Solving the InsurTech Dilemma: Should I Stay an MGA or Become a Carrier?

Every MGA should not transition to a carrier model. Consider your technology, competitive dynamics, team and access to reinsurance and scalability when contemplating such a change.

• We have technology that would be genuinely difficult for others to replicate. (5 points)
• We have technology that could be replicated, but it would take considerable time. (3 points)
• We have technology that, by and large, others could build tomorrow. (0 points)

Competitive dynamics

• We have a truly differentiated product. Customers seek us out. (5 points)
• There are parts of our proposition that allow us to stand out against others in the market. (3 points)
• We operate in a highly competitive line of business; other carriers could match our price and it would not hurt them. Cost of acquisition is high. (0 points)

Underwriting advantage

• Our loss ratio is consistently 15 points better than the average in our line of business, or tracking in that direction. (5 points)
• Our loss ratio is between 5-15 points better than the average in our line of business, depending on the year. (3 points)
• Our loss ratio is no better than the average in our line of business. (0 points)

Team

• Our team comprises a sophisticated blend of technology and insurance expertise. (5 points)
• Our team is mainly technology or mainly insurance expertise, but not both. (3 points)
• Our team hails from other backgrounds and we have a lot to learn. (0 points)

Reinsurance

• We could easily reinsure our business. (5 points)
• Reinsurance could be a challenge, but we could get there. (3 points)
• Reinsuring the business could be very difficult or prohibitively expensive. (0 points)

Scale

• There is a feasible path to >$500M in annual premiums. (5 points)
• The company could generate somewhere between $100-500M in annual premiums. (3 points)
• There is a material chance that the carrier could not grow beyond $100M in annual premiums. (0 points)

25+ or more: It could make sense to be an insurance company. Call us.

18-25: There could be an interesting MGA opportunity here.

Below 18: This might not make sense.

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