Managing General Agent(MGA) is a specialized type of insurance agent/broker that is authorized with different insurance companies. We can say that these types of agents can work as a broker or agent on the behalf of an Insurer. While an insurance broker works for the policyholder, an MGA works for the insurance company.
These independent agents have specific skill sets or knowledge that the insurance company doesn’t have amongst their regular staff. As a result, they’re often assigned duties an insurer won’t be able to fulfill.
MGA’s can also perform certain functions that are ordinarily handled only by insurers like binding coverage, underwriting, and pricing, appointing retail agents within a specific area, and settling claims. Generally, MGAs are involved in some uncommon lines of coverage, like professional liability and surplus lines of insurance, which require some specialized expertise to underwrite the policies.
MGAs frequently concentrate on those fields on which any insurer won’t concentrate. Establishing an edge during a new region is dear and time-consuming. Contracting with an MGA helps an insurer to avoid funneling tons of cash into opening a replacement office and hiring staff to fill it.
The major reason behind the long-term successes of MGAs is that they’re true specialists in their space. MGAs mainly offer stability to the market, this allows the MGA to survive through various cycles of the insurance market for a particular region.
An MGA will also deliver and service an insurer’s product to both insurance agencies and clients. To formulate a selected mixture of products MGAs can work with several insurance companies and later this will be delivered to agents/brokers or on to insureds.
Working with MGAs is useful to insurers because they possess expertise that insurers might not have in their head or regional offices. To hire those types of expertise might be costly for them according to IRMI.
MGAs also can write business in geographically isolated areas where an insurance firm doesn’t want to open an office. Similar to insurance companies, agents can get expertise for a few particular products and can also get more competitive pricing by working with an MGA.
MGAs can also use various kinds of technologies, like online platforms that integrate with wholesale channels or products that speed up the quoting process, that help independent agents provide better services to their clients.