Agency Staff Articles4 min read

Insurance MGA: Understanding the Role of MGAs in Today's Market

What an insurance MGA is, how delegated underwriting authority works, how MGAs differ from wholesalers and fronting carriers, and what retail agents should check.

By Justin Goodman, Co-Founder and CEO, Total CSRPublished Updated
Watercolor illustration of an insurance carrier's office building linked by a dotted line to a smaller MGA office and a group of agents.
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A managing general agency is a licensed intermediary that an insurance carrier authorizes to underwrite, bind coverage, and often handle policy issuance on its behalf. Insurance professionals usually meet one when a risk falls outside a standard market, such as a contractor with a tough loss history or a cyber account that needs specialty insurance. Knowing what that intermediary can and cannot do helps you set client expectations on price, timing, and service. Many MGAs focus on property and casualty insurance niches, while others build life and health insurance programs.

What Is an MGA? The MGA Definition

In plain terms, an MGA is part distributor and part outsourced underwriting department. The carrier keeps the risk on its balance sheet and its policyholder surplus, while the agency works within written underwriting guidelines that set eligible classes, rates, limits, and forms. The NAIC model law adds a narrower test: a firm that manages an insurer's business and underwrites premium equal to at least 5% of that insurer's surplus, while also adjusting larger claims or negotiating reinsurance agreements, is treated as an MGA. States that adopted the model may use different thresholds, so check your state's statute.

What a Managing General Agent (MGA) Does for Carriers

The core of the relationship is delegated underwriting authority. A typical agency agreement covers which risks the firm may quote and bind, maximum limits, premium collection, and whether it has claims authority or must send claims to the carrier or a third-party administrator. Carriers use this structure to reach niche markets without building local underwriting teams, while the MGA brings product knowledge, producer management, and its own technology. Strong carrier relationships depend on clean data, so MGA teams often invest in insurtech platforms and producer onboarding tools. Compensation usually combines commission with profit sharing tied to loss results, which gives the firm a reason to underwrite carefully.

MGAs vs Managing General Underwriter, Wholesaler and Fronting Carrier

These titles overlap, so read the contract rather than the label. An MGU is usually the same kind of firm with the emphasis on underwriting. A wholesale broker places business with insurance carriers but may have no authority to bind at all. A fronting insurer issues the policy on its own paper and then cedes most of the risk to reinsurers, often for an MGA or program that lacks a rated carrier of its own. In the London market, a firm with similar delegated authority is called a coverholder.

How MGAs Are Regulated: The MGA Act and the UK MGAA

Most states base their rules on the NAIC Managing General Agents Act (Model 225), part of the NAIC model legislation that state insurance departments adopt in their own form. It generally requires an agency producer license, a written contract with specific terms, carrier audits, and the carrier retaining final control over underwriting policies. State laws differ, so confirm the rules where each risk is located. In the United Kingdom, the Managing General Agents' Association is the trade body for these firms. Regulatory scrutiny tends to rise after an MGA program fails, so carriers keep tightening compliance monitoring, audit preparation, and regulatory reporting.

Working With MGAs: A Checklist for Retail Agents

Before you place business through an insurance distribution channel like this, confirm the details that affect your client and your own errors and omissions exposure:

  • Which carrier issues the policy, and its rating
  • Whether the policy is admitted or surplus lines
  • The MGA's binding authority and any referral limits
  • Who handles claims, and how to report losses
  • Your carrier appointments or producer agreement with the MGA
  • Your producer licensing, including any surplus lines license

Ask the MGA about its appetite for the class before you promise a quote. When a submission falls outside that appetite, the MGA must refer it to the carrier, and that step adds time to binding coverage.

A Hypothetical MGA Placement

Hypothetical example: a retail agent has a 40-person architecture firm that needs professional liability after its standard carrier non-renews. The agent submits to an MGA that writes design professionals for a surplus lines carrier. The agency can quote within its authority, but a prior claim above its referral threshold sends the file to the carrier first. Explaining that referral step to the client up front avoids a surprise when the quote takes longer than expected. A short file note on the referral also supports your regulatory compliance records.

Frequently Asked Questions

What does an MGA do in insurance?

An MGA is an intermediary that underwrites and binds policies for a carrier under written authority.

Is an MGA the same as an insurance agency?

No. A retail producer sells insurance products, while an MGA also underwrites them for the carrier.

Why do carriers use MGAs?

Carriers gain specialty programs and market expansion without building their own local underwriting teams.

Who pays the claims on an MGA policy?

The carrier pays claims, though the MGA or a third-party administrator may adjust them.

What should insurance agents ask before placing business with an MGA?

Ask which carrier issues the policy, whether it is admitted, and who handles claims.

Justin Goodman

Co-Founder and CEO, Total CSR

With two decades of experience in the insurance industry, Justin is the co-founder and CEO of Total CSR and the co-founder and Managing Director of Project 55. By the age of 29, Risk and Insurance Magazine recognized him as one of the nation’s top five construction insurance experts. He has also been named to Insurance Business Magazine’s Hot 100 and was most recently honored as the 2024 Insurance Journal Agent of the Year.

Through his leadership at Total CSR, Justin has trained more than 100,000 CSRs, account managers, and producers, driven by his passion for developing the next generation of insurance professionals. When not spending time with his family, he dedicates his free time to speaking at industry events and advising agency owners across the country.

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