of large companies (with 5,000+ employees) rely on six or more systems, and nearly a fifth operate with 10+ systems. This tangled web of outdated technology isn’t just inefficient—it creates serious issues around data quality, security, and scalability.

The Industry Recognises the Need for Change—But Many Are Hesitant

Despite the clear risks, 74% of insurance executives have been holding back from making the switch. However, two key factors are now accelerating digital transformation across the industry:

1. AI Adoption – While AI comes with plenty of hype, insurers are beginning to understand that without a solid digital foundation and structured data, they won’t be able to capitalise on AI’s potential.
   
2. The London Market’s Influence – With Lloyd’s leading the charge in digital transformation, brokers and insurers are realising they need to follow suit to stay competitive.
   

The Cost of Sticking with Legacy Systems

For many insurers, data quality and security are top concerns. In an industry that relies on efficiency, precision and compliance, it’s surprising how many processes are still manual or spreadsheet-based—introducing unnecessary risks of human error and regulatory challenges.

This is often the starting point for brokers, MGAs and insurers looking to modernise. Cloud-based core platforms, like those built on Salesforce, offer best-in-class security and seamless data integration, eliminating the vulnerabilities that come with legacy systems. But security is just the beginning—modern platforms also unlock operational efficiencies that can transform business performance.

Efficiency: The Defining Challenge in 2025

There is pressure from all sides. The increasing frequency of natural catastrophe (Nat Cat) events demands rapid and comprehensive responses, while rising consumer expectations—driven by digital-first companies—are reshaping service expectations.

Internally, businesses are also grappling with inefficient processes that slow down growth. Too many employees spend time on manual workflows that could be automated, limiting their ability to underwrite more risks, distribute more products, and scale effectively.

Managing Multiple Systems: A Hidden Challenge

While the insurtech market offers many solutions, multiple disconnected systems create their own inefficiencies. Novidea’s research found that nearly a fifth of large organisations use more than 10 different systems, making data security, workflow integration, and overall efficiency difficult to manage.

Instead of layering on more standalone applications, insurance organisations should consider an integrated platform. This eliminates the risks of fragmented data, improves compliance, and streamlines operations—without sacrificing flexibility.

Why DIY Digital Transformation Hasn’t Worked

Many have attempted to build their own digital architecture, only to find it costly and time-consuming. Hiring and retaining top insurtech talent is a challenge, and many internal teams lack the specialised expertise to create a seamless, future-proof system.

A hybrid approach—where businesses retain elements of their homegrown systems while integrating with a scalable platform—often makes the most sense. By leveraging technology that has been iterated and optimised over years, insurers can accelerate transformation while reducing the risks and costs of a fully custom-built system.

Building for the Future: More Than Just Plug-and-Play

True digital transformation isn’t just about installing new software—it’s about rethinking the entire ecosystem to meet both current and future needs.

1. Target Operating Model – How will the system function from an operational standpoint?
   
2. Applications & Architecture – What technology is required to support this model?
   
3. User Access & Compliance – Who needs access to what? How do you ensure regulatory compliance and data governance?
   

A 360-degree, real-time view of data and processes is essential. In the past, brokers, MGAs and insurers had to wait until the end of the month to assess claims, renewals, or financials. Today, modern platforms provide live insights across the entire business, enabling leaders to make informed decisions in real time.

Preparing for Tomorrow’s Challenges

Beyond solving today’s inefficiencies, insurers must invest in scalable systems and the right people to manage them. Digital transformation isn’t just about buying technology—it’s about investing in people and a future-ready business model.

Many hesitate to make the leap, thinking they can “hold out” for another year. But transformation is not just about solving today’s problems—it’s about future-proofing operations. The real shift happens when organisations start thinking beyond their current challenges and reimagining their business for the years ahead.

The Road Ahead

Looking ahead, the pace of change will only accelerate. Whether adapting to climate change risks, evolving regulations, or increasing customer expectations, the ability to process claims quickly, manage risk efficiently, and make data-driven decisions will determine the market leaders.

Recent wildfires in California, for example, highlight just how critical this is. As extreme weather events become more frequent, the industry must be prepared to handle a surge in claims processing at scale. The industry can no longer afford to be reactive—proactive investment in technology is essential.

At Novidea, we understand that no two insurers, MGAs, or brokers are the same. That’s why we’ve built a flexible, future-proofed platform that can be tailored to unique market needs. With a global team of 300+ experts, two-thirds of whom are dedicated to R&D, we are committed to helping our customers navigate digital transformation—not just for today, but for the future.

Reach out now to see how we can help you.

The insurance industry is navigating one of its most dynamic periods of change, driven by unprecedented challenges like climate change, surging litigation, and rapidly advancing technology. Jeff Heine, Chief Revenue Officer at Novidea, brings a wealth of experience and a sharp perspective on how these factors are transforming the sector. From harnessing data to mitigating emerging risks to adopting innovative technologies that enhance operational efficiency, his insights shed light on how insurers, brokers, and MGAs can adapt and thrive in a fast-evolving landscape. Here are some of the strategies and forward-thinking approaches reshaping the future of insurance.

Watch the full video of insights.

Addressing Emerging Risks

When examining the most pressing risks affecting the insurance industry, two key areas prominently arise.

1. Climate Change and Severe Weather Events

Climate change is increasingly impacting the sector, with extreme weather events such as typhoons, wildfires, and hurricanes growing more frequent. These developments affect not only property insurance but also various liability lines. Insurers are now required to adopt proactive measures, from assisting clients in fortifying their properties to advising on effective risk mitigation strategies.

2. The Rising Threat of Litigation

Litigation, once thought of as primarily a U.S.-specific issue, has now become a growing international concern. For instance, litigation finance and class action lawsuits have risen by 26% across Europe, adding further pressure on insurers. Insurers must be prepared to anticipate these evolving risks and help clients prepare for them.

The key takeaway is that insurers should adopt forward-looking strategies. By using data to identify patterns and understand exposures, insurers can assist their clients in mitigating risks before they materialise.

The Central Role of Technology in Insurance

Technology is no longer just an added benefit in insurance; it has become an essential component. It enables insurers, brokers, and MGAs to bridge gaps in distribution and better understand the needs of their clients. However, realising its full potential requires tackling the long-standing issue of siloed systems and fragmented data.

Leveraging Data Effectively

For years, the industry has struggled with outdated systems and disconnected information. Now, platforms with open API capabilities are enabling the integration of these systems into cohesive ecosystems. This innovation provides a holistic view of risks, benefiting not only insurers but also brokers, who can offer more tailored advice based on real-time data and historical trends.

AI as a Transformative Tool

AI continues to revolutionise the insurance sector. Although its full potential remains unexplored, several practical applications have already begun to optimise operations:

• Streamlining Administrative Processes
  AI is automating manual, repetitive tasks such as email triage, claims filing, and document sorting. This not only boosts operational efficiency but also frees up time for professionals to focus more on their clients.
• Providing Predictive Insights
  Advanced AI algorithms and generative AI analyse historical data to predict future risks. Whether identifying patterns in cyberattacks or assessing exposures linked to climate change, these insights empower insurers to make more informed decisions.

Advancements in API-Driven Ecosystems

Open APIs are transforming how insurers work by enabling better system integration, unified data flows, and scalable ecosystems. These advancements have equipped insurance companies to innovate and tackle risks more effectively. An API-driven approach allows insurers to consolidate diverse data sources and deliver precise, actionable advice to their clients.

Essential Steps for Brokers, MGAs, and Coverholders

To stay competitive in this evolving market, industry professionals should focus on three crucial steps:

1. Modernise Technology
   Organisations relying on outdated systems risk losing their competitive edge. Upgrading to modern platforms that integrate data and optimise workflows is now a necessity.
2. Harness Data
   Data can help create more personalised client experiences, which builds trust and positions insurance professionals as proactive advisers rather than just policy providers.
3. Develop a Proactive Approach
   Proactively addressing challenges, from the effects of climate change to evolving litigation risks, is essential. By focusing on forward-looking strategies, brokers and MGAs can provide clients with greater value.

The Growing Importance of Proactive Risk Management

A key emerging trend is the increasing involvement of policyholders in managing their risks. For instance, sectors like climate technology are seeing buyers demand actionable insights to guide their decisions, and this mindset is beginning to influence insurance markets as well. To meet these expectations, insurers and brokers will need to adopt transparent, data-driven strategies. Distribution methods will also need to evolve to accommodate these growing client demands.

Looking Ahead

The insurance industry is at a defining moment. Converging factors—including climate change, increased litigation risks, technological innovations, and shifting customer behaviours—are fundamentally changing how organisations operate. But with modernised technology, smarter use of data, and a proactive mindset, the industry is well-placed to address these challenges and thrive moving forwards.

At Novidea, we are committed to equipping insurance professionals with the tools and insights needed to stay ahead of the curve. Whether through AI, API-driven ecosystems, or data-centric innovations, our goal is to help the industry work more intelligently and efficiently. To discover how Novidea can support your organisation’s objectives, get in touch with us today

The insurance industry has been undergoing a profound transformation, fuelled by technological advancements and shifting consumer demands. This evolution, spearheaded by insurtech, is not only reshaping traditional business models but also catalysing mergers and acquisitions (M&A) within the sector. For insurance professionals, these changes present both opportunities and challenges, with technology playing a central role in navigating the waters of industry progress.

The Role of Technology in Modern Insurance

Technology is no longer just a supporting function in insurance; it is a critical enabler of growth, scalability, and competitiveness. Cutting-edge advancements like artificial intelligence (AI) and data analytics are driving operational efficiency, streamlining processes, and delivering enhanced customer experiences. These innovations are particularly beneficial in M&A scenarios. Companies that have the ability to view and manage their entire distribution lifecycle in one platform benefit from advanced analytics. They are able to easily  understand and demonstrate the profitability of their business, making them more attractive to potential buyers. Such platforms simplify post-acquisition integration, enabling insurers to launch new products, expand into emerging markets, and scale operations with reduced complexity. For both brokers and MGAs, possessing a forward-looking tech strategy can significantly improve valuation and business appeal in the M&A marketplace.

What Drives M&A Activity in Insurance

The insurance industry has seen an uptick in the aggregate value of M&A activity in 2024. 

Technological advancements throughout the insurance profession is one driver of current M&A activity. The trend is for larger brokers to acquire smaller brokers because the smaller operation’s tech can be subsumed easily into the bigger organisation. However in many cases the independent broker’s tech is superior from that of the bigger broker. Smaller brokers with quality systems and tech, when acquired, are far better at business reporting and are more transparent, making them a reliable partner.

Firms offering advanced solutions, such as real-time insights, actionable data intelligence and full integration between customer policy transactions and middle and back office functions, are particularly sought after. These acquisitions not only help insurance companies penetrate untapped markets but also allow them to diversify their portfolios and streamline risk management.

The Impact of Technology-Driven M&A

Technological capabilities are increasingly becoming the key differentiator in M&A deals. Investing in innovation allows insurers to specialise in emerging risk areas like climate change, cybersecurity, and personalised customer coverage. ESG, social, and governance considerations, for example, are playing a more significant role as consumers demand greater accountability from insurers.

Advanced tech ultimately fast-tracks innovation by allowing companies to automate labour-intensive tasks. Fraud detection, claims processing, and back-end customer service are just a few areas already benefiting from AI-driven automation. Such tech transformations make post-acquisition integration seamless while reducing operational costs and boosting productivity.

Furthermore, collaboration between traditional insurers and tech-driven MGAs is expected to increase. This partnership model fosters innovation and allows both parties to strengthen their market positioning. For insurers, these collaborations also serve as a fertile ground to test and refine new products that address emerging risks and customer demands.

Preparing for the Future of Insurance

It is clear that the future of insurance will be shaped by continuous innovation and adoption of advanced technologies. M&A activity will remain a key driver in this transformation, providing companies with the tools to scale, improve efficiency, and better serve their customers. For insurance professionals, the message is clear – embracing technology is no longer optional, but essential to staying competitive.

Successful insurance professionals and firms must:

• Invest in flexible, open-API core systems that facilitate seamless integrations into other platforms, allowing businesses to adapt to new challenges, capitalise on opportunities and grow their business
• Explore insurtech partnerships that enhance operational capabilities
• Prioritise emerging risk specialisations to remain competitive

By aligning with these trends, you will not only adapt to the evolving landscape but also position your business as a leader in the next chapter of insurance innovation.

Reach out now to see how we can help you.

The insurance industry is undergoing significant transformation as the market seeks to balance profitability with the increasing demand for distribution. This shift is especially pressing for carriers who need to continually benchmark their underwriting, regions, and accounts to assess profitability. 

As the market evolves, several key themes have emerged that are shaping the future of insurance distribution and innovation. Here’s what’s top of mind for carriers, brokers, MGAs and the broader insurance ecosystem.

Profitability in distribution and the rise of MGAs

Carriers today face mounting pressure to broaden their distribution channels without sacrificing profitability. To address this many are buying, or opening their own MGA, or supporting others with capacity to provide flexibility and more focused distribution channels for niche products.

MGAs have become a critical part of distribution strategies, enabling carriers to efficiently reach niche markets and align with the changing needs of customers. For carriers, MGAs offer a way to diversify their portfolios while maintaining tighter control over underwriting standards, helping them achieve that essential balance between growth and profitability.

Innovation as a strategic imperative

Innovation has become a central theme for brokers, carriers, MGAs, and others in the insurance sector, often via dedicated in-house ‘Innovation Labs’, dedicated to fostering new ideas and processes that add value across the supply chain.

Further, many are now recognising the need for their businesses to modernise their core platforms to embrace innovation more quickly, which in turn enables them seize new business opportunities more swiftly, maintain control of the development of their technology and support, and integrate emerging technologies such as AI and data via APIs.  This means they have total autonomy and agility with their platform, eliciting partnership support from their vendor as and when needed.

This drive toward innovation will only accelerate with the anticipated BP2 plan set for 2025, which will bring new standards to the industry and spur further progress. BP2, when delivered, is expected to create substantial opportunities for brokers, carriers and MGAs alike to develop data-driven innovations.

Climate extremes and insurability challenges

The insurance market faces an increasing challenge with climate extremes becoming routine rather than rare. Secondary perils such as flooding are proving particularly troublesome, as despite their title, they cause more losses overall than the likes of primary perils, such as hurricanes. 

These conditions strain policyholders and insurers alike, with many people unable to afford insurance coverage and carriers being reluctant to insure high-risk properties. 

The wholesale insurance market is particularly impacted, as premium pricing and risk management become ever more complex. For insurers to navigate these challenges, it’s crucial to use high quality climate data to build resilience and effective risk management into their policies. 

There are now many modelling firms to support carriers, from early stage Insurtechs such as Fathom, which provides specialist flood data, to established players like Moody’s RMS, covering hurricanes, etc.

The role of AI: hype or reality?

AI, including Gen AI, is one of the most talked-about trends in the insurance space, but it remains largely in the realm of ‘smoke and mirrors’ without the right digital infrastructure. While AI has huge potential, it can only deliver meaningful impact if insurers have robust digital architecture in place. 

Recent industry events have underscored this reality, as AI-specific innovation remains sparse and the need for foundational digital transformation is clear. As the market advances, we can expect to see mergers and acquisitions focused on building these capabilities, with companies like Intellect AI and Intelligent AI setting examples in real-world applications.

Redefining talent and skills for the modern insurance landscape

The skillsets required in the insurance sector are evolving rapidly. Where data scientists were once highly sought after, the emphasis is now shifting toward innovation leaders who can drive change across every aspect of the industry. 

Insurers are increasingly embedding innovation into their core functions, creating a culture that not only adapts to, but also initiates and anticipates change. This shift is essential for companies looking to stay competitive and responsive to market dynamics to support growth and profitability.

The rise of ecosystems built on cloud-native platforms

The rise of insurance ecosystems marks a transformative shift in the insurance industry, from underwriting and claims processing to risk assessment and customer engagement. This shift not only enhances the customer experience, but also fosters innovation, allowing insurers to respond more effectively to changing market demands and consumer expectations.

Building these insurance ecosystems on data-driven cloud-native platforms is essential for maximising scalability, flexibility, and efficiency. Cloud-native technologies enable the market to rapidly develop, deploy, and iterate on applications and services without the constraints of traditional on-premises infrastructure. 

This agility enables the market to leverage real-time data, enhance analytics capabilities, and implement advanced technologies like AI and machine learning to improve decision-making and risk management. 

By embracing cloud-native solutions, insurance firms can create a resilient and adaptable ecosystem that can easily integrate new partners and services, ultimately driving growth and ensuring long-term sustainability in a competitive market.

*first published in Fintech Global, December 2024

On July 19, 2024, leading cybersecurity vendor CrowdStrike released a software update, just like many enterprise software vendors do every day. However, things went haywire when the updated version of its software turned out to be faulty. Within hours, widespread problems started with the Microsoft operating system, one of business’s most ubiquitous software platforms. The faulty upgrade quickly impacted IT systems globally, causing outages and downed systems across every industry. International news outlets and social media were full of stories of grounded planes, shuttered businesses, and stopped markets. This software glitch has cost Fortune 500 companies approximately $5.4 billion in damages to date, according to insurance company Parametrix.

The days-long disruption sparked an influx of cyber and business interruption insurance claims and litigation by businesses impacted by the debacle. Last week, Delta Airlines announced that it is seeking legal action against CrowdStrike and Microsoft after the outage, which resulted in the cancellation of more than 7,000 Delta flights. The airline claims that the outage caused a direct revenue hit of $380 million due to refunds to customers for canceled flights and compensation in cash and frequent flyer miles.

There is an ongoing debate about whether this is a matter of Cyber, Business Interruption, or another line of coverage. Some experts say it’s a bit of both. Since the outage began with a botched software update and not a cyberattack, the non-malicious nature of the incident may limit the scope of coverage.

One thing is for sure. In this increasingly interconnected world of global business systems, where software ecosystems are dependent on various vendors playing well together, it’s more important than ever for insurance organizations to be better prepared for the next incident. Because there will be more to come in the future.

Taking Stock of Your Current Technology Systems

Insurance organizations fortunate enough to escape this incident unscathed should use the Crowdstrike outage as a teachable moment. This is the perfect opportunity to assess your front, middle, and back office systems and ensure they’re up for the task if a global incident like this happens again.

For example, are you ready to scale up your front office interface and effectively support a wave of customer calls after a large-scale incident? As an agent or broker, are you prepared to communicate quickly and efficiently with your customers about the impact of such an outage? Can you provide a dedicated, secure customer portal or send text messages with claim status updates? Can your entire team access policies in force and actual coverage when serving the business? You need an updated back-end system to respond effectively. And you don’t want to discover this in the middle of a large-scale event when your customers need you the most.

A connected front, middle, and back office utilizing modern technology will enable your organization to respond swiftly and accurately to a surge in claims following a national or international incident. Remember that your customers will likely have coverage questions and need to file and track claims easily. Secure customer portals can handle much of this process. A self-directed customer service portal is crucial for policyholders to check on the progress of their claims.

This is a genuine opportunity to support your clients, but your technology systems must be capable of supporting both your staff and your customers.

The time is now to make the necessary changes and upgrades to your insurance management system. Our research shows that 75% of insurance organizations worldwide are planning to significantly change their current technology systems by 2025. The smart, strategic insurance players will spend the rest of 2024 and the first half of 2025 investing in their technology systems and streamlining their operations. The players who procrastinate when it comes to upgrading their systems risk being left behind by their competitors.

Ready to talk to an expert about preparing your insurance management systems for whatever comes next? Get in touch with a Novidea expert today.

There was a time, not so long ago, when businesses were nervous about depending on the cloud. Today, that has all changed (source Forbes), and most technology vendors are positioning themselves as being in the cloud.

So, what’s changed?

Some would argue that the Covid pandemic was the driver. And whilst it’s true that the need to work remotely accelerated the adoption of cloud-based technologies, big tech providers like Salesforce (150% 2016-2020 growth) had already made great in-roads into forward-thinking businesses.

Further, most organisations across all sectors now expect to significantly ramp up adoption and migrate a growing share of their IT environment to public cloud, with a projected 32% annual growth in cloud services by 2025 (source McKinsey).

What does ‘born-in-the-cloud’ actually mean?

True born-in-the-cloud solutions come with powerful benefits over the retrofitted legacy approach. This blog aims to explore how these can help our sector, from insurers to agencies, brokers, and MGAs, to improve operations, reduce costs, and increase revenues. 

At its simplest, born-in-the-cloud (or cloud-native) solutions are those that have been entirely designed, built, deployed, and managed within a cloud computing environment. Novidea is an example of this approach since it was built on the Salesforce SaaS platform.

Many insurance technology vendors claim to offer cloud solutions, but when you examine them more closely, solutions that are labelled as ‘cloud-based’ are often little more than legacy off-premise offerings that have been retrofitted to be available remotely.

You can learn whether your current vendor is really cloud native here

This happens when legacy software providers skip the time-consuming and expensive rebuilding of their applications for the cloud and instead create web-based, front-end interfaces that are still attached to legacy application architectures in the back end.

True cloud-native software delivers a lower total cost of ownership, zero maintenance for you as the customer, automated product updates, elastic computing power that increases and decreases according to a business’ needs, and seamless integration with other cloud-based systems.

Cloud- Native – the benefits

If you want to be sure that your organisation is leveraging cloud-native software, ask yourself whether you are benefitting from these four areas:

1. Scalability: A cloud-native insurance platform allows users to increase or decrease their usage based on their changing needs – without the need for any additional hardware or any software downloads. For instance, if an MGA needs more computing power because they’ve just partnered with a new underwriter, a cloud-native platform can scale up to accommodate. Alternately, say a broker offers a top new cyber product, a cloud-native platform can expand as needed to meet increased demand.
2. Cost-effectiveness: The users’ hardware and maintenance costs are all wrapped up in the monthly SaaS subscription fee, meaning you never pay for more capacity than you need. [1] Also, with cloud-native software you get instant access to the latest features and enhancements developed by the vendor.
3. Working on the move: A cloud-native platform is accessible from any device, anywhere, with a good internet connection and the right security access. Brokers and agents can download documents, such as claims and premium data, to their phone and make deals in clients’ offices without needing to contact their own office. Claims adjusters can enter clients’ risk profile details in real-time from any claims location with just a few clicks. MGAs can agree new capacity deals with carriers without needing to head back to their desk. This is insurance on the move, and only a true born-in-the-cloud platform enables this level of flexibility and accessibility.
4. Iron-clad security: True born-in-the-cloud platforms come with top cyber security measures that ensure you are 100% compliant with all customer and client data privacy legislation in every jurisdiction in which you operate. The chances of losing client data or being hacked are incredibly remote. Salesforce, for instance, has security built into every layer of its platform. The infrastructure layer comes with replication, backup, and disaster recovery planning.
5. Born-in-the-cloud, now six years old: Novidea’s insurance platform was born-in-the-cloud in 2017, and built on Big Data firm Salesforce’s platform. It took time, focus, extensive resources and specialist expertise, along with our insurance market know-how.

Book a meeting now to discover why we now have over 100 customers in 22 countries enjoying the above benefits. You can too, while effectively managing the entire customer journey, end-to-end, with greater operational efficiencies, reduced costs, and accelerated growth.

While not new to the insurance industry, the proliferation of digital technologies and the increasing availability of structured and unstructured data has exponentially increased the use cases for data and analytics. 

Today, these include new forms of risk analysis, which are driving revenue growth, reducing fraud, and increasing operational efficiencies. 

Data-driven decision-making helps not only underwriters, but also agents, brokers, and MGAs to grow into new markets while boosting profitability. Here are some of the most compelling ways insurance firms throughout the value chain are using data and analytics:

1. More accurate risk assessment and underwriting

Ever since the industry’s origins in the 1600s, underwriters have used the available data to analyse and predict the likelihood of certain events. Back then it was the odds of merchant ships arriving back in Europe loaded with tradable goods. 

In the centuries since, data usage has transformed to incorporate almost every type of risk, including those that are new or rapidly evolving, such as natural catastrophe and cyber security. Fast-moving risks like this require huge volumes of data and the ability to collect and analyse them in as close to real time as possible. 

MGAs are increasingly combining specialist market knowledge with sophisticated risk models to underwrite new business more profitably than many carriers can. Brokers and agents are also benefiting from the ability to sell a wider range of more specialist products into new markets, worldwide.

2. Driving business growth

We have seen how MGAs are able to use their specialist knowledge to drive business growth by winning capacity from carriers in new emerging or fast-moving risk types, such as cyber and niche SME business. The same is true across the value chain, where those insurance firms with access to more data – and the ability to analyse it – can either win business from their competitors or else carve out new, under-served markets. 

Many brokers and agents are using data and analytics to improve customer retention through relevant cross-selling and identifying better value products for clients at renewal. Those insurance firms with cloud-native insurance platforms are also better able to segment their customers and tailor their offerings and marketing messaging.

Many InsurTechs and tech-savvy carriers are also analysing customer data to devise more appealing and appropriate products for specific customer segments. Embedded insurance is another way carriers can meet their customers at the point of sale by offering insurance products through new channels or by bundling it in a product experience.The London market is seeing a lot of this sort of innovation in the commercial space, while carriers in emerging markets are developing new products for small businesses and communities who have lacked competitive tailored coverage up to now. 

3. Improving claims ratios 

With escalating claims inflation, reducing claims where possible is sure to be as important as ever. Many carriers are increasingly using sophisticated data analysis to spot fraudulent claims, eliminate higher risk customers from their books, and process genuine claims faster and more efficiently. Some are even going one step further by leveraging IoT or wearables to collect even more data to better drive their decisions. All of this is leading to lower claims costs and improved ratios. MGAs’ sophisticated underwriting models are also in many cases leading to better claims ratios. 

4. Optimizing operations 

Another way many insurance firms across the value chain are using data is to improve operational efficiency. Analyzing data from various business processes allows firms to identify bottlenecks and inefficiencies and implement changes to eradicate them.

Overall, the use of data and analytics in the insurance industry is increasingly essential for informed decision-making and improving business performance. However, many legacy brokers, agents, and underwriters suffer from operating multiple systems and data silos, making customer data harder to access, harder to analyse, and harder to keep secure. 

This is why so many fast-growing companies within insurance are increasingly looking to consolidate their data and systems onto a single, modern cloud-based insurance platform. 

Get in touch today, to find out how Novidea’s born-in-the-cloud insurance platform, built on Salesforce, can help your business grow revenues and optimise operations, through better use of data and analytics.

MGAs have become an increasingly vibrant and innovative part of the global insurance market, often addressing niche or underserved markets. McKinsey estimates that there are 600 MGAs currently operating in the U.S., and 300 MGAs in the UK. And these numbers are growing.

Their role in the insurance industry is providing another vital, cost-effective distribution channel for carriers and specialist solutions and products for customers in specific insurance lines, such as management liability (like D&O or EPLI), Product Recall, Flood, Specialty Insurance, Transportation, Work Compensation are some other common examples.

MGAs also provide access to isolated geographic areas. An insurer may want to write business in a remote location, but don’t want to spend the money and resources to open an office there. With an MGA they can gain access to these markets without having to open an office or hire staff.

Indeed, MGAs play an especially important role across a variety of commercial lines, where their specialty market expertise means they can identify and underwrite emerging risks more profitably than mainstream insurers, who find it more difficult to target niche markets. 

The three most common types of MGA in today’s market are:

1. Underwriting-led: MGAs founded by experienced insurance specialists to capture a niche in the market not currently well served
2. Technology-led: MGAs that have acquired capacity and are writing business for commoditised lines where they can offer higher margins due to having lower operating costs and new methods of pricing
3. Service-led: companies that are offering a range of services in a specific niche, of which specialist insurance cover is a key part

In the US, the majority of focus is on the second category: those technology-led MGAs who can write commoditised lines at a higher margin than the competition. In the UK market, categories one and three are more numerous. 

In all three categories, technology is facilitating more rapid growth. Although MGAs have been growing in importance and influence over the years, they are still young businesses by insurance industry standards, and so most of them lack the same constraining legacy technology that holds back many larger, incumbent carriers. 

Even traditional underwriting-led MGAs are therefore leveraging technology to streamline their operations and – in many cases – augment their pricing models. 

Those consumer-facing MGAs enjoying the most robust growth are those that enable customers to handle everything seamlessly online. One standout example is the UK-based MGA ManyPets, which hit a valuation of $2 billion in 2021 following rapid growth in its customer-base throughout the Covid pandemic. 

Let’s take a deeper dive into how MGAs are using technology to drive growth, according to recent research from McKinsey:

1. Automation

Many MGAs are using artificial intelligence or machine learning to automate routine tasks and improve efficiency. This can include automating underwriting processes, risk assessment, and claims handling. By automating back-office processes, MGAs can operate much more efficiently.  

2. Digital platforms

Consumer-facing MGAs are using digital platforms to interact with customers, agents/brokers, and carriers. These platforms enable MGAs not just to provide online quotes, but to issue policies and even handle claims digitally. In this way, they are the equal of even the largest incumbent insurers. What’s more, MGAs in specialty lines are increasingly offering this kind of slick all-in-one digital service to commercial clients too, cutting out the need for printed paperwork altogether and speeding up sales cycles. 

3. Data analytics

MGAs are using data analytics in several ways. Obviously, for any MGA, their single most important client is the carrier which gives them capacity. As Insurance Insider puts it, “Insurers now see MGAs as part of the strategic direction for their business. They are not as nimble as they would like to be, so working with an MGA gets access to new markets and helps develop new products.”

The savviest MGAs are therefore using analytics to track the kinds of business that would be most beneficial for their carrier partners, and to prove where they are adding the most value – a crucial competitive advantage in a hard market where spare capacity is beginning to dry up in many lines. 

Secondly, MGAs are using data analytics to develop more responsive and more accurate pricing models, allowing them to underwrite the better risks at higher margins, as well as develop products for more specialist risks, such as cyber. 

Thirdly, MGAs are using data analytics to look at more granular segmentation of customers and offer coverage that better suits their needs – and their pockets.  

Many MGAs have obtained their competitive advantage through use of a born-in-the-cloud all-in-one insurance platform like Novidea’s. If you are an MGA looking to work with the best, why not have a conversation with one of Novidea’s insurance platform experts? 

If you’re a broker or agent that wants to work with a technology-driven MGA, why not get in touch and see what Novidea could do for your business?

Last month over 1,000 insurance professionals gathered at Chelsea Pier in New York City for the InsurTech New York Spring Conference. This event was a great opportunity to connect, network, take in thought leadership sessions, share best practices and learn more about the current state of the commercial insurance industry. The event featured innovative new startups to large multinational organizations. Representatives from brokers, carriers, InsurTechs, MGAs and more gathered together to discuss what is happening in our industry. Novidea was proud to sponsor, present and exhibit at the event. 

Here are the top five trends we identified for InsurTech New York.

1. Digitization Increases in Popularity: The growing number of companies developing ways for brokers, MGAs and carriers to digitize their operations. For decades the insurance industry has relied largely on paper documentation and spreadsheets. These often require repetitive manual workflows and are inefficient and error-prone. To help solve this problem many companies are coming up with ways to help turn physical assets into digital ones. As underwriters begin requiring more and more data to effectively cover and price insurance, the ability to quickly access information in a digital format is critical.

2. Investors Still Interested in InsurTechs: There have been many reports that given the current economic situation there has been a slowdown in the amount of investment in the InsuTech space. While many indicators demonstrate that this is accurate, the conversations and presentations at InsurTech New York showcased that there is still strong interest in investing in InsurTechs. Representatives from the leading VC and PE firms such as MS&AD Ventures Inc, ManchesterStory, Avanta Ventures and Bessemer Venture Partners were in attendance and were busy talking to the exciting startups at the event. The biggest change in InsurTech investing is that terms may be different, valuations might be lower and due diligence will be more thorough, but there is still great interest from leading firms to continue to bet on InsurTech.

3. The Number of MGAs Continues to Rise: MGAs have been on the rise for years. They connect the strength of established carriers with a network of trusted brokers through cutting edge technology. InsurTech New York featured dozens of different MGAs specializing in unique verticals to help deliver innovative products to the market. Many of the speaking sessions featured representatives from MGA discussing how they are helping carriers bring specialized products to the new areas.

4. Delivering Better Customer Service with Embedded Insurance: For years insurers have been looking for ways to meet their customers’ insurance needs where they want them. Years ago, portals were the method carriers could reach their customers by allowing them to request quotes directly from their website. Now they are using InsurTech companies to reach their customers through embedded insurance. When you purchase airline tickets, reserve a hotel room, or buy an expensive electronic device, you are presented with an opportunity to insure the transaction. This is embedded insurance and it gives carriers an opportunity to meet their customers insurance needs, in real time. Many companies are helping insurers develop products and find ways to distribute insurance to their customers directly. 

5. Progressing the Industry with Specialization and Niche Insurance: It was only a few years ago that the idea of pet insurance became mainstream and now there are dozens of carriers writing billions of dollars in premiums helping people protect their pets. This trend has continued with more insurers specializing in unique solutions. Insurtech New York featured a number of companies that focus on very specific areas. Some of these include coverage for boats, perishable cargo, wildfire, climate change, tornadoes and many more. These companies are helping move the industry forward by developing new products and coverages that were often ignored or never existed.

Ready?

Using the best technology is vital for navigating this high-price, low-margin insurance industry. When you’re ready to go digital, reach out to the Novidea team. We’d love to discuss how we can help inflation-proof your business.