Questions on starting a new MGA

[californiasun]

I am part of a health-tech startup in California trying to pivot into the life insurance industry. We are hoping to use our data repositories and machine learning algorithms to innovate the underwriting process and believe becoming a life insurance MGA (along the lines of Ladder or Bestow) would be our best option. I have a few questions regarding starting an MGA.

What is the process for approaching an insurance carrier to partner with us?
Who is the best person to talk to at these insurance carriers?
What do carriers typically expect/require from new MGAs?
How long do negotiations with carriers usually take?
Are there any financial reserve requirements or other unique legal requirements for MGAs (compared to typical brokers)?

Any additional advice would be much appreciated.
Thank you.

 

[Travis Price]

I am part of a health-tech startup in California trying to pivot into the life insurance industry. We are hoping to use our data repositories and machine learning algorithms to innovate the underwriting process and believe becoming a life insurance MGA (along the lines of Ladder or Bestow) would be our best option. I have a few questions regarding starting an MGA.

What is the process for approaching an insurance carrier to partner with us?
Who is the best person to talk to at these insurance carriers?
What do carriers typically expect/require from new MGAs?
How long do negotiations with carriers usually take?
Are there any financial reserve requirements or other unique legal requirements for MGAs (compared to typical brokers)?

Any additional advice would be much appreciated.
Thank you.

Have you ever sold insurance before?

 

[californiasun]

Have you ever sold insurance before?

No, but we are in the process of getting the proper licenses and researching the industry thoroughly.

 

[Travis Price]

No, but we are in the process of getting the proper licenses and researching the industry thoroughly.

Not to be rude, but you shouldn't do this.

Here's the problem, you don't know anything out our industry. How can you lead agents if you've never sold a policy? How can you model an insurance policy or answer tough questions when you don't know anything about our industry?

You cannot add value for a new agent.

 

[Robert Barney]

Not to be rude, but you shouldn't do this.

Here's the problem, you don't know anything out our industry. How can you lead agents if you've never sold a policy? How can you model an insurance policy or answer tough questions when you don't know anything about our industry?

You cannot add value for a new agent.

All of that was true for every MGA at some point.

 

[Tahoe Ray]

Can you define what you mean by an MGA because I feel the you and Travis may be talking about two different things

 

[Travis Price]

All of that was true for every MGA at some point.

I would disagree. Having bare minimum experience of selling insurance in and of itself would provide value to your downline.

Can you define what you mean by an MGA because I feel the you and Travis may be talking about two different things

I think you might be right. After re-reading the post looks like not managing agents. Totally on me.

 

[leevena]

I am part of a health-tech startup in California trying to pivot into the life insurance industry. We are hoping to use our data repositories and machine learning algorithms to innovate the underwriting process and believe becoming a life insurance MGA (along the lines of Ladder or Bestow) would be our best option. I have a few questions regarding starting an MGA.

What is the process for approaching an insurance carrier to partner with us?
Who is the best person to talk to at these insurance carriers?
What do carriers typically expect/require from new MGAs?
How long do negotiations with carriers usually take?
Are there any financial reserve requirements or other unique legal requirements for MGAs (compared to typical brokers)?

Any additional advice would be much appreciated.
Thank you.

I think what you are doing is great and would encourage you to continue. Just because you have not been an agent is irrelevant as long as you surround yourself with people who can fill-in the gaps for you.

We created a similar organization years ago for health, succeeding on the group side and failing on the individual side. We had experience in the whole process, with contacts already in-place. My experience with life is zero, so keep that in mind as you read my post.

If you can build a better mouse trap, the carriers will line-up, and once done getting the distribution will be relatively easy. We identified carriers who we thought we could help. Sometimes we knew the decision makers and the discussion was easy to start. In the others we started talking to anyone who could get us a name/meeting. No formula, just heads down work. Some signed on quickly, others took time, some said no.

Carriers want profit/business, so we shared with them how we could improve their underwriting process, how we planned to distribute and profit sharing with some.

Good luck, I wish you the best.

 

[Robert Barney]

I would disagree. Having bare minimum experience of selling insurance in and of itself would provide value to your downline.

Oh, I am not disagreeing with the need for experience, but everyone started in this business with no experience. It's not like the subject of selling or even buying life insurance is taught in schools. Note, the buying part should definitely be on the curriculum, along with how to manage your personal finances, balance a check book, etc. Some schools are too buy with all that, teaching why socialism is a beautiful thing.

I think you might be right. After re-reading the post looks like not managing agents. Totally on me.

Most people get experience the same way they learn to ride a bicycle, by falling off a few times. You and I both know that selling and distributing life insurance is not as simple as riding a bike, and the majority of people do not succeed. But you won't find that out unless you try and my experience is that telling someone they won't succeed can be more of an incentive than telling them "good luck with that".

And if you are really good at what you do, people will assume it is easy and want to jump in the water. If they drown they drown, not my problem.

 

[californiasun]

Can you define what you mean by an MGA because I feel the you and Travis may be talking about two different things

By MGA (Managing General Agent), I mean a company that designs its own life insurance policies and underwriting process but is backed by a larger, well-established insurance carrier that will handle the claims process. An example would be Ladder Life.

Sorry for the confusion, is this not a typical use of MGA?