As Head of Sales Credit & Surety at SCHUMANN Lara Biermann is advising and supporting international credit risk insurer and surety bond provider in digitizing and automating their risk and business process management. She studied business administration focused on finance, accounting and taxes and supervises international credit and surety insurance companies while implementing CAM Credit & Surety.
Technology to Drive Success in the Surety MGA Revolution
Managing General Agents or MGAs remain one of the most dynamic segments of the insurance market. This was underlined in our webinar with Alessandro Rizzo, CEO and Chief Underwriting officer of EuroCaution, the largest surety & bond provider in Belgium and Luxembourg. Over the last 5 years, MGAs have taken a larger share of surety business in the Belgian market, and it continues to see new entrants. Technology is a key driver of this growth and profitability for the business.
To win the battle for backers, MGAs must ensure interests are aligned with their insurers and reinsurers. To win the confidence of the insurers that provide them with underwriting capacity, it is increasingly important that their systems are state of the art and have the most accurate data flowing freely in real time between all the relevant stakeholders. That demands that they deploy technology which delivers the certainty and reassurance that enable capital providers to invest.
But capacity alone doesn’t equal growth. One sure route to an expanded book is to develop new products that match the needs of the market and gives insureds more choice. In Europe, this almost certainly means a shift away from imported U.S. bond models to home-grown systems which better reflect the European market and its structures.
Of course, growth itself does not automatically mean profitability. MGAs are increasingly well placed to compete with banks for surety bond business. As stated before, they can offer a wider range of products and adapt them to clients’ need more quickly. Faster adoption of new technologies also makes MGA’s nimbler and more efficient. Technology can increase customer satisfaction through faster decision-times and more accurate sales targeting for example.
Eurocaution also highlighted in our webinar that in the past, banks’ access to real-time banking data gave them an unmatchable competitive edge, but the advent of open banking has closed the gap. It allows MGAs and insurers to garner the real-time financial data necessary to make informed underwriting decisions quickly directly from banks across Europe and beyond. It permits instant verification of income sources directly from the potential insured’s transaction history and improves the accuracy of credit scoring calculations by incorporating current, pertinent financial information into credit assessment models.
Limits may be determined based on actual spending habits, and costly, inefficient due-diligence processes abandoned, to be replaced by fast-track onboarding. This ability is ever more critical as customers increasingly turn away from large bond facilities in favour of bonds for individual projects – another sweet-spot for agile MGAs. Better data on small companies will support the credit management industry across the board, as historically this segment was difficult to underwrite due to a lack of up to date financial information.
Technology: The Great Enabler
Technology can deliver all of these benefits. It improves the product and enhances the customer experience, leading to larger, more profitable portfolios. Connectivity through APIs between multiple software applications allows flexibility, simplicity, and personalisation, as well as dramatically increased automation. As advanced data, analytics, and reporting capabilities are incorporated into processes and decisions, the result is better underwriting performance.
All that said, no one wants to hand over the surety underwriting business entirely to algorithms. Human interaction and judgment are too important to allow that to happen and remain an important part of the customer experience.
However, connected technology lets underwriters focus more of their time on the elements of the process which demand their skills and intuition, and much less of it on repetitive administration and unnecessary processing. It allows MGAs to improve their efficiency, build value, and win the competition for capacity, clientele, and profitability. And it will benefit the policyholder as well.