In addition to insurance tables and schedules, insurance (and claims processing) guidelines are an important part of the agreement and are part of the agreement with the partner. The ability to manage and serve guidelines is a key element of a successful agreement. As MGA is an insurer in all respects, the insurance company with which it works wants to ensure that the MGA has the systems in place to issue policies, collect premiums and make the necessary reports to the insurer. Many MGAs mark their products to give them a distinctive look and feel. This allows the MGA to create its own brand identity, making its brand synonymous in the eyes of customers with the chosen name, unlike the name of the insurer. This is an important feature if the MGA has to change its insurance partner, as policyholders generally perceive their relationship with the product name, unlike the insurer. Commissions should reflect marketing costs, either directly or through an intermediary channel, and be considered separate components. From the insurer`s point of view, the ideal agreement is one in which the MGA covers its costs and makes a small profit through the commission, but then has the opportunity to increase that profit through growth and insurance provision. In the latter case, an enhanced commission, known as the Profit Commission, can be incorporated into the agreement, so that MGA participates in positive technical results. A good example of how we are helping our customers in North America, particularly in hurricane-sensitive coastal areas, where local opportunities are limited, by holding a binding authority with London insurers to enable our customers to provide “catastrophic” capabilities and insurance policies to coastal communities and businesses.
We live in an increasingly troubled world. On High Street, retailers are fighting online providers, black taxi drivers are in an Uber tower and hoteliers have seen Airbnb push them out of bed with lower overheads. Insurance is no different since Google and Amazon end and threaten to take the helm of the booming insurtech. But there are opportunities for agile and entrepreneurial actors, especially in the field of delegated authority. Any agreement should include a termination provision recognizing that, although the contract exists legally between the insurer and the policyholders, the policyholders are MGA customers and cannot be covered by the insurer in the event of termination.