Insurance Broker:

An insurance broker is a mediator between the insurer and the customer. Insurance brokers are insurance experts who advise clients about their insurance needs and then interact with insurers on their behalf to get them the most suitable insurance.

Insurance brokers work on behalf of the client and will work with insurance companies throughout the market. They are not tied to one insurer and can therefore recommend products from any insurer.

Insurance brokers are compensated by the insurance companies, from whom they earn a commission for the business they place.

Many insurance brokers will have their own claims team to assist customers through the claims process and liaise directly with the claims department of the insurer.


The MGA Managing General Agents Association defines it as “An agency whose main function is the providing the underwriting services and whose primary depositary duty is to its insurer principal”.

So what does it really mean? MGAs are wholesale brokers who take on many of the functions normally performed by an insurer. They act as agents of the insurer under the Delegated Authorization Agreement. Tasks that may be performed by an MGA may include:

  • Underwriting and pricing
  • Binding cover
  • Claim settlement

MGAs are usually mediators between the insurer and the insurance broker, who act on behalf of the insurer. Insurance risk remains with the insurer; It doesn’t sit with the MGA.

It is important to highlight that when MGAs act on behalf of an insurer, they work closely with customers and interact with insurers to ensure that they receive insurance that meets the needs of the customer.

Difference Between Insurance Broker and an MGA

  • An insurance broker will work on behalf of the client while an MGA will work for the insurer (though they work closely with clients to get them a good deal).
  • Both MGAs and insurance brokers are usually paid commissions by the insurers with whom they do business, MGAs are sometimes partially accountable for the underwriting and share of the underwriting profit or loss.
  • While some insurance brokers specialize in certain markets or product lines, they are usually quite generalists and have a broad spectrum of clients.MGA specialists are more likely to provide insurance products or focus on a particular customer type or market segment.
  • It generally requires more time and effort to set up an MGA as compared to an insurance broker. This is because MGA takes over more functions of the insurer and delegates authority. To achieve this, MGA needs to build trust with the insurer and also have a strong relationship with the insurer and this takes time.