The FCA’s recent speech on Consumer Duty, delivered by Sheldon Mills, emphasises the crucial need for insurance firms to rigorously assess and evidence the outcomes their customers receive. Mills reiterated that “Consumer Duty is not a one-off task, but an ongoing commitment.”
This reminder from the regulator adds urgency to the continuous efforts insurers must undertake to align with these expectations. The speech sheds light on the current landscape, offering both positive examples of best practice, and areas where firms are falling short in outcomes monitoring. For insurers, it is essential not only to understand these findings but also to proactively address any identified gaps to ensure compliance and maintain customer trust.
Key Takeaways
Emphasis on Outcomes Over Processes: Mills highlighted a common pitfall among firms—an excessive focus on process completion rather than the actual outcomes for customers. This approach can lead to a disconnect between regulatory compliance and customer-centric service delivery. Insurers must shift their focus to defining clear customer outcomes and selecting metrics that directly reflect these goals.
Comprehensive and Analytical Reporting: The effectiveness of monitoring hinges on the comprehensiveness and analytical depth of the data reported. Many firms were found lacking in this area, with reports providing limited insights into customer outcomes due to insufficient or inadequately analysed data. Enhancing the quality of data and ensuring robust analytical frameworks are crucial steps forward.
Proactive Remediation: The FCA has observed that evidence of proactive measures taken to address identified poor outcomes was notably sparse. Insurers must prioritise not only identifying but also acting upon areas where customer outcomes are suboptimal. This requires a dynamic and responsive monitoring system that facilitates timely interventions.
Tailored Monitoring Approaches: The speech highlighted that the most effective monitoring systems are those tailored to the specific strategies, products, and target markets of the firm. Generic or process-focused metrics often fail to capture the nuances of customer experiences. Firms should develop bespoke monitoring frameworks that align with their unique operational contexts.
Next Steps for Insurers
We would urge insurers to redefine and align the metrics they track with outcomes—and for some, this may involve revisiting their monitoring frameworks, ensuring that metrics are not just indicators of process completion but are directly tied to customer outcomes. It is important to set clear, specific outcomes and choose relevant metrics that can provide genuine insights into whether these outcomes are being met.
Investing in data quality improvements and advanced analytical tools is also crucial. Firms should aim to collect comprehensive data and conduct in-depth analyses to derive meaningful insights. This might include leveraging advanced analytics and machine learning to predict and preempt potential poor outcomes.
Establishing a culture that prioritises proactive responses to monitoring insights is essential. This means fostering an environment where potential issues are promptly addressed, and continuous improvement is ingrained in the firm’s ethos. Regular training and awareness programmes can help instil this mindset among staff.
The FCA’s update on Consumer Duty serves as a crucial reminder of the ongoing responsibilities insurers hold towards their customers. Each insurer must craft a monitoring approach that resonates with its strategic objectives and operational realities. This involves understanding the unique needs of their customer base and designing metrics that accurately reflect the quality of service delivered. Engaging with customers to gather feedback can also provide valuable perspectives for refining these frameworks.
A Reminder of Proactive Responsibilities
By adopting a proactive audit perspective, insurers can not only ensure compliance but also enhance their client relationships and, ultimately support sustainable long-term growth. At Pro Global, we are committed to supporting our clients in navigating these regulatory landscapes, fostering a culture of excellence and customer-centricity in the insurance sector.
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Further Reading:
Tightening up: New FCA rules
Name: Pervin Sivanathan
Job title: Group Head of Audit & Advisory
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This article is shared with the kind permission of P&C360
Louisiana has recently updated its regulations for managing general agents (MGAs) through House Bill 672, aligning many aspects with the National Association of Insurance Commissioners (NAIC) Model Act. While some changes are technical or conform to the NAIC Model, the new legislation introduces additional financial reporting requirements and other obligations for MGAs and their associated insurers, effective August 1, 2024.
These changes are partly in response to a series of insolvencies among Louisiana insurers that use affiliated MGAs. The amendments extend existing laws and apply broadly to MGAs, managing general underwriters (MGUs), program administrators, insurers, and investors. Key provisions include quarterly financial reporting by MGAs, regulatory notifications for certain financial thresholds and events, mandatory independent audited financial reports, expanded examination rights for regulators, and a prohibition on persons involved in prior insurer insolvencies from acting as MGAs.
House Bill 672 reflects a broader trend towards increased scrutiny and regulation of the growing MGA sector, driven by concerns over rapid insurance growth and the risk of insolvencies. This legislative response underscores the heightened regulatory environment MGAs now face, particularly around robust data documentation and underwriting guidelines. Ultimately, regulators view MGAs and TPAs as extensions of insurance carriers. This perspective necessitates that MGAs and TPAs uphold the same standards of compliance, transparency, and diligence as the carriers themselves.
At Pro Global, our recent analysis of over 200 U.S. audits reveals critical insights into the current state of compliance within these entities. Our audits uncovered an average of five findings per engagement, with 55% classified as high-priority issues. Key areas requiring immediate attention include compliance policies and procedures, accurate and complete policy documentation, adherence to authorized binding limits, and appropriate/diligent sanctions checking. These deficiencies underscore the need for MGAs to bolster their internal controls and compliance frameworks.
One of the most pressing TPA issues identified is poor claims handling, which not only affects customer satisfaction but also exposes companies to significant financial and reputational risks. Ineffective reserving practices and inadequate coverage analysis further exacerbate these challenges, potentially leading to regulatory penalties and financial losses. To address these issues, it is imperative that MGAs and TPAs enhance their claims management processes, ensuring timely and accurate claims processing and reserving.
Moreover, proactive audits and claim peer reviews play a vital role in strengthening overall risk management and governance policies. Regular audits not only ensure compliance with regulatory standards but also help businesses become more resilient to unforeseen challenges. By rigorously examining internal controls and operational processes, audits mitigate financial, reputational and conduct risks and enhance the reliability and accuracy of business operations.
Cybersecurity is another critical area that requires attention. With the increasing reliance on digital platforms and data, MGAs and TPAs are vulnerable to cyber threats. Implementing robust cybersecurity measures and conducting regular vulnerability assessments can help protect sensitive data and maintain the integrity of business operations.
The key takeaway for carriers, MGAs, TPAs, and compliance teams is clear: the regulatory landscape is evolving, and the focus is sharpening on delegated authority structures in North America. Louisiana’s recent amendments through House Bill 672 epitomize the heightened regulatory scrutiny that MGAs and TPAs now face in their rapidly growing corner of the insurance market. These changes, driven by a need to address past insolvencies and ensure robust financial practices, reflect a broader trend towards increased oversight. As MGAs and TPAs are seen as extensions of insurance carriers, they must adhere to the same standards of compliance, transparency, and diligence.
North America’s growing and dynamic population of MGAs and TPAs must rise to the occasion by strengthening their compliance frameworks, enhancing their operational processes, and prioritizing cybersecurity. Proactive audits and continuous improvement are the keys to navigating this evolving landscape successfully. By doing so, MGAs and TPAs can not only keep pace with regulatory expectations but also drive sustainable growth and build a solid and compliant foundation for the future. A proactive approach to continuous improvement is key – audits are not just tick box exercises, nor are they limited to a “once and done” approach. MGAs and TPAs take note!
Name: Robert Sherman
Job title: US Head of Audit & Advisory
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This article is shared with the kind permission of Insurance Journal.
Ensuring Accurate Exposure Reporting
Accurate reporting of exposures is the cornerstone of premium audits, which are conducted in order to determine the exposure basis for an insurance policy – such as payroll, sales, or vehicle count – at the end of a policy period in order make a final calculation of premium and premium taxes, according to a definition from the International Risk Management Institute. The Rating Bureau requires yearly audits, and while some carriers may waive them, the threshold for estimated or waived audits is low in the industry.
The audits ensure that the right premiums are charged, reflecting the actual risk insured. This accuracy benefits not only the insurers but also the policyholders and their agents. For the policyholders, paying the correct premium means they are not overcharged and can potentially benefit from downstream cost savings through appropriate experience modification adjustments.
Agents also stand to gain from accurate reporting, as their commissions are often adjusted based on the revised exposures calculated during the audit. Moreover, accurate exposure reporting informs the future rate-making process of states and helps carriers apply appropriate loss cost modifiers. This, in turn, affects the earned premium, influencing loss ratios and combined ratios, which are vital for larger enterprise-wide decision-making.
The importance of accurate exposure reporting is underscored by data from the National Council on Compensation Insurance (NCCI), which shows that incorrect classifications and underreported payrolls can lead to significant discrepancies in premium calculations.
A study by the Century Foundation found that worker misclassification has a direct impact on higher workers’ compensation insurance premiums, stating: “As misclassification is fundamentally a process to evade required taxes and insurance, it is revealing that the three Northeast states (Vermont, Connecticut, and New Jersey) with the highest estimated rates of misclassification are also in the top five in the country in terms of the cost of workers’ compensation insurance premiums.”
Tackling Potential Premium Leakage
Premium leakage remains a significant challenge in the insurance industry. It often occurs due to misclassification of workers, underreporting of payroll, and the use of uninsured subcontractors. A common issue is the misclassification of subcontractors and independent contractors, particularly in states with stringent classification tests like California’s ABC test, which is used to determine whether a person is an employee or an independent contractor. Ensuring subcontractors have proper workers’ compensation coverage and validating their levels of independence is crucial.
Another area of concern is the interchange of labor, where employees are classified incorrectly according to state manual rules. Detailed interviews with business owners and officers to understand their duties and levels of management can help apply the correct classification codes. Accurate documentation of job duties and the defense of all classifications is essential. Additionally, understanding temporary staffing and labor broker agreements is crucial for assigning appropriate classifications.
Data from the Coalition Against Insurance Fraud indicates that workers’ compensation premium fraud costs insurers an estimated $25 billion annually. Addressing premium leakage through thorough audits can significantly reduce this financial burden. For example, substantial financial gains are achievable through productive audit practices, which can help transform a negative return premium – where a carrier is at risk of missing critical information at the time of audit (hidden exposure, subcontractors etc.), which in turn decreases the premium amount. This could have adverse effects on expense and loss ratios, thus having a direct impact on combined ratios and overall profitability.
Addressing Non-Compliance Issues
Non-compliance with state and regulatory bureau guidelines is a pervasive issue that can lead to severe penalties and financial losses for insurers. Proactive measures are essential to address non-compliance, starting with educating policyholders throughout the lifecycle of the policy. Premium audits often serve as one of the few touchpoints with customers, making it crucial to communicate the benefits of compliance clearly.
This is a time where the customer works directly with the carrier auditor or third-party audit firm. They will receive electronic or physical mail requests for information, requests to upload material to portals and fill out worksheets etc. Therefore, it is important that the carrier thinks of the process through a lens of customer experience and success as it could be the only time they are talking with a customer through the life of the policy.
While non-compliance surcharges and potential non-renewal or cancellation are traditional tactics, focusing on the customer’s experience and showcasing the benefits of compliance can be more effective. Customer journey mapping can identify critical touchpoints, ensuring that the premium audit process enhances rather than detracts from the customer relationship.
Engaging with state bureaus and industry associations such as the National Society of Insurance Premium Auditors (NSIPA) can provide valuable insights into best practices and regulatory updates. Being part of these networks helps insurers stay ahead of potential compliance issues and adopt industry-leading practices.
A proactive approach to compliance can also involve leveraging technology. Remote and AI-powered auditing solutions are becoming more prevalent, offering increased accuracy and efficiency. These tools can analyze large datasets to detect patterns and anomalies, providing a robust defense against non-compliance and fraud.
Ensuring Best Practice
The role of premium audits in the U.S. insurance industry is more critical than ever – a yearly audit is recommended and a substantial requirement at the rating bureau level. Ensuring accurate exposure reporting, tackling premium leakage, and addressing non-compliance are fundamental to maintaining financial stability and fostering trust with policyholders. By adopting thorough and proactive audit practices, insurers can mitigate risks, enhance accuracy, and ultimately drive better financial outcomes.
However, the path forward requires decisive action. Insurers must be proactive in implementing rigorous premium audits and maintaining stringent checks and balances to prevent non-compliance and financial losses. This proactive stance involves investing in advanced auditing technologies, engaging in continuous education for policyholders and agents, and fostering strong relationships with regulatory bodies and industry associations.
The stakes are high: inaccurate reporting, unchecked premium leakage, and non-compliance can lead to significant financial and regulatory repercussions. Conversely, a robust premium audit framework can not only protect against these risks but also unlock substantial financial gains, as evidenced by operational transformations seen by Pro Global that yielded up to 18% additional premium on productive audits.
Insurers can set higher standards for their premium audits by adopting the following practices:
The time to act is now. By prioritizing these measures, insurers can safeguard their financial health, improve customer satisfaction, and strengthen the integrity of the insurance industry. The commitment to proactive premium audits and stringent checks and balances will not only prevent financial loss but also ensure a more resilient and trustworthy insurance ecosystem.
Name: Robert Sherman
Job title: US Head of Audit & Advisory
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This article is shared with the kind permission of Insure TV.
In an insightful discussion with Insure TV, Hans Døhlen discusses how Pro MGA supports MGAs from early stages, driving growth and expansion in the UK, Europe, and the US, with plans for Latin America and DIFC.
Please click on the video link below to view.
Name: Hans Martin Døhlen
Job title: Managing Director, Pro MGA Solutions Europe GmbH
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The event brought together industry experts and leaders to discuss the latest trends and challenges in the auditing world, highlighting the increasing scrutiny of Third-Party Administrators (TPAs/DCAs) and the growing cyber threats facing the industry. With insights from Pro Global’s Audit Team and experts from Cyber Security Associates (CSA), attendees gained actionable strategies to navigate the complexities of regulatory requirements and cyber defense. Here are the key takeaways from this dynamic and informative session.
Regulatory Trends and Audit Findings: Increasing scrutiny of MGAs & TPAs
Robert Sherman, U.S. Head of Audit & Advisory at Pro Global, kick started the event by highlighting some significant regulatory trends in the region, : “The Property and Casualty (P&C) market in the U.S. is expected to grow by 7% in 2024, with a notable rise in the use of Managing General Agents (MGAs) and Third-Party Administrators (TPAs). As a result of this regulators are emphasising the importance of robust data documentation and underwriting guidelines; viewing MGAs as extensions of carriers.”
Key findings presented at the event by Robert, from Pro Global’s analysis of 200 U.S. audits, revealed that compliance, policy documentation, adherence to binding limits, and sanctions checking are areas needing attention. The audits showed an average of five findings per engagement, with 55% of these being high-priority issues. Compliance lapses, poor claims handling, and inadequate coverage analysis also emerged as significant risks, potentially leading to financial losses and regulatory penalties.
Similarly, he emphasised how an audit helps enhance overall risk management and governance policies, making businesses more resilient to unforeseen challenges while safeguarding their reputation. In addition, it ensures compliance with regulatory standards, reducing risks and building trust with stakeholders. Moreover, audits pinpoint and address conduct-related issues, promoting ethical practices and reinforcing the company’s integrity and transparency. By rigorously examining internal controls and operational processes, audits also mitigate financial risks, ensuring the reliability and accuracy of business operations.
The key takeaway for attendees was that regulators are increasingly scrutinising MGAs and TPAs/DCAs, and proactive audits are critical to ensuring ongoing compliance and best practice.
Cybersecurity Threats and Defense
Phil Cordey, Operations Director at CSA, then provided an in-depth overview of the evolving cyber threat landscape. He warned that ransomware incidents remain the top threat to businesses, with active criminal gangs targeting insurance companies and using collated information to infiltrate their third-party partners. These groups specialise in conducting sophisticated reconnaissance and penetration testing, making them formidable adversaries.
He stressed the importance of using comprehensive audits to tackle increasingly sophisticated attempts to hijack a company’s core systems and data: “AI is increasingly being used in both cyber-attacks and cyber defense, balancing an increase in attempted incidents with better monitoring and automation to prevent complete compromise of organisations’ IT systems. Data protection remains a critical concern, with inadvertent data leaks through services like ChatGPT posing significant risks, a breach that many companies are unaware and unprepared for.”
To mitigate these threats, Phil emphasised the importance of putting in place stringent security audit assessments, available to organisations using globally recognised frameworks like NIST – used by most, if not all, U.S. based companies – ISO 27001, the Centre for Internet Security, and the UK’s National Cyber Security Centre’s Cyber Assurance Framework & Cyber Essentials Frameworks.
Confirmation was provided that companies can obtain technical assurance of their security controls through Penetration Tests, Gap Analysis Assessments, or a combination of both using Cyber Due Diligence Assessments.
Phil added: “These are three important active steps that companies should undertake to cement and assure themselves they are on the right security journey in line with budget and strategic considerations.”
Canadian law and regulation
Elaine Collier, Senior Auditor (Canada), in her session, talked to the importance of Bill 96 and increased regulatory scrutiny:
“A year after Bill 96, known as Law 14, came into effect in June 2023, questions about its implementation continue to dominate discussions. The legislation, which enforces French as the official and common language of Québec, gave MGAs and contract writers a year to comply, though no audits have been conducted to ensure adherence.”
In response, Pro Global has developed a specific audit approach to evaluate compliance, finding that whilst some organisations already had French-language policies in place, others struggled with the requirement to issue French documents first, followed by English versions if requested.
A key recommendation for companies is to establish a clear policy on handling Bill 96 and effectively communicate this to staff. Eliane stressed that the “French First” rule remained untested in courts, adding to the regulatory uncertainty.
“Additionally, we observed instances where policies were issued in French but included English endorsements, highlighting the need for thorough audits to ensure full compliance. Another grey area involves handling policies written outside Québec or companies with both English and French names, which cover holders need to address carefully under binding authority agreements.”
Elaine also highlighted how regulatory scrutiny is intensifying in other provinces. Specifically, in Ontario, the Council of Registered Insurance Brokers of Ontario regulates MGAs, although licensing is not yet mandatory. However, the Financial Services Regulatory Authority of Ontario (FSRA) is beginning to focus on MGAs due to complaints, although its strategic plan primarily targets consumer business outcomes.
She concluded: “Despite this, the growing presence of MGAs in Canada, particularly within the Lloyd’s market, underscores the importance of regular audits to navigate these evolving regulatory landscapes.”
Integrating IT and Security
Kristy Lovegrove, Group Head of Technology at Pro Global, stressed the need to view IT as integral to business operations rather than simply a cost centre within the business; adding that effective data management and security were crucial for business continuity and risk management.
Kristy also highlighted the importance of defining security goals aligned with business objectives and ensuring compliance at all user levels within an organisation:
“As technology evolves, businesses must educate employees about new tools like ChatGPT while maintaining stringent security standards. The focus should be on continuous improvement in response to changing threats.
“The two core takeaways from a technology perspective from me would be that security must support the business in achieving its goals and objectives, but it must increase the value of the business.”
Conclusion
Pro Global’s event underscored the critical role audits play in ensuring robust regulatory compliance, effective use of AI and Big Data, and proactive cybersecurity measures. The key takeaway is clear: to safeguard their future against evolving threats, companies must conduct diligent audits that encompass IT, MGAs, and TPAs. This also requires integrating audit and business strategies that consistently enhance and test their processes.
As Kristy emphasised: “An audit is not a tick box exercise; it should be a journey of continuous improvement, as the threats to the business are constantly changing.”
Pro Global offers comprehensive audit and consultancy services to help businesses navigate these challenges, ensuring compliance with regulatory and corporate standards. Visit our Audit Services page to learn more.
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This was our second year at the conference, and it was heartening to see the increased recognition of Pro Global as a Claims management provider for local authorities. Unlike last year, where many of our conversations were introductory, this year, attendees proactively approached our stand seeking support with claims, ideas, concepts, and clarifications. This shift indicates that our solutions are resonating well, particularly with local authorities, which is incredibly encouraging.
The conference agenda was rich with learning, networking, and training opportunities, allowing us to connect with members and industry experts. Our involvement in the logistics of the event provided us valuable insights into how we can refine our approach for next year to better serve the community.
One of the standout themes from our discussions with delegates this year was the integration of technology in claims handling, particularly automation and AI. The interest in digital transformation was palpable, with many questions about how these innovations can streamline claims processes and enhance efficiency. It is evident that the market is currently underserved in terms of smart automation due to the perceived high barriers to entry. At Pro Global, we are committed to lowering these barriers and enhancing our support with advanced digital services, ensuring local authorities can benefit from cutting-edge claims management solutions and smart automation.
Our support for Employers’ Liability (EL) and Public Liability (PL) claims handling, bolstered by our technology enablement, resonated strongly with attendees. The discussions reinforced the need for robust claims management solutions that leverage technology to improve efficiency and overall outcomes.
We extend our heartfelt thanks to the ALARM team for organising such a stimulating and successful conference and everyone who took the time to engage with us during the event. Your insights and feedback are invaluable as we continue to innovate and enhance our offerings.
If you would like to find out more about how Pro Global can support your claims management needs, please get in touch.
Name: Michael Mackenzie
Job title: Head of Specialist Claims
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Having worked for large insurers earlier in your career, what attracted you to Pro Global?
The Insurance sector, whilst large in size, is full of small circles (everyone knows everyone). I was aware of Pro and the work they did in the Employers’ Liability legacy space. Working as a Third Party Administrator was something I had experience of. I was familiar with – and liked – the Pro values, the work they did and the client base they had. I believed I had a skillset that could enhance that further.
You’ve worked in the Claims sector for most of your career – how have you seen it evolve?
I think we have seen significant evolution in the last 15-20 years. When I started my career everyone was looking at how to offshore their claims work – I even spent some time in India as part of the project team doing exactly that. However, now we’re seeing a lot of that work coming back onshore with Insurers and Reinsurers looking for either a full onshore model or a hybrid model, and for UK TPA’s to be working collaboratively with offshore providers.
We’ve also seen changes in technology. This will be an ever-evolving reality as automation and AI continue to grow and develop. However, whilst technology has a part to play in creating greater claims efficiencies, I believe that we still require the skill set that only our people bring, to handle the more complex claims.
What challenges do you think your clients face and how can Pro Global help solve them?
Our clients today are looking to reduce cost and settle genuine claims quickly. Pro has the technology in place along with an expert Disease and Illness team who can best advise on Strategies for these portfolios, streamline processes and ensure the right outcome, always ensuring customers are treated fairly.
What do you see as the market opportunities and challenges over the next 12 months?
Pro continues to work with the market and clients on a number of strategies which will see some good opportunities in the Legacy space. We see Head Injury in Sport as the ongoing market challenge and this is likely to gain momentum over next 12 months.
What is your call to action for claims specialists in insurance?
We all have a part to play in ensuring the next generation of Claims specialists have the right knowledge, skillset and confidence to continue handling these legacy books. My call to action is for all of the existing Claims Specialists to ensure they spend time training the more junior members of staff, passing on the knowledge you have like others did for you.
Name: Debbie Roome
Job title: Client Engagement Executive (Claims)
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This article was published by Insurance Business and is being shared here with thanks to the publication.
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In an interview with Insurance Business last year, Danny Maleary CEO of Pro MGA Solutions underscored the need for the managing general agent (MGA) sector to take a “grown-up” approach to creating a healthy talent pipeline.
Cautioning against complacency in efforts to bridge the talent gap facing insurance, he championed taking a grow-your-own approach to talent, which leverages the expertise and insights of existing team-mates. It’s a model his own team have taken to heart, as seen by the appointment of Emily Lewis to a new role as business development representative at Pro MGA Solutions in January 2024.
Having joined Pro Global in 2020 as an assistant technician within insurance services, Lewis noted the importance of firms being willing to recognise the potential of their people and to mentor them to help them fulfil that potential. When you have a business that’s willing to make that investment and to guide you along that journey, it makes all the difference, she said, but also essential is you being able to seize that opportunity and make the most of it.
Emily Lewis and Danny Maleary pictured above.
What it takes to bring young talent into and through the market
“For me, bringing in people like Emily who were in a different part of the business into the sector and into our world is something we’re looking to do more of,” Maleary said. “It’s by mentoring, coaching and guiding young talent as to what we do as a business but also in terms of their personal aspirations and career path that we can really make a difference.
“It’s good to see so many young, passionate individuals who are part of our talent pipeline and part of the future of our business. And our investment in them will continue throughout the whole of our growth story, not just in the UK but also overseas.”
How is the MGA sector faring with regards to talent development?
From his vantage point of observing the market, Maleary said it has become clear to him that certain areas of the MGA sector are underserved when it comes to embracing better diversity. It’s on the right path, he said, but the sector still has a lot more work to do. What is also clear is that it’s going to take a continuous programme of change and an ongoing commitment to nurturing and supporting a more diverse talent pipeline to move that dial.
“It has to start somewhere,” Lewis said. “And it really starts with having that physical representation where you see a team that is diverse and that has young people. Because that’s how you evidence progress.”
Is the wider insurance industry embracing talent initiatives?
The 2024 BIBA Conference was a great opportunity to speak with key stakeholders from all across the industry – from insurers, to reinsurers, to distributors – Maleary said, and it was interesting to see how conversations about talent are evolving. These businesses are really starting to build teams that are geared towards the future, he said, and are placing strong emphasis on empowering the next generation of talent.
“They’re putting the right focus on fostering and bringing along good quality individuals that just need that little bit of encouragement to help them develop a bit more confidence,” he said. “I’ve also seen that there are still some that sadly, haven’t done it yet. But there’s still time and generally speaking, I think where we are today is quite encouraging.”
Delivering the message of insurance to a broader talent base
Lewis highlighted that becoming part of the insurance has opened her eyes to the breadth of what the market does, but also to the range of opportunities an insurance career can offer. Before you join, she said, it’s easy to just think about insurance as being limited to cars and houses, but her experience in the sector has made her an advocate for spreading the word about the potential encased within an insurance career.
The next step now is for the market to embrace the opportunity to get out into the communities it serves and educate young people on the jobs that are available, she said. It’s something the industry hasn’t done enough of in the past and the time is right because more people are considering different career routes. Whether it’s graduate schemes or apprenticeships, or even support for travel expenses etc. there’s so much that insurance businesses can do to create greater access to insurance careers.
“It’s something I tend to kick around as an idea with my head of operations and people, how we can target people at the early end of their career,” Maleary said. “And we’ve nurtured individuals, we’ve taken on some internships. But I don’t think we do enough as a sector to get into schools early enough and have the right conversations with career advisors to really set out the stall of the insurance sector. Because there is still lots to be done and, as Emily said, it does have to start somewhere.”
Name: Danny Maleary
Job title: CEO, Pro MGA Global Solutions
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Data, often referred to as the oil of our sector, remains central to success. It’s the battleground where victories are won and lost. Initiatives like Lloyd’s Blueprint 2 underscore the pivotal role of data in market-wide transformation efforts. Whether structured or unstructured, mastering data manipulation is crucial for leveraging technologies like AI and forms of automation to benefit every facet of re/insurance.
The fusion of vast data potential with AI capabilities brings immense promise, but it also harbors risks, particularly concerning the potential for discrimination within models. Without adequate checks and balances, these biases could permeate decision-making processes. Thus, understanding the context of AI-generated insights is paramount. We must prioritise explainability and embed ethical considerations into model designs to ensure that the pursuit of advantage is aligned with ethical principles.
Looking ahead to the second half of the year, as technology hurtles forward, the question arises: Can we keep up? Are we instilling the right value structures into organisations and model designs to safeguard against unintended consequences? It’s essential to ensure that the evolving business of insurance remains true to the core values we aim to uphold. This alignment is the key to staying ahead in the rapidly evolving tech landscape.
With this in mind, I feel strongly that the next two to three years will be pivotal for our industry, marked by fresh momentum in the transformative potential of technology across the insurance value chain. With projections indicating robust growth, particularly in the US property and casualty (P&C) sector and the European managing general agent (MGA) sector, the stage is set for insurers worldwide to capitalise on opportunities while navigating through global challenges. At Pro Global, we stand at the forefront of this dynamic environment, witnessing firsthand the intersection of technological innovation and insurer operations.
The outlook for 2024 continues to be promising, with significant premium growth and easing inflation pressures forecast over the course of the year. Swiss Re predicts industry return on equity (ROE) at 9.5% in 2024 and 10.0% in 2025, supported by premium growth of 7.0% and 4.5% respectively in these years.
However, amidst this optimism, it’s crucial to acknowledge the diverse regional landscapes shaping the industry. 2024 sees ongoing multiple economic and geopolitical crises converging; and political shifts, with more than 80 countries – over half the world’s population – voting this year in elections that could be pivotal for global democracy. And, while the US P&C sector shows signs of strength, challenges such as hyperinflation in countries like Argentina and shifting regulatory pressures particularly with a focus on the applications of AI and automation in insurance, and ongoing scrutiny over governance, underscore the need for agility and adaptability across jurisdictions.
Challenges and Opportunities of Running Multinational Businesses
Running multinational insurance businesses entails navigating complex regulatory landscapes, addressing varying market demands, and optimising operational efficiencies across jurisdictions. In today’s interconnected world, insurers must deploy strategic solutions to capitalise on growth opportunities while mitigating risks associated with geopolitical uncertainties and regulatory changes. Against this backdrop, technology emerges as a critical enabler, offering solutions to streamline operations and enhance competitiveness, while maximising the value of their human expertise.
At Pro Global, we recognise the transformative power of technology in reshaping insurer operations. Our international team of insurance experts, spanning across the UK, Europe, Latin America, and the US, collaborates seamlessly to deliver value-added services to our clients worldwide. From this perspective, we can see that from claims management to underwriting – automation solutions are revolutionising every aspect of the insurance value chain.
Last year’s acquisition of Propel Automation underscores our commitment to delivering value through cutting-edge technology, empowering insurers to drive operational efficiencies and capitalise on growth opportunities, and throughout 2024 we have been embedding digital services across our business verticals to augment and enhance our support for leading re/insurers.
Ethics and Automation: a headline topic for 2024
As I alluded to at the start, a key part of this conversation is the ethical considerations of weaving automation into the corporate fabric of re/insurance. While technology offers unprecedented opportunities for efficiency and innovation, it is imperative that insurers maintain a human-centric approach and prioritise ethical practices.
Moreover, as insurers increasingly rely on data-driven algorithms for pricing and risk assessment, ethical oversight is paramount. It is essential to ensure that these algorithms are transparent, fair, and free from bias, particularly when sensitive data such as health or personal information is involved. Our sector has a regulatory and ethical duty to uphold trust, integrity, and fairness in the way re/insurance operates, ultimately benefiting both customers and society at large.
A key focus for 2024 and 2025 is striking the balance between automation and human expertise. Rather than replacing humans, automation should complement and enhance the capabilities of insurance professionals, enabling them to focus on high-value tasks that require empathy, creativity, and critical thinking.
At the same time, the significant introduction of technology that both streamlines and augments the tasks that are completed by human beings introduces a critical new point of potential operational failure. It is therefore essential that insurers recognise this potential failure point, and proactively work to address eventualities, to assure business continuity and resilience in all contexts. This control-focused and anticipatory thinking applies not only during digital transformation programmes, but also with post transformation operations, which need as much focus on measurement and continuous improvement as the technology opportunity that is being harnessed. It is vital that insurers avoid inadvertently automating flaws into their core operations and processes that could, if left unchecked, snowball into significant operational challenges.
While embracing innovation with this critical thinking in mind, insurers must also contend with legacy systems that pose challenges to modernisation efforts. Legacy technology, particularly in run-off and legacy portfolios, can impede operational efficiency and inhibit the adoption of new technologies.
However, it’s essential to recognise that legacy systems play a vital role in supporting core business functions and must be integrated effectively with newer technologies. We advocate for a balanced approach to legacy tech, leveraging modernisation strategies to enhance operational efficiencies while ensuring seamless integration with existing systems. By adopting a phased approach to technology transformation, insurers can unlock the full potential of the data within their legacy systems while embracing the benefits of new technologies.
The Rise of MGAs and Tech-Centric Startups
At the same time that traditional insurers are evolving, the MGA sector continues to serve as a hotbed of innovation, bridging the gap between traditional insurers and emerging technologies. Pro Global’s subsidiary, Pro MGA Global Solutions, stands as a testament to this trend, with tech at the heart of every startup’s proposition.
The agility and flexibility inherent in the MGA model allow capacity providers to access startups to experiment with new technologies and underwriting approaches, driving innovation and differentiation in the marketplace. Pro MGA Global Solution’s multi-territorial platform supports the incubation of new MGA startups, enabling them to scale rapidly and capture market opportunities efficiently. In 2024, we anticipate continued growth and expansion in the MGA sector as insurers seek innovative solutions to meet evolving customer needs.
With the increasing emphasis on efficiency and multi-territory access, brokers are also increasingly seeking collaboration opportunities with entities like Pro MGA Global Solutions to develop more efficient models for distributing and placing business into global markets. Parametric insurance and tracker-type syndicates represent just a few examples of how the insurance industry is aligning with wider financial services in terms of data-driven progress.
Expertise and Tech Combined as Core Enablers of Growth
I am firmly of the view that technology working in harmony with sector-specific expertise will remain the cornerstone of insurer success. From harnessing AI for risk insight to streamlining processes through automation, re/insurers, brokers and MGAs have unprecedented opportunities to drive growth and profitability, through the focused lens of human expertise.
Pro’s competencies lie in its unique blend of proprietary technology and market practitioner insights, which form the backbone of its service offering. Unlike traditional tech companies, our technology is not developed in isolation but is intricately crafted through the lens of Pro’s own market practitioners. This ensures that our solutions directly address real challenges encountered in the field, honed through repeated encounters over time.
Pro stands out as both an enabler and a partner. Our approach bridges the gap between the old and the new, leveraging the expertise of practitioners alongside cutting-edge technology, both proprietary and partnered. Moreover, our partnerships extend to solutions developed by market practitioners for market practitioners, enhancing the relevance and applicability of our offerings.
The differentiation we offer is not merely in transformation but also in our thoughtful consideration of the post-transformed operating state. We focus on the thematic of automation and the evolution of capabilities and controls beyond the initial transformation phase. This holistic approach ensures that our solutions not only bring about change but also pave the way for sustained innovation and efficiency.
We recognise the interconnected nature of global challenges, and the need to reject old silos in favor of collaborative, innovative approaches. As the CEO of Pro Global, I am confident that together, we can navigate through the complexities of the insurance landscape and emerge stronger, more agile, and better prepared to thrive in the evolving global marketplace.
Name: Steve Lewis
Job title: CEO
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Key to this challenge lies the post-audit phase. It’s not merely about ticking boxes or meeting regulatory requirements; it’s about instilling a culture of continuous improvement and forging longer-term partnerships that transcend the audit cycle. This is where the significance of post audit consultancy emerges as a partnership approach providing support for MGAs and TPAs striving to achieve and maintain best practice in this rapidly growing side of the industry.
So, why is Post Audit Consultancy not just a value-add but a strategic necessity for MGAs and TPAs?
Extension of Audits and Professional Due Diligence
The audit lifecycle shouldn’t conclude with the delivery of a report; it should seamlessly transition into a phase of partnership aimed at improving observations and recommendations. Post Audit Consultancy extends this lifecycle, ensuring that audits aren’t just isolated events but part of a broader commitment to compliance best practice and operational excellence.
Guidance Tailored to Your Needs
Our consultancy team doesn’t just point out observations; we roll up our sleeves and work alongside MGAs and TPAs to address them comprehensively. Whether it’s underwriting, claims management, technical accounting, compliance, or SOX, our subject matter experts provide tailored guidance that’s rooted in deep industry knowledge.
Comprehensive Compliance Posture
With regulatory frameworks evolving constantly, maintaining compliance is an ongoing challenge. Post Audit Consultancy deepens your compliance posture by implementing expert guidance within your processes and procedures. This proactive approach ensures that your organisation not only meets regulatory standards but exceeds them.
Global Reach, Local Expertise
Our consultancy services aren’t bound by borders. With teams based in multiple locations and experienced in multiple languages, we offer unparalleled flexibility and adaptability. Wherever you operate, whatever your regulatory environment, our experts are ready to support you.
Protection of Reputation and Quality Standards
In an industry where reputation is paramount, Post Audit Consultancy provides peace of mind. By ensuring that observations are corrected promptly and compliance posture is continually enhanced, MGAs and TPAs can safeguard their reputation, brand, and quality standards.
In the fast-paced world of MGAs and TPAs, the only constant is change. With Post Audit Consultancy, we are working with leading MGAs and TPAs to help them embrace change as an opportunity for growth and innovation, confident in the knowledge that they have a trusted partner by your side, every step of the way.
Name: Robert Sherman
Job title: US Head of Audit & Advisory
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