Among the insurance industry’s many acronyms, “MGA” could prove one of the most important to your business clients—and to your own brokerage.
The meaning of MGA is “managing general agent.” MGAs are a specialized type of wholesale brokers. Insurance carriers grant them underwriting power. (For this reason, MGAs are also sometimes known as MGUs, “managing general underwriters.”)
MGA insurance functions can also include binding coverage, settling claims, and appointing retail agents in certain regions—activities insurance companies usually handle. And if a given business doesn’t fit an insurer authorizing the MGA, they can broker it to find a carrier where it does fit.
When you, the independent agent, work with an MGA, you can access markets, carriers, and insurance products you’d have a hard time accessing on your own. Partnering with an MGA makes you more responsive to rapidly shifting coverage needs and can position you for greater success.
Keep reading for expert advice from ProWriters on maximizing MGA insurance relationships for your clients and for yourself.
MGAs, Insurers, Agents, and Brokers: Know the Distinctions
It’s Insurance Industry 101: Carriers underwrite insurance policies. Agents (representing the carriers) and brokers (representing their own clients) sell those policies.
A managing general agent is an intermediary in the insurance market, like and unlike carriers, agents, and brokers.
Like an insurance carrier, an MGA underwrites policies. But unlike carriers, who hire and contract with agents to sell policies, MGAs quote and bind the policies they underwrite. They can do so because carriers have granted them more authority than granted to other agents.
Most MGAs further differ from carriers because they:
- Act on behalf of multiple carriers
- Specialize in a particular, often niche industry or line of insurance
- Respond more rapidly than carriers to market and industry changes
- Offer a “human touch” large carriers often can’t
Insurers use MGAs because their expertise in specialized types of insurance means the carrier doesn’t have to develop the same expertise in-house. MGAs’ underwriting authority lets insurers expand their reach and stay nimble in the ever-changing insurance business.
Although MGA’s meaning is “managing general agent,” an MGA is, as mentioned, a specialized wholesale broker. Like brokers, they can act on behalf of clients, not only on behalf of the insurer, as a traditional insurance agent does.
At times, independent brokers’ clients require specialty insurance. MGAs’ expertise in specialty insurance products, as well as their influence and relationships with carriers, helps the independent broker compare providers and find the best policies for their clients’ specific risks.
8 Factors To Consider When Choosing Your Managing General Agent
To fully benefit from working with a managing general agent, you must select the most competent and qualified MGA you can.
Here are eight factors to look for:
Experience matters. Look for an MGA whose history of working with insurers is long and successful. The better their track record, the more likely they will be able to write the specialized coverages your clients need.
Finding an MGA who’s licensed in all 50 states means you will be able to serve all your clients, no matter their location.
Every client carries individual risk and unique insurance needs. MGAs need to be flexible enough to tailor policies to these specific needs.
Every day your clients continue to do business without the appropriate insurance, they face substantial risk. An efficient MGA allows you to quickly find your clients the coverage they need.
The MGA you choose should not only have access to the insurance products your clients need but also enable you to secure those products for them in a straightforward way.
While quality products, prices, and workflows can all lead to positive experiences with MGAs, don’t overlook the importance of service. Doing business accurately the first time around saves everyone time and money.
Maintaining up-to-date technology is crucial for providing the most efficient and streamlined processes, as well as protecting your business clients from rapidly changing risks.
Educational resources, risk management information, and marketing materials all help brokers market and quote policies for their clients. A well-educated client is much more likely to understand their exposure and seek coverage.
ProWriters Can Help You Find the Best MGA for Your Brokerage
At ProWriters, we have more than 20 years’ experience as one of the leading wholesale insurance brokers in the industry. As such, we can help you connect with the best MGAs and carriers for you and your business clients.
We at ProWriters specialize in:
In all these areas, we offer national coverage and can provide both admitted and surplus lines policies.
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We use innovative, proprietary technology to help you find and quote policies. Our registered brokers don’t need to enter a risk five, six, or seven times.
We also offer a number of broker resources, including policy fact sheets, carrier policy forms, and applications, to make your job easier.
For more information on how MGAs can help you, download our FREE eBook, The Cyber Advantage: Wholesale vs. Retail Brokerages. And to find out more about how we can help you connect with the best MGA for your brokerage, contact us online or call (484) 321-2335.