InsurTech CEOs Discuss 5 Secrets to Launching a Successful MGA
Launching a managing general agent (MGA) is a bit like juggling with your hair on fire. You’re having to learn about insurance, technology, finance, regulation, and compliance while contending with an endless stream of challenging questions, such as:
- What do I build first: My team, my product, or my technology?
- How do I find capacity?
- When and how do I search for funding?
- When do I launch?
- Who can I turn to for help?
All of these questions and more were discussed in a recent, Socotra-hosted panel of insurtech CEOS who have already made the journey from initial concept to fully operational MGA.
Here are the 5 secrets they shared to juggling with your hair on fire; i.e., launching a successful MGA.
1. Move fast, but don’t break things.
MGA founders face a foundational paradox when launching their business: the need to move quickly but also act with caution.
“The reason people are coming to a company that is not the incumbent is because you’re doing something fundamentally different,” Elpha Secure CEO and Co-Founder Preetam Dutta said. “In order to be different, you have to move fast. And in order to move fast, you need to give people what they want, when they want it.”
Sigo Seguros CEO and Co-Founder Nestor Solari added: “Startups talk about Facebook: move fast and break things. But you can’t really break things in insurance. You don’t want to go to market and forget some important statutory reporting, get fined, and get put out of business, right? I think being very intentional about what open risks you have and which ones you take is of utmost importance.”
2. Build your team first.
Another insurtech CEO quandary: What to build first—your product, your technology, or your team? Without a great product, it’s hard to attract a great team. Without a great team, it is hard to build the product and technologies you need to succeed.
For Player’s Health CEO Tyrre Burks, the answer was clear—the team comes first.
“In three and a half years, I raised $5 million of insurance capacity,” Burks said. “Then we brought in our president, Naveen Anand. He was in our company for two weeks and we raised a half a billion. Well, you need the right team to make that happen. Once we figured out who we were going to be, we could decide how to go to market and really focus on how we were going to build in the pieces, the capacity, and the compliance, and everything else we were going to do.”
Matan Slagter, the CEO and founder of Armadillo, added: “We were juggling a lot but we were focused on just one thing: getting a really good product to market as soon as possible, so we could see what distribution methods work. It was ruthless prioritization.”
3. Don’t obsess over funding.
“Build it and it (funding) will come.”
That was the panel’s overall sentiment around funding.
“The last thing we focused on was capital,” Dutta said. “Capital, I think, is a byproduct of the work that you put into building the right team. Your team will figure out where you fit in the ecosystem, what makes you different, what makes your company actually stand out in this crowded universe. Then, you get investors who come knocking on your door. I think it’s company first, capital second.”
4. It’s okay if your baby is ugly.
Burks, the CEO of Player’s Health, argued that a founder must accept that going live with an imperfect first product may be preferable to waiting for the finished product to be totally ready. Improve that product, he said, as you move forward.
“Just don’t be afraid to call your baby ugly; it’s going to be ugly in the beginning,” Burks said. “Be okay with starting with just that MVP. It’s going to be ugly. Recognize it. But constantly look in the mirror and figure out what you need to do to change, and change it quickly.”
“I 100% agree,” Slagter added. “We just jumped. We knew things were going to be on fire. There are certain things that we not only knew would be on fire but that we’d have to do manually, and that was okay. For us it just had to happen to go to market.”
5. Partners are key.
Every founder runs into problems in fields they don’t know much about and/or requires expertise they don’t yet have in-house. The panel sentiment was that founders shouldn’t be afraid to reach out to board members, advisors, friends, and partners with the experience and expertise they need.
For some, that partner was Socotra.
“Whenever we ran into bugs, we didn’t bang our heads against the wall. We just asked somebody at the Socotra team, and they were really quick to respond,” Dutta said. “Socotra’s OpenAPI documentation, if you haven’t seen it, is the best in class in the insurance industry, period. I’m a technologist myself. I would not give such high praise unless I actually believed it. Socotra is an excellent platform and enabled us to build our cyber-MGA product really quickly. We got our product live within six weeks.”
Burks added: “We focused on simplifying what can be a very daunting task on getting an MGA live. We focused on whale-hunting in the beginning so that we can write master policies and get to live. We wrote about $6 million in premium, just manually, not having a platform in place, and then that helped us get a better understanding around how we would digitize the process, how we would build more efficiencies within it, and then when we connected with (Socotra) we were able to move a lot faster.”
View the full panel discussion here.