Managing General Agents (MGAs), large insurance agencies that manage over 250 career agents and smaller agencies, are plagued by unique administrative challenges. Because they sell different types of products from multiple carriers across multiple states, and pay commission to an oversized force of writing agents and general agencies, MGAs are prone to difficulties in administration that are best handled by a specialized business technology solution.
However, it is difficult for MGAs to find solutions that entirely meet their business needs since they fall in between the scope of the most common solutions available. For instance, they do not require the extensive policy management or billing and enrollment systems in place at the carrier level, yet they are too complicated to rely on typical agency management systems in place at the general agency and small agency level. However, there are solutions available that can help MGAs manage three main areas of their administration and ensure the sustainability of their business.
Policy management and revenue forecasting: The typical MGA learns of a sold policy when they receive their commission check from the carrier. But from that point forward, the MGA has no way of tracking changes to the policy, such as a cancellation, that may impact their commission revenue. MGAs need an automated way to receive updates from the carrier on the status of sold policies.
Advancing and charge-backs: It is common for MGAs to issue their agents advances upon submission or issuance of a policy, sometimes up to 8 months or a year in advance. If the carrier changes the commission plan or cancels a policy, the MGA needs to charge the agent back for the outstanding amount advanced to the agent. This is a difficult task to accomplish without an automated system to track and calculate advances and charge-backs.
Payment reconciliation: With carrier compensation plans becoming increasingly sophisticated MGAs have no reliable measure in place to assure that payments received from the carrier are accurate. They need an automated way to model the carrier’s compensation plans, calculate expected commissions, and compare expected to actual amounts received.