MGAs cook not deal directly with customers, nevertheless bring products to brokers.
MGA stands for "managing accepted agent" and is a wholesale insurance middleman with the governance to grip placements from (and Frequently to nominate) retail agents on behalf of an insurer. MGAs generally afford underwriting and administrative services for the insurers they copy.
MGAs take on the significant costs involved in being a wholesaler and the investment needed to succeed. They must function in many capacities including recruiting, training and motivating. They also must maintain their personal practice.
Significance
MGAs normally marketplace besides unusual types of insurance coverage, for which specialized knowledge is required to underwrite policies. Insurers collaborate with MGAs because such expertise is not always available in-house and would be more costly to develop within the company.
Types
An MGA can be used in any line of insurance for any form of insurer. According to the American Association of Managing General Agents, this includes insurers who are "admitted or not, direct or otherwise, broker or agent system, contract/appoint or open-broker subproduction, or any or all combination of these."
Compensation
MGAs are generally entitled to a contingency commission, or override, on all business written within their territory. They will take a percentage of the commission that would otherwise go to the producing insurance agent.
Challenges
Being an MGA means personal accountability too as responsibility for producers.
