Three Carrier Approaches to MGA Policy Systems Rob Reed, VP Sales | Jan 28, 2019

Insurance Program Market Opportunities

Remember the old “Rock – Paper - Scissors” game?  Each of these items has utility on its own, but when placed side by side, there are trade-offs. Scissors beats paper, but rock beats scissors, and of course paper covers rock. It’s the same with MGA policy systems. A carrier can provide a system to an MGA, require an MGA to acquire their own, or offer the MGA a choice. Each approach is valid but comes with a trade-off.

In this post, we examine the pros and cons of three carrier approaches to MGA systems and our recommendations for carriers that are undecided.   

Option 1: The Carrier Provides a System

This is, perhaps, the most traditional scenario. It’s used by the program groups at some of the world’s largest carriers. Because this approach that has been around for some time, the systems offered by these carriers may be aging and less than optimal for their MGA partners. However, this is the option for carriers that want the greatest level of control. Here are the trade-offs:


  • Program carrier controls compliance: The carrier’s rates, rules, and forms are built into the system, and the carrier controls all updates
  • Potential synergies across programs: The carrier has a common framework with which to manage all its programs, regardless of the MGA partner
  • Onboarding is easier: There is no project required to integrate the MGA and carrier systems or to define the carrier’s reporting requirements


  • Reputational risk: If the system is old and difficult to use, the carrier risks a frustrated MGA that searches for a new partner
  • Changes are slow and expensive: If the system must also support the carrier’s “Main Street” business, it will be generic, so incorporating the specialized coverages of programs will be difficult
  • New programs compete with enterprise: The broader issue here is that MGA partners place an incremental load on the carrier’s IT resources

Option 2: The Carrier Does Not Provide a System

Some carriers may choose to opt out of providing and supporting an MGA system. This approach aligns well with the movement among MGAs to own their systems. This is the option for carriers that want to offload systems management to the MGA and are willing to accept some loss of control. Here are the trade-offs:


  • Does not interfere with corporate IT: The carrier’s IT organization is freed to focus on supporting other corporate systems and initiatives
  • MGA manages the system: The burden passes to the MGA to support and maintain the system
  • Less complex change management: The carrier no longer needs to account for the effects of a system change across their enterprise and landscape of partners


  • Some MGAs can’t afford: Smaller MGAs may not be able to afford their own systems, so carriers may need to adjust the MGA’s compensation to enable the MGA to cover the cost
  • Limited access to detailed policy data: Carriers can specify requirements for reporting, but access to the full data set for further analysis is lost
  • Control over compliance more difficult: MGAs own the data and are free to modify the system under this scenario. Carriers that pursue this approach will need to establish a governance process with their MGA partner

Option 3: The Carrier Can Provide a System, But Doesn’t Require It

This is the approach for carriers that want to leave their options open and partner with the broadest cross section of MGAs possible. Here are the trade-offs:


  • Easy to do business with: The carrier offers the MGA a choice, rather than insisting on one approach
  • Onboarding fastest: Regardless of platform choice, new program development is expedited as system challenges become bygones
  • May open new opportunities: Because the carrier offers a choice, any MGA, whether they own a system or not, is a potential partner


  • Compliance is challenging across models: Syncing compliance across two distinct approaches can be difficult to maintain
  • Pressure to compensate differently: Knowing that the carrier offers a system to some MGAs and not others may prompt different compensation models within the same partner type
  • Data aggregation is challenging: Data is distributed across disparate systems, some owned by the carrier and some not. Getting a top down view of the carrier’s entire program business requires more work

In the end, there is no “one size fits all”. The approach you choose as a carrier needs to align with your program strategy and how you weigh the pros and cons of each option. Consider the programs that fit your business objectives. Do the MGAs that cover those programs expect a system from you or do they feel strongly about owning their own? If your approach to systems is not a fit, it may be time for a change.

Rob Reed began his career in the insurance industry in 1997. Starting as an Underwriter Trainee at Prudential, Rob went on to become an agency interface specialist at CGU Insurance Limited and OneBeacon Insurance companies. With his deep domain expertise, Rob joined Instec as a Sales Executive in 2001, and has since helped dozens of insurers solve challenging operational issues with tailored solutions. As Vice President of Sales, Rob serves as a key partner, guiding prospective clients through the sales engagement and initial implementation processes.