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industry & Markets
One Year In l An MGA Perspective
George Longo—President & CEO, Towerhill Excess Underwriting
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s we enter year two of the pandemic, we’ve shifted from survival mode to accepting the new realities of the professional workplace. A reflection on what has and what hasn’t worked is required to determine the best course forward.
Although the challenges our managers and employees face are different, they’re rooted in the fact that working from home is no longer a work-life balance companies can offer its employees—it’s a mandate. With this comes new pressures of productivity, balance and connection.
Connectivity and hardware became immediate issues, but as it turned out, these were the easy ones to solve. The real challenges were making sure people were adjusting, coping and managing this forced sense of balance in their homes.
In pre-pandemic times, it was often the employees who worked remotely who were self-starters, easily motivated and self-disciplined. However, recent surveys indicate that only a third of people currently working from home are comfortable in this new environment.
Managing teams not mentally or practically equipped to work from home presents additional challenges. Transitioning from one work paradigm to another can create all kinds of issues without proper preparation and acclimatization. Add to the mix that the pandemic has caused fear, anger and resentment, and all of this has combined to affect productivity and impose strains on management they haven’t had to deal with before.
Managers are struggling with a lack of presence. Pre-pandemic, good leaders could manage their day-to-day by engaging their team members directly, which provided first-hand insight into engagement levels, issues and problems. This face-to-face presence helped build trust and respect. Losing access has impacted everyone—managers have had to switch much of their focus to coaching and listening versus doing and showing.
Every business deserves the ability to get the coverage they need. Insureds have the right to expect that as an industry, we’ll find a way to respond to risks and make sure they have access to proper coverage.
As people have blended their personal and business lives, managers have had to learn to be aware of signs that an employee may be experiencing distress and must be prepared to react quickly and appropriately. Technology provides some answers—using virtual apps for group meetings is good for team building, but virtual can sometimes be dominated by forceful personalities. One-on-one meetings, if conducted regularly and frequently, are more effective in engaging and motivating all staff.
Our leaders’ ability to engage and work with their teams remotely has become the make-or-break success for teams. Studies have shown that leaders who have embraced agile project planning—methodology that uses short development cycles and focuses on continuous improvement—have seen higher buy-in to the team approach. We’ve enabled our employees to learn the benefits of working effectively, not working harder and longer hours.
From an insurance standpoint, the pandemic has resulted in MGAs playing a more significant role in insurance placements. We’ve seen the industry shift to sharing more of the risk across multiple markets, with multiple partners and MGAs providing much more capacity than they had historically.
The concept of sharing risk isn’t new, but it’s become a more deliberate strategy than the consolation prize. Sharing or subscribing risk is better for the industry. Instead of hanging the whole risk on a single carrier, it creates an opportunity for underwriters to stay within their comfort level and most importantly, their risk or limit appetite.
Bridging the gap between appetites and risk levels of multiple carriers is a sustainable business strategy. It helps spread the risk, avoids single market shock losses and stabilizes books of business while creating a more stable book of revenue for all participants and reducing insurable values for a single carrier. MGAs like Excess Underwriting are almost purpose-built to serve this type of facilitator role. By picking up 10 or 20% of a risk in partnership with other markets, we provide market stability.
As an industry, we need to find a way to respond to those less desirable and more complex risks. Every business deserves the ability to get the coverage they need. Insureds have the right to expect that as an industry, we’ll find a way to respond to risks and make sure they have access to proper coverage instead of declining it.
Despite the many challenges the last year has brought, it’s allowed the industry to change the way we do business. It’s created an environment where more is better—more markets and more MGAs working together to find or build solutions to meet the needs of brokers and their clients. Now everyone wins. The client wins because they have access to a more stable means of managing their risk, the market wins because we spread the risk and there’s an opportunity for MGAs to be profitable for the right reasons.
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