Scout InsurTech Spotlight with Rajiv Matta

Rajiv Matta is the Chief Innovation Officer of MGA Programs at MSI, the third largest independent managing general agency in the country. He’s responsible for designing products that address emerging or evolving risks that oftentimes require innovative approaches. Rajiv was interviewed by Deniz Isik, Sales Leader - Insurance Vertical at Newgen Software.

Rajiv, what do you think is one of the key challenges currently facing the insurance industry? 

“One of the key challenges is the convergence of risk appetite. We're seeing a trend where everyone is reaching the same conclusions about risk because the tools, technologies and models being used are very similar. This lack of out-of-the-box thinking is problematic.

The danger is that the industry collectively identifies certain types of business as ‘good risk,’ attracting a surge of risk capital into them, which erodes margins. Conversely, other risk classes are deemed unfavorable or uninsurable, leaving those markets without any viable coverage options. If this trend continues, it could have catastrophic consequences for the industry and the broader economy.

A good example is California, post-wildfires—many markets are exiting, leaving little to no insurance coverage options for California homeowners. Similarly, in certain casualty insurance classes, the industry has collectively deemed them uninsurable, leaving a lack of options in the marketplace. On the flip side, when certain risks are seen as favorable, capital floods in, creating a soft market that may not be sustainable long-term. This convergence of risk appetite is a critical challenge we must address.”

Where does accountability across industry decision-makers come into play?

“I believe there’s shared accountability and opportunity for multiple stakeholders—both within and outside the industry. The opportunity is for the insurance sector to evolve and avoid being confined to the same tools, methods and techniques repeatedly. We need to be more imaginative. 

Vendors supplying the industry with models, tools and policy language must also innovate—introducing new techniques and investing in solutions beyond current methodologies.

Additionally, regulatory agencies play a crucial role. Many industry constraints are dictated by government agencies, and they need to be more open to new approaches and technologies. The regulatory process should be more adaptable and efficient, reducing the need for lengthy approval processes. 

Ultimately, stakeholders must work together to adapt to a rapidly evolving climate and marketplace.”

You stress the need for more imagination in the industry. Can you expand on that?

“In my view, there’s an over-reliance on certain models and techniques. Don’t get me wrong, these models are backed by solid science, and they do a great job of showing a range of possible outcomes. But, in a way, they can still be a bit limiting. 

What we really need to do is step outside those boundaries and explore the ‘what ifs’ that aren’t covered by these models and not just modify model views. That might mean looking at situations where unusual events come together or considering early trends we’re starting to see and extrapolating them to larger scales. It’s about using our imagination to think beyond what the models tell us and being open to possibilities that might not fit into the standard frameworks and not dismissing extremities.”

How do innovation and disruption go hand in hand, and what is the right balance?

“Innovation and disruption are closely linked. The industry is already experiencing disruption due to the convergence of risk appetite—margins are shrinking, and in some areas, insurance coverage is disappearing. Given this landscape, there’s a real opportunity for innovation.

At MSI, we see this as an opportunity to innovate - offering new solutions, unique distribution models and advanced tools for risk assessment. By doing so, we aim to capitalize on disruption and generate differentiated margins for like-minded partners.

The challenging landscape creates a unique space for innovation, enabling the development of products that meet the needs of our customers, distribution partners and capacity providers and also drive significant returns.”

What should industry participants do to ensure insurance remains available for those in need and continues to support a thriving, functional economy?

“Again, it's about shared accountability. The industry must be more open to divergent risk views and skeptical of herd mentality, where everyone uses the same models and tools simply out of convenience or lack of options. However, it's not just the insurance sector that needs to evolve.

Vendors must invest in new techniques and expand the spectrum of possible realistic scenarios. Government agencies also have a responsibility—they need to allow for more flexibility, encourage the adoption of innovative approaches and expedite regulatory changes to keep pace with evolving risks.

Ensuring the availability of insurance is essential to a functional economy, and collaboration among all stakeholders is crucial.”

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