What is an MGA?
Understanding Managing General Agents and their role in the insurance ecosystem
The MGA Business Model
An MGA is a simplified insurance business that prices risk and distributes insurance. It does not maintain a large balance sheet to pay claims; instead it contracts with insurance companies that serve as capacity providers to the MGA. An insurance company grants a binding authority to an MGA, enabling it to underwrite a specified class of insurance on the insurance company's behalf.
Focused Expertise
MGAs are typically smaller than traditional balance sheet insurance companies. They focus on a limited number of insurance products in which they possess deep expertise. Many of the most challenging lines of insurance – including cyber risks and property perils affected by climate change – are handled by specialist MGAs.
Key Characteristics
- Specialized risk expertise
- Binding authority from insurers
- No claims balance sheet
- Focus on distribution and underwriting
Innovation & Technology
MGAs have generally found it easier to integrate new technology into their operations than large insurance companies. They have thus been early adopters of technology to improve the pricing of risk, increase operational efficiencies and enhance the customer experience.
Risk Pricing
Advanced analytics and AI for better risk assessment
Operational Efficiency
Streamlined processes and automated workflows
Customer Experience
Digital platforms and enhanced service delivery