What is an MGA in insurance?
An MGA (Managing General Agent) is a specialised intermediary that acts on behalf of insurers to underwrite and manage insurance programmes. MGAs typically have delegated authority from carriers to bind policies, collect premiums, and sometimes handle claims. They operate between brokers and carriers, providing underwriting expertise in niche or specialty lines.
The insurance value chain
To understand what an MGA does, it helps to see where they sit in the insurance distribution chain:
MGA vs broker vs carrier
How MGAs differ from brokers
Brokers place risk but don't have binding authority. They present risks to underwriters and negotiate terms on behalf of the insured. MGAs can bind policies directly under their delegated authority, without referring each risk to the carrier. MGAs also typically handle premium collection, bordereaux, and sometimes claims, while brokers don't.
How MGAs differ from carriers
Carriers carry the risk on their balance sheet. They are the insurer. MGAs don't hold the risk; they underwrite and manage policies on behalf of the carrier using delegated authority. The carrier provides the capital and capacity; the MGA provides the distribution, underwriting expertise, and operational capability.
Why MGAs exist
MGAs solve a distribution problem for both sides of the market:
- For carriers: MGAs provide access to niche markets and specialty lines without building local teams. A carrier can write Australian property insurance through an MGA in Sydney without setting up an office there.
- For brokers: MGAs provide access to specialised products and fast underwriting. A broker can get a complex marine risk quoted and bound in days rather than weeks.
- For the market: MGAs bring underwriting expertise in specialty areas (cyber, marine, aviation, professional indemnity) that generalist carriers may not have in-house.
The MGA operational challenge
MGAs are operationally intensive. Despite often having small teams, they handle the full back-office lifecycle:
- Premium collection: collecting premium from brokers, matching payments to policies, chasing overdue balances
- Reconciliation: matching bank transactions to policies, handling partial payments and multi-policy remittances
- Bordereaux: producing regular reports for each carrier in their required format
- Claims: handling first notification, setting reserves, managing authority limits, settling claims
- Carrier settlement: calculating net premium (after commission and tax), settling to carriers on time
Most MGAs manage all of this with spreadsheets, email, and manual processes. This is the problem that MGA software like BBNET is built to solve, automating insurance back-office operations so MGA teams can focus on underwriting, not administration.
Related terms
- What is delegated authority?, the arrangement that gives MGAs their underwriting power
- What is a bordereaux?, the reports MGAs produce for their carriers
- BBNET for MGAs, how BBNET automates MGA back-office operations
- MGA premium collection, the biggest operational challenge for MGAs