Looking at the Risks of MGUs
As a specialized insurance broker or agent, you easily have a competitive advantage in new market areas. However, there is a significant increase in risk, as underwriting tasks aren’t the only areas of responsibility. MGU’s may also be responsible for billing, binding, claims management, issuing and marketing. Just as MGUs help establish policies to safeguard the investments of others, MGU insurance needs to be a priority investment for these insurance specialists.
The Insurance Partnership
Insurers partner with MGUs for many reasons, but the advantages of the partnership are also a significant part of the risks MGUs assume. These are some of the benefits an MGU brings to the partnership.
- Insurance-industry expertise
- Greater access to the market
- Strong growth opportunities
- Improved risk management
MGUs are called upon to deliver expert advice concerning insurance opportunities in new markets and more streamlined operations. The relationships between agents, both wholesale and retail, opens doors to a broader distribution network. The knowledge MGUs bring to the table can improve the risk management strategies and services of a business, saving precious time and financial resources.
The Risks of the Partnership
With so much riding on the performance of the MGU, failing to deliver according to industry standards or expectations opens the door for litigation from dissatisfied partners. Errors and omissions, in addition to other liabilities associated with the operations, can lead to costly lawsuits. This is why there is a need for strong insurance coverage.