What Is an MGA in Insurance? Managing General Agents Explained

On this page (9)

1. TL;DR
2. When does an agent legally count as an MGA?
3. How is an MGA different from an agent, broker, wholesaler or program administrator?
4. What authority does a carrier delegate to an MGA?
5. How does MGA capacity and money flow?
6. How are MGAs licensed and regulated by state?
7. How do MGAs report to their carriers?
8. What software do MGAs run?
9. FAQs

TL;DR

• A managing general agent (MGA) is a licensed insurance intermediary that an insurer authorizes to underwrite and bind policies on the insurer's behalf, and often to handle claims, under a written contract that sets the limits of that authority.
• The NAIC's Managing General Agents Act (Model #225) treats an agent as an MGA when it manages part of an insurer's business, produces and underwrites premium equal to at least 5% of the insurer's policyholder surplus, and also adjusts or pays claims over $10,000 or negotiates reinsurance for the insurer.
• States set their own versions. New York's regulation uses a $25,000 claims threshold, Florida's statute counts any claims adjusting, and Texas issues a separate managing general agent license.
• The insurer carries the risk and stays liable to policyholders. The MGA earns commission (and sometimes profit commission) for running the underwriting, and must account to the insurer and remit premium at least monthly under the model act.
• AM Best reported that premium written through MGAs and other delegated underwriting authority enterprises grew 15% to $89.9 billion in 2024, the fourth straight year of double-digit growth.

A managing general agent (MGA) is an insurance agency that a carrier has handed part of its underwriting pen. Under a written agreement, the MGA quotes, underwrites and binds policies on the carrier’s paper within set guidelines, and many MGAs also issue policy documents, collect premium and settle claims. The carrier keeps the risk and the regulatory liability; the MGA supplies the specialist underwriting and distribution and is paid commission. The NAIC’s Managing General Agents Act gives states a template for regulating the relationship, and each state that adopts it sets its own thresholds.

When does an agent legally count as an MGA?

Calling yourself an MGA doesn’t make you one in law. The NAIC model act’s drafting note says so directly: an agent that doesn’t perform the listed activities is not an MGA for the act’s purposes. The model definition has two parts. The agent must manage all or part of an insurer’s business, and it must produce and underwrite gross direct written premium of at least 5% of the insurer’s policyholder surplus (from the insurer’s last annual statement) in any quarter or year, while also adjusting or paying claims over $10,000 per claim or negotiating reinsurance for the insurer.

States change those numbers. Here is one made-up agency measured against three versions of the test.

Example (made-up figures): an agency underwrites a contractors’ liability program for a carrier with $80 million of policyholder surplus. The agency writes $5 million of gross direct premium for that carrier in a year and is authorized to settle claims up to $15,000. It does not negotiate reinsurance.

Test	Premium threshold (5% of $80M = $4M)	Claims activity counted	Is the agency an MGA?
NAIC Model #225	Met: $5M produced and underwritten	Adjusts or pays claims over $10,000	Yes: it settles claims up to $15,000
New York, 11 NYCRR 33.2	Met: $5M underwritten	Adjusts or pays claims over $25,000	No, unless it negotiates reinsurance
Florida, s. 626.015	Met: $5M produced or underwritten	Adjusts or pays claims, no dollar floor	Yes

The exclusions differ too. The model act and Florida both exclude the insurer’s own employees, the US manager of an alien insurer’s US branch, certain affiliated underwriting managers that aren’t paid on premium volume, and the attorney-in-fact of a reciprocal exchange; Florida also excludes administrators as defined in s. 626.88. New York’s only exclusion is a full-time employee or officer of the insurer, and its definition also covers agencies that supervise bail agents for an insurer.

How is an MGA different from an agent, broker, wholesaler or program administrator?

The difference that matters is who holds the pen. The Wholesale and Specialty Insurance Association’s 2026 surplus lines primer lays out the distribution chain, and the NAIC glossary defines the retail roles.

Role	Works for	Can bind the insurer?	Who it deals with
Agent / producer	An insurer (captive) or several insurers (independent)	Only within any binding authority an insurer grants	Insureds
Retail broker	The customer; paid commission by the insurer that writes the policy (NAIC glossary)	No underwriting authority	Insureds
Wholesale broker	Retail agents	No: WSIA says it submits risks but the insurer makes the underwriting decision	Retail agents, rarely insureds
MGA	One or more insurers, under a written agency contract	Yes, within the contract’s underwriting guidelines; may also handle claims and place reinsurance	Retail agents and wholesalers, rarely insureds
Program manager or administrator	A specific insurer, for one niche product (a “program”)	Depends on the program agreement	Retail agents and wholesalers seeking that program
Lloyd’s coverholder	A Lloyd’s syndicate, through its managing agent	Yes, under a binding authority agreement	Varies by market

WSIA describes a program manager as a specialized wholesale broker that administers a niche product for a specific insurer, and notes that a Lloyd’s coverholder is often an MGA. Lloyd’s itself says a coverholder “also referred to as a Managing General Agent (MGA)” is a company authorized by a Lloyd’s managing agent to enter into insurance contracts, and that companies must be approved by Lloyd’s before binding insurance or issuing documents. A third-party administrator (TPA) is a different job: it handles claims or administration for a fee, without the underwriting authority. Florida’s definition keeps the two apart by excluding TPAs from the MGA definition.

What authority does a carrier delegate to an MGA?

The contract decides, and the model act lists what it must contain. Under Section 4 of Model #225, the written agreement has to spell out underwriting guidelines covering:

• maximum annual premium volume
• the basis of the rates to be charged
• the types of risks the MGA may write
• maximum limits of liability, applicable exclusions and territorial limits
• policy cancellation provisions and the maximum policy period

If the MGA settles claims, the contract must require timely claim reporting to the insurer and send the insurer the claim file when a claim involves a coverage dispute, may exceed the MGA’s settlement authority, has been open more than six months, or crosses a dollar limit set by the insurer or the regulator. Claim files are joint property of the insurer and the MGA, and become the insurer’s alone if the insurer is ordered into liquidation. Without the insurer’s prior approval, the MGA may not pay a claim above a set amount, net of reinsurance, that is no more than 1% of the insurer’s policyholder surplus.

The model act also lists things an MGA may not do: bind reinsurance or retrocessions (with a narrow exception for obligatory facultative agreements written into the contract), commit the insurer to a syndicate, appoint a producer without checking their license, jointly employ someone who works for the insurer, or appoint a sub-MGA. The MGA can’t assign the contract either.

How does MGA capacity and money flow?

The carrier, or a Lloyd’s syndicate, provides the capacity (the balance sheet that pays claims), and the MGA runs the product. When the issuing carrier passes most of the risk to reinsurers, it is acting as a fronting insurer. The NAIC glossary describes fronting as a primary insurer acting as insurer of record and passing the entire risk to a reinsurer for a commission, often because the fronting insurer is licensed where the risk sits and the reinsurer is not. Draft material from the NAIC’s Receivers’ Handbook subgroup adds that the fronting insurer remains financially liable to the policyholder for the full amount, and that abuses can occur when it fails to control underwriting and claims.

1. 1
   CarrierGrants authority

   Signs an MGA agreement (a binding authority at Lloyd's) setting guidelines, limits and commission. The NAIC model act requires the carrier to notify its regulator within 30 days.

2. 2
   Retail agentSubmits the risk

   Sends the application to the MGA, directly or through a wholesale broker.

3. 3
   MGAUnderwrites and binds

   Rates, quotes and binds within the guidelines, and issues the policy on the carrier's paper.

4. 4
   MGAReports and remits

   Holds premium in a fiduciary account and renders accounts and remits funds to the carrier at least monthly.

5. 5
   MGA or TPAHandles claims

   Settles claims within its authority and sends files to the carrier above the set limits.

6. 6
   CarrierOversees and cedes

   Reviews the MGA on site at least twice a year and may reinsure part or most of the risk.

Steps 1, 4 and 6 follow the NAIC Managing General Agents Act (Model #225). State versions differ: Florida, for example, lets the MGA hold up to 60 days of estimated claims payments in the fiduciary account.

The carrier’s duties under Section 5 of the model act are specific. It must keep audited financial statements for the MGA’s two most recent fiscal years showing a positive net worth, get an actuary’s opinion each year on loss reserves the MGA sets, run an on-site review of the MGA’s underwriting and claims operations at least semi-annually, and review its own books quarterly to catch producers that have crossed into MGA status. The carrier must also require the MGA to carry a surety bond of at least $100,000 or 10% of the MGA’s prior-year written premium for that insurer, capped at $500,000, and may require errors and omissions coverage.

How big is the market? AM Best reported in June 2025 that premium written through MGAs and other delegated underwriting authority enterprises rose 15% to $89.9 billion in 2024. More than 700 MGAs met the NAIC disclosure threshold (premium above 5% of the carrier’s policyholder surplus), AM Best estimates that more than 1,000 MGAs operate in the US, and 19 MGAs wrote $500 million or more in direct premium that year.

How are MGAs licensed and regulated by state?

The model act requires an MGA to hold a producer license in the state where the risks are located, and a producer license (resident or nonresident) in the insurer’s home state when it writes risks elsewhere for a domestic insurer. Beyond that, practice varies. The three states checked for this page:

State	License or registration	Notable rules
New York	MGA must hold a DFS insurance agent’s license for the kinds of insurance it handles; the insurer files an MGA Appointment Form (and a Biographical Questionnaire in some cases) through the DFS Portal within 30 days, and an amended form within 30 days of any change, including termination (DFS)	Claims threshold of $25,000 in the MGA definition
Texas	A separate managing general agent license under Insurance Code s. 4053; agency applicants need proof of financial responsibility (a bond or an E&O policy), and nonresidents generally need an MGA license in their home state (TDI)	Exam required for resident individuals
Florida	Contract requirements in s. 626.7451	Monthly or more frequent remittance; up to 60 days of estimated claims payments may be held; claims must be adjusted by properly licensed persons; either party may terminate for cause

Other states have their own statutes and regulations, and the thresholds above shouldn’t be assumed elsewhere. Surplus lines business adds another layer. WSIA lists the duties of surplus lines intermediaries, which include filing diligent-search affidavits where required and collecting and remitting premium tax to the insured’s home state.

How do MGAs report to their carriers?

Reporting is the day-to-day cost of delegated authority. The model act requires the MGA to render accounts detailing all transactions and remit funds at least monthly, keep separate records of the business it writes, and give the insurer access to those records in a usable form. Where electronic claim files exist, the contract must address how the data is transmitted.

In practice those accounts travel as bordereaux: periodic premium and claims schedules listing the policies bound and the claims handled in the period. Layouts differ from one MGA and contract to the next, so carriers standardize the data and check it against the contract terms before they rely on it; vendors such as Send sell bordereaux ingestion built around that check. The bordereau guide covers the fields and formats, and insurance document extraction software compares tools that read them.

What software do MGAs run?

An MGA needs most of a carrier’s operating stack without a carrier’s IT budget. The usual pieces:

• Policy administration for products, rating, quotes, issuance, endorsements and renewals, plus billing and commissions. Majesco sells CoreConnect for P&C MGAs and MGUs, covering policy, billing and claims, and describes its MGA workflows as connected policy, commission and carrier-payable processes. Insurity describes its Pro Suite as modular core software for growing carriers and MGAs. The full comparison is in policy administration systems for MGAs and carriers.
• Underwriting workbench and rating to triage submissions and price within the carrier’s guidelines. Send sells separate products for direct and delegated underwriting, with binder management for binding authority agreements and bordereaux ingestion that validates data against contract terms. See underwriting workbench software and the AI underwriting explainer.
• Bordereaux production and ingestion. MGAs package bound policies and claims into bordereaux for each capacity provider; carriers ingest and validate them. Send says its post-bind processing can push bound policies to downstream systems or package them as bordereaux.
• Claims, either in-house within the contract’s authority or through a TPA, with files sent to the carrier when they cross the agreed limits.

An MGA with several capacity providers reports to each of them under a different contract. Ask any vendor how it handles several carriers with different bordereau layouts and remittance terms before signing.

FAQs

What does MGA stand for in insurance?

MGA stands for managing general agent. It is an agent or agency that an insurer has authorized to manage part of its business: underwriting and binding policies within agreed guidelines, issuing documents and, in many contracts, settling claims. Some markets use managing general underwriter (MGU) or underwriting manager for similar businesses.

Is an MGA an insurance company?

No. An MGA is a licensed intermediary acting as the insurer's agent; the insurer issues the policy on its own paper and holds the risk. The NAIC model act says the acts of the MGA are considered the acts of the insurer it represents, and that regulators may examine the MGA as if it were the insurer.

What is the difference between an MGA and a wholesale broker?

Binding authority. The Wholesale and Specialty Insurance Association's surplus lines primer says a wholesale broker submits risks for underwriting but cannot bind coverage, while an MGA is authorized by the insurer to underwrite and bind, and may also handle claims and place reinsurance. Both usually work with retail agents rather than directly with insureds.

Do MGAs need a special license?

It depends on the state. The NAIC model act requires an MGA to be a licensed producer in the state. New York requires an insurance agent's license plus an appointment filing by the insurer, and Texas issues a separate managing general agent license. Check the rule in each state where the MGA will write business.

How do MGAs get paid?

MGAs are typically paid a commission on the premium they write, and some contracts add a share of profits. The NAIC model act and Florida's statute delay profit commission when the MGA sets loss reserves: no payment until one year after it is earned on property business and five years on casualty business.

What is a Lloyd's coverholder?

A coverholder is a company that a Lloyd's managing agent has authorized, through a binding authority agreement, to enter into insurance contracts on behalf of a Lloyd's syndicate. Lloyd's says coverholders are also referred to as MGAs, and companies must be approved by Lloyd's before they bind insurance or issue documents.

What is a fronting carrier for an MGA?

A fronting carrier is a licensed insurer that issues the policy and then passes most or all of the risk to reinsurers. The NAIC's glossary describes fronting as a primary insurer acting as insurer of record and passing the risk to a reinsurer in exchange for a commission. The fronting insurer stays liable to the policyholder even after it reinsures the risk.