While a period of change has its challenges, it also offers a great deal
of opportunity for MGAs who are well positioned in the market, says Jim Virtue,
president and CEO of PPI Solutions.
There is no question that the industry is going through a lot of change, he says. “But what I think is going to happen is that who you are is going to determine whether it is a positive change or a negative change. From our point of view, I think most of the changes that are happening, if not all of the changes, are actually going to be quite positive for us. We see an awful lot of opportunities.”
There is no question that the industry is going through a lot of change, he says. “But what I think is going to happen is that who you are is going to determine whether it is a positive change or a negative change. From our point of view, I think most of the changes that are happening, if not all of the changes, are actually going to be quite positive for us. We see an awful lot of opportunities.”
The organizations that can prosper in this environment will be those
that have scale and are able to comply with the new regulations that are coming
down the pipe, he adds. The MGAs that will succeed must also be large enough to
meet the volumes of business that will be required to keep their contracts with
insurers. “I think a lot of these changes will allow the better organizations
to flourish actually,” says Mr. Virtue.
Large MGAs that have sufficient business volume to maintain all their
contracts will be in the advantageous position of picking up the business lost
by their smaller competitors, he adds. “That’s a good example of how size and
scale and the volume of business makes a difference.”
He also sees an advantage for advisors in the changes in the MGA market.
“In order to survive and thrive in these changes, it’s going to be more
incumbent on MGAs to deliver better services to the advisors.” These better
services include technology, marketing, education, compliance, etc. He mentions
his own firm’s PPI Solutions Toolkit – a marketing and compliance resource – as
an example of an enhanced service that could only be offered by an MGA with
scale and resources.
In terms of the recent wave of product changes, Mr. Virtue also sees
opportunity there. In part as a response to these changes, his firm has
launched its own suite of products. “We’re working with several insurance
companies to develop new insurance products. We’ve launched a couple of those
(LifePhases and Signature Life). We have actuarial staff that work with the
insurance companies that assist them in developing insurance products.”
He expects that PPI Solutions will introduce additional products, some
before the end of the year. Such a product development program is only possible
with a great deal of scale, he adds.
Mr. Virtue notes that his firm has just finished its best first quarter
ever. “We are very, very bullish on our ability to continue to grow through
these changes. With problems come opportunities and really for us it is nothing
but an opportunity.”
The Insurance & Investment Journal
May 2013
1 comment:
"Great summary of the MGA transition in the industry! We are moving from Professional Sales to Professional Advice (i.e. Professional Practice). We are moving from 'Me' to 'We'.
Professional Advisors have an implicit fiduciary duty to their clients.
Not all individuals have a need to serve in a fiduciary role.
The selection process must find clear evidence of this need to serve.
This transition is being driven by the consumer.
Those MGAs who can focus on Professional Practice will do well."
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