AI & Underwriting: 3 Ways MGAs Can Increase Profitability

Managing General Agents (MGAs) play a crucial role in the insurance ecosystem, offering specialized coverage in niche markets. However, their success hinges on efficiency, underwriting discipline, and their ability to secure reinsurance capacity. Without profitability, an MGA risks losing its competitive edge and, worse, its capacity partnerships.

Fortunately, artificial intelligence (AI) is reshaping underwriting by enabling MGAs to enhance efficiency, optimize risk selection, and strengthen their relationships with capital providers. Here’s how AI is revolutionizing MGA profitability.

1. More Efficient Use of Underwriter Time

Underwriter time is one of the most valuable assets an MGA has. Yet, many MGAs operate with limited resources, making it essential to maximize productivity without adding headcount. While conventional wisdom suggests speeding up underwriting processes, the real key to efficiency is ensuring underwriters focus their efforts where they are most impactful.

• AI-driven submission triage automates the evaluation of incoming submissions, instantly identifying the most relevant and high-potential risks.
• Winnability assessment helps underwriters prioritize deals that are most likely to bind, preventing wasted effort on submissions the MGA will never actually win. 
• Automation and data integration ensures that underwriters aren’t bogged down by administrative tasks, allowing them to concentrate on risk assessment.

By optimizing underwriter focus, MGAs can maximize the effectiveness of their existing resources.

2. Higher Volume of In-Appetite Business

Many insurers, including MGAs, struggle with a disconnect between their intended risk appetite and the risks they ultimately write. Appetite evolves as more risks are signed, making real-time visibility critical. AI helps MGAs boost their profits by helping them to sign more of the business that best fits their strategy and appetite.

• AI continuously tracks portfolio data and appetite changes in real time, and can surface these changes to underwriters to prevent over-concentration in undesirable risk categories.
• Automated submission sorting prioritizes in-appetite risks, ensuring the best opportunities rise to the top for underwriters’ first attention.
• MGA leadership can leverage AI to ensure any change in strategy or underwriting goals is immediately communicated to underwriters and reflected in underwriting tools, allowing for proactive course correction.

By helping MGAs better align their bound business with their risk appetite, AI helps increase the overall profitability of their portfolios.

3. Built-in Underwriting Guardrails for Better Reinsurance Negotiations

Most MGAs rely on risk capital partner relationships for capacity, making underwriting discipline essential. AI provides built-in guardrails that enforce underwriting guidelines and ensure strategic alignment across teams.

• Dynamic decision support ensures underwriters receive the most up-to-date guidance at the time of risk selection, helping them adhere to the strategy.
• Real-time portfolio analytics give MGAs a clear picture of performance, with insights into how individual underwriting decisions impact overall profitability.
• AI-powered reporting provides data-backed evidence of underwriting discipline, strengthening MGA credibility with risk capital providers.

With performance data that proves they deliver on their promises, MGAs are in a good position to negotiate more favorable reinsurance terms, enabling them to grow and operate more profitably.

Leverage AI-Powered Profitability with Federato

AI can help MGAs optimize underwriter time, capture more in-appetite business, and reinforce underwriting discipline for better reinsurance negotiations.

Ready to see how AI can enhance your MGA’s profitability? Learn more about Federato’s RiskOps platform today.

FAQs

1. What is an underwriting workbench, and how does it benefit MGAs?

An underwriting workbench is a centralized platform that aims to integrate data, analytics, and decision-making tools to streamline underwriting. For MGAs, it is intended to enhance efficiency, enforce underwriting discipline, and improve risk selection. 

2. How does AI help MGAs secure better reinsurance terms?

AI enables MGAs to provide transparent, data-driven insights into their underwriting performance, demonstrating discipline and portfolio quality—key factors in negotiating favorable reinsurance agreements.

3. Can AI completely automate the underwriting process for MGAs?

No, AI enhances but does not replace human underwriters. It supports decision-making by automating administrative tasks, triaging submissions, and providing real-time portfolio insights, allowing underwriters to focus on strategic analysis and make risk decisions in the context of the portfolio as a whole.

4. How does AI improve submission triage for MGAs?

AI processes submissions in real-time, evaluating key factors such as appetite fit, risk quality, and winnability. It then prioritizes high-value opportunities, ensuring underwriters focus on the most promising deals.

5. What makes Federato’s RiskOps platform unique for MGAs?

Federato’s RiskOps platform combines AI-driven insights with real-time portfolio monitoring, helping MGAs optimize underwriting efficiency, write more high-appetite business, and strengthen relationships with capacity providers—all within a single, streamlined workflow.