If you’ve spent some time in the insurance industry, you’ve likely heard the term “MGA” used more than a few times. But what is an MGA, and what do they do? Falvey Insurance Group is an example of an MGA through its partnerships with Lloyd’s of London, Beazley Insurance, Starr Indemnity & Liability Company, Berkshire Hathaway Specialty Insurance, Ascot Insurance Company and many more.
An MGA, or Managing General Agent, is an individual or company who can act as a broker or agent on behalf of an insurer. However, unlike a typical agent, they have the authority to underwrite the policies they end up selling to clients. While an insurance broker works on behalf of the policyholder, an MGA works on behalf of the insurance company.
These independent agents often possess specific skill sets or knowledge that the insurance company doesn’t otherwise have amongst their regular staff. As a result, they are often tasked with duties an insurer wouldn’t otherwise be able to fulfill.
What Does an MGA Do?
When appointed by an insurance company, the MGA – also referred to as an MGU, or Marketing General Underwriter – performs a variety of duties on behalf of the insurer. This includes underwriting, settling claims, pricing, and binding risk.
They frequently specialize in fields the insurer might not otherwise have a particularly strong foothold in. Even the largest insurer can’t staff up and train appropriately for every single field that might need an insurance policy – there’s far too many. An MGA who is a specialist in their particular field knows the ins and outs, and is a valuable contact that can be trusted to understand the risks and set premiums accordingly. By already having experience, processes, systems, licenses, and staff for a particular class of business, they offer insurers the ability to try different products in different regions without taking on the investment themselves.
Specialized Experience
Establishing a foothold in a new region is expensive and time-consuming. Contracting with an MGA helps an insurer avoid funneling a lot of money into opening a new office and hiring and training staff to fill it. An MGA becomes particularly useful if they possess a skill set or expertise in an area the insurer is interested in but has not yet pursued.
The major reason certain MGAs are long-term successes is that they are true specialists in their space. While insurance companies change their interest and strategies, MGAs offer stability to the market by their ability to interchange the insurance companies backing them. This allows the MGA to survive through various cycles of the insurance market. Falvey’s Marine Cargo and Stock Throughput product is an example of a specialized MGA that achieves better than industry average results while providing strong levels of service to the broking and policyholder community.
Thanks to their skill sets and flexibility, MGAs are bound to be useful contacts for insurers looking to expand their business.
Learn more about Falvey Insurance Group.
