What Is An Mga In Insurance

What is an MGA in insurance? A Managing General Agent (MGA) is a licensed intermediary that holds delegated underwriting authority from one or more insurance carriers. The MGA can bind coverage, issue policies, set rates, and in some cases handle claims, all without needing carrier approval on individual risks. This delegated authority is what separates MGAs from standard wholesale brokers.

According to AM Best 2025, U.S. MGAs bound approximately $67 billion in premium across specialty and non-standard lines in 2024. That figure represents roughly 12% of all U.S. commercial property and casualty premium, a share that has grown steadily since 2015.

If you place non-standard commercial risks, understanding what an MGA does and how it differs from a retail carrier relationship is essential to accessing the right markets efficiently.

Key Takeaways

• U.S. MGAs bound approximately $67 billion in premium in 2024, representing about 12% of all U.S. commercial P&C premium (AM Best 2025)
• An MGA holds a Managing General Agency Agreement (MGAA) that specifies exact classes, territory, premium volume limits, and rates it can bind independently without per-risk carrier review
• MGAs differ from retail agents in one fundamental way: they hold binding authority, meaning they issue the policy, not just submit an application
• Carriers use MGAs to access specialty niches they cannot staff internally, typically paying MGAs 15-22% of gross written premium in combined commission and profit-sharing (TMPAA 2025)
• Retail agents working with MGAs must provide completed applications, loss runs (typically 3-5 years), and supplemental underwriting data, not just basic ACORD forms
• MGA agreements can be terminated by carriers with as little as 30-90 days notice if loss ratios exceed contractual thresholds, typically set at 65-70% combined ratio

What Is an MGA: The Legal and Operational Definition

An MGA is defined in most state insurance codes as a person or entity that manages all or part of the insurance business of an insurer. The National Association of Insurance Commissioners (NAIC 2025) model act defines an MGA as any person who:

• Manages a book of business exceeding $1 million annually under authority from one or more carriers
• Has authority to bind or delegate authority to bind
• Negotiates reinsurance on behalf of the carrier, or settles claims in excess of $10,000

This definition matters for licensing. Most states require MGAs to hold a Managing General Agent license in addition to a standard producer license. As of 2025, 43 states have enacted MGA-specific legislation based on the NAIC model act (NAIC 2025).

The practical effect is that an MGA operates within a written Delegated Underwriting Agreement (DUA) that specifies the exact scope of its authority. That DUA is the foundational document governing the MGA's relationship with its capacity provider.

What Authority Does an MGA Hold?

The authority an MGA holds flows from its Delegated Underwriting Agreement with each carrier. That agreement defines three distinct types of authority.

Binding Authority

Binding authority is the right to commit a carrier to coverage without per-risk approval. The DUA specifies the classes of business the MGA can write, the maximum per-risk premium it can bind, the geographic territory covered, and the policy forms and rates it must use. Binding authority is always limited: an MGA writing habitational property might have authority to bind up to $5 million in total insured value per risk, but must submit larger risks to the carrier for individual approval.

Underwriting Guidelines

Carriers give MGAs a set of underwriting guidelines that define acceptable and unacceptable risk characteristics. These guidelines function as the MGA's operating manual. They specify minimum and maximum risk parameters, required documentation, prohibited occupancies, and schedule rating factors the MGA can apply.

An MGA that underwrites outside these guidelines, such as binding a risk the guidelines exclude, has committed a breach of the DUA. That can trigger binding authority suspension or agreement termination.

Claims Authority

Some MGAs, particularly those writing commercial auto or workers' compensation, hold claims handling authority. This authority is typically limited to claims below a specified dollar threshold, often $25,000-$50,000. Above that threshold, claims route directly to the carrier's claims department. MGAs with claims authority must maintain claims handling licenses in each state where they exercise that authority.

How MGAs Differ from Retail Agents

The table below summarizes the key operational differences between MGAs and retail insurance agents.

The key distinction is decision authority. A retail agent submits an application and waits for an underwriting decision. An MGA makes the underwriting decision itself, within the parameters its carrier has established.

This distinction matters for how retail agents should interact with MGAs. When you submit to an MGA, you are submitting to an underwriter who has authority to say yes or no, not to a middleman who will forward your paperwork to someone else.

How MGAs Differ from Insurance Carriers

MGAs are often confused with carriers because they perform underwriting functions that look similar to carrier operations. The differences are significant.

A carrier holds admitted or surplus lines status and takes the risk onto its own balance sheet. It maintains statutory reserves, pays claims from its own capital, and files rates with state regulators in admitted markets. The carrier is the ultimate risk-bearer.

An MGA does not bear the risk. It underwrites and places business on behalf of the carrier, earning a fee (commission) for that service. If losses exceed expectations, the carrier absorbs them, though the MGA may face DUA termination if its loss ratio consistently exceeds contractual thresholds.

This is why AM Best rates carriers, not MGAs. The carrier's financial strength rating (FSR) is what retail agents and policyholders rely on for claims-paying confidence. When evaluating an MGA, you need to know the rating of the carrier(s) behind it. An MGA backed by an AM Best A-rated carrier provides materially different security than one backed by a non-rated carrier.

How Retail Agents Work With MGAs

Retail agents access MGA markets in one of two ways: direct MGA appointments or through wholesale brokers who have MGA relationships.

Direct MGA Appointments

Some MGAs appoint retail agents directly. The retail agent signs a producer agreement with the MGA, which outlines commission rates, submission requirements, and performance expectations. Direct appointments typically require minimum annual premium commitments, often $100,000-$500,000 per year, and consistent submission quality.

Wholesale Broker Access

When a retail agent cannot meet an MGA's direct appointment minimums, or when the risk type requires a surplus lines diligent search, the retail agent submits through a wholesale broker. The wholesale broker holds the MGA appointment and adds a broker fee, typically 2-5% of premium, on top of the MGA's rates.

What MGAs Require in Submissions

MGAs require more documentation than admitted carriers because they make underwriting decisions independently. A standard commercial lines MGA submission typically includes:

1. Completed ACORD application (ACORD 125 for commercial, line-specific supplements)
2. Loss runs for 3-5 years, including current year-to-date
3. Schedule of values or detailed property information
4. Prior carrier declination letters if applicable (required for surplus lines diligent search in most states)
5. Supplemental questionnaire specific to the class of business
6. Financial statements for larger or more complex risks

Incomplete submissions are the most common cause of MGA underwriting delays. MGAs operating within binding authority constraints often have 24-72 hour turnaround expectations from carriers; incomplete submissions break that turnaround commitment.

Why Carriers Use MGAs

Carriers use MGAs to access specialty niches that their own underwriting staffs are not equipped to handle profitably. The MGA model gives carriers four specific advantages.

Specialist Underwriting Expertise

An MGA focused on restaurant coverage, for example, develops underwriting data, loss patterns, and pricing discipline in that class that a general commercial lines carrier cannot replicate internally at scale. The MGA's loss data and underwriting approach become a proprietary competitive advantage that the carrier licenses through the DUA.

Variable Cost Distribution

When a carrier uses an MGA, the MGA's commission is a variable cost tied directly to premium volume. The carrier pays only when business is written. By contrast, building an internal specialty unit requires fixed staffing costs regardless of volume.

Geographic Reach Without Infrastructure

An MGA can write business in states where the carrier has no physical presence or marketing staff. The MGA handles producer relationships, submission intake, policy issuance, and in some cases billing, allowing the carrier to access those markets without building local infrastructure.

Speed to Market

An MGA with existing producer relationships can begin writing business for a carrier within 90-180 days of executing a DUA. Building an equivalent internal operation from scratch typically takes 18-36 months.

MGA Market Size and Growth

AM Best 2025 pegged U.S. MGA premium volume at approximately $67 billion for 2024, up from $58 billion in 2022. That represents a compound annual growth rate of approximately 7.4% over the two-year period.

The growth reflects several structural trends. First, standard admitted carriers have continued to restrict their appetite in catastrophe-exposed property markets, driving retail agents to MGA markets for coverage solutions. Second, new specialty classes, including cyber, cannabis, and gig economy liability, have emerged where MGA expertise is the primary underwriting approach. Third, private equity investment in MGA platforms accelerated during 2022-2025, funding expansion of existing MGAs and launching new ones (Conning 2025).

The 10 largest U.S. MGAs by premium volume in 2024, per AM Best 2025, collectively wrote approximately $18.4 billion, or 27% of the total MGA market. The market remains fragmented, with the majority of MGAs writing under $250 million in annual premium.

How to Evaluate an MGA Before Submitting Business

Not all MGAs are equal. Before placing significant premium with an MGA, evaluate four factors.

Carrier Quality

Identify the carrier(s) backing the MGA and check their AM Best FSR. An A- or better rating is the standard threshold most state surplus lines regulations require for non-admitted placements. Below A-, some retail agents and buyers may face contractual restrictions or claim concerns.

Binding Authority Scope

Ask to see a summary of the MGA's binding authority. Specifically, ask about per-risk limits, aggregate limits, and any classes within the program where the MGA must seek carrier approval. Understanding these limits tells you which risks the MGA can handle in-house and which will require additional review time.

Claims Handling

Determine whether the MGA handles claims internally or routes them directly to the carrier. MGAs with in-house claims authority typically offer faster initial response, but the quality of that claims handling varies significantly. Request references from policyholders or other retail agents on claims experience.

Loss Ratio and Stability

Ask how long the MGA has held its current carrier relationship and whether there have been any authority suspensions or program changes in the past 24 months. An MGA that has maintained a stable carrier relationship for 3 or more years is a stronger indicator of underwriting discipline than one with recent disruptions.

Common Misconceptions About MGAs

"The MGA is the insurer."

The MGA is not the insurer. The carrier is. If an MGA fails or its program is discontinued, claims continue to be paid by the carrier. Retail agents should always disclose the carrier name, not just the MGA name, when presenting coverage to clients.

"MGAs are only for hard-to-place risks."

Many MGAs write standard or near-standard risks in specialty classes. A construction MGA, for example, may write contractors that admitted carriers would cover, but the MGA's pricing and program structure is more precisely calibrated for that class.

"MGA commissions are higher so pricing must be worse."

MGA pricing is not automatically worse than admitted carrier pricing. In specialty classes where the MGA has deep loss data and disciplined underwriting, MGA pricing is often more competitive than admitted market alternatives.

6 Frequently Asked Questions About What Is an MGA in Insurance

1. What does MGA stand for in insurance?

MGA stands for Managing General Agent. An MGA is a licensed intermediary that holds delegated underwriting authority from one or more insurance carriers under a written Delegated Underwriting Agreement (DUA). That authority allows the MGA to bind coverage, issue policies, and set rates without per-risk carrier approval.

2. How is an MGA different from a wholesale broker?

A wholesale broker submits every risk to a carrier or MGA underwriter for a decision. An MGA makes the underwriting decision itself, within the parameters defined by its DUA with the carrier. MGAs hold binding authority; wholesale brokers do not.

3. Do retail agents need a special license to work with an MGA?

Retail agents do not need a special license to submit business to an MGA, but they may need a surplus lines license if the MGA places business with non-admitted carriers. The MGA or wholesale broker typically handles surplus lines filings, but the retail agent must verify this requirement varies by state (NAIC 2025).

4. Who regulates MGAs?

MGAs are regulated by state insurance departments in each state where they operate. Most states require MGAs to hold a Managing General Agent license, and 43 states have enacted MGA-specific statutes based on the NAIC model MGA act (NAIC 2025). Carriers are also responsible for supervising MGAs under the terms of their DUAs.

5. What is a Delegated Underwriting Agreement?

A Delegated Underwriting Agreement (DUA) is the contract between a carrier and an MGA that defines the scope of the MGA's underwriting authority. It specifies classes of business, geographic territory, per-risk and aggregate premium limits, required policy forms and rates, reporting requirements, and termination conditions. The DUA is the legal foundation of the MGA's authority.

6. Can an MGA handle claims?

Some MGAs hold claims handling authority under their DUA. This authority is typically limited to claims below a defined dollar threshold, often $25,000-$50,000. Above that threshold, claims route to the carrier directly. MGAs with claims authority must maintain claims handling licenses in each applicable state.

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Written by Javier Sanz, Founder of BrokerageAudit. Last updated April 2026.