What should MGAs know about applying AI technology?
What should MGAs know about applying AI technology? | Insurance Business America
Technology
What should MGAs know about applying AI technology?
“Speed-to-market is everything”
For managing general agents (MGAs) who thrive on bringing specialized insurance products to market, speed and customer experience are crucial for success. However, as they are typically leaner operations, they often have to deliver both with limited resources.
One expert told Insurance Business that leveraging artificial intelligence-powered technologies is more crucial than ever for MGAs to stay competitive amid the fast-moving business environment.
“Speed-to-market is everything in our industry,” said Michael Parcelli (pictured), senior vice president and head of the MGA business at Xceedance. “Being able to bring new products and services to market quickly gives us a competitive edge.”
The product development cycle with traditional insurance can be lengthy, involving manual processes and extensive paperwork.
However, artificial intelligence technologies are rapidly revolutionizing this aspect of the business, empowering MGAs to expedite and automate underwriting and claims processes, enhance pricing models, and provide on-demand service with online customer portals.
“AI enables us to automate many of these processes, significantly reducing the time it takes to develop and launch new products,” said Parcelli.
MGAs face hurdles in implementing AI-powered technologies
Like other insurance companies, MGAs face unique hurdles in implementing AI technology across their businesses. According to Parcelli, the biggest limitations MGAs face when applying AI are limited knowledge and resource constraints.
Parcelli explained: “MGAs generally run a very lean, functional staff. They’re not a large organization, a hybrid between a brokerage and an insurance company, so they have just enough people to do what needs to be done.
“There are not many departments or resources to test, monitor, and do proofs of concepts for AI, so it’s challenging for them to implement these technologies. They must rely on companies that bring market knowledge and professional services to enable that value.”
However, the benefits of prioritizing investments in AI are tremendous. Parcelli said MGAs should bifurcate their efforts into three key areas: enhancing speed-to-market, boosting operational efficiency, and improving customer service.
How generative AI can accelerate MGAs’ speed-to-market and customer service
One way AI accelerates speed-to-market is through data analysis. By leveraging machine learning algorithms, MGAs can analyze vast amounts of real-time data to identify market trends and customer preferences. This allows MGAs to reduce the time it takes to underwrite policies while enabling them to tailor their offerings accordingly.
Parcelli noted that timelines for MGAs to get innovative products to the market first are shrinking, especially with the introduction of generative AI.
“The window of opportunity [to introduce a new product] before competitors begin to erode your share is crucial. That’s where AI, particularly generative AI, comes into play,” he said.
“Implementing a product into your policy administration system is a time-consuming process that requires significant effort and resources, akin to how insurance companies have historically introduced products. AI can streamline this process by aiding in understanding business requirements, coding the system, and accelerating the timeline for market release.”
By optimizing AI, MGAs can significantly boost productivity, enabling quicker processing of submissions, claims, and underwriting activities with fewer personnel.
On the customer service side, AI chatbots are a powerful tool for enhancing the insurance experience for consumers who increasingly expect seamless interactions with their providers.
“With chatbots, we can provide immediate assistance to customers, answering their questions and guiding them through the insurance process,” said Parcelli.
What should MGAs know about implementing AI?
AI technologies hold immense promise for MGAs. However, Parcelli cautioned that implementation requires careful planning and strategic execution.
“Integration with existing systems, data privacy concerns, and staff training are all factors that need to be considered,” he told Insurance Business.
His best advice for MGAs? Get the right tool for the right job.
“The key is to leverage the right version of AI that efficiently integrates your product into your system, expediting your path to market because timing is crucial for gaining market share,” he said. “In the competitive MGA space, where multiple companies offer similar products, differentiation is essential.”
Parcelli also advocated finding the right balance in an AI strategy: avoiding overkill or inadequate solutions and maximizing the technology’s productivity potential.
“The right tool for the job is also making sure that you’re using it in a way that’s the most productive, that you’re not using a backhoe to plant your garden,” he said.
What are some other benefits of AI technology for MGAs to enhance speed-to-market and improve customer service? Please share your comments below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
