Everything to Know About MGA Insurance

If you are like most people, you find the insurance industry complicated. You work with an agent who tells you about the coverage you need. You may go a step further and shop around for better rates. However, there are some parts of the industry that you may not know about. For example, do you know what a managing general agent is and what these professionals do? This is what you should know.

Managing General Agents Defined

MGAs are wholesale brokers. However, they have specialized underwriting power. This means that they can bind policies for clients. These agents also offer specialized products and negotiate insurance policies. Much of their work revolves around identifying and calculating risk and building insurance policies that take this risk into account. They provide excess insurance when customers have gaps in their coverage.

However, MGAs often hire agents and others or contract them to deal directly with the public. Therefore, you are unlikely to meet with an MGA as a client, but they can sell directly to clients as well.

They Are Intermediaries and Create a Bridge

Insurance companies offer specific policies to their customers through brokers or independent insurance agents. The agents and brokers understand all the details involved in the policies offered by the insurance companies they work with.

MGAs position themselves between the brokers or agents and the insurance companies. When clients cannot get all the insurance they need, the broker or agent may contact these managing agents to evaluate the risk of a policy that makes up the difference. MGAs then conduct a risk analysis and underwrite a policy that will work for the client. They often offer products outside traditional policies offered by insurers, creating specialized products.

However, MGAs do not have contracts with insurance companies. They can underwrite products for a number of different insurers. They can also handle claims and service the policies they underwrite.

MGAs Are Not Wholesale Brokers

Wholesale brokers have similar but not the same jobs. Wholesale brokers also act as liaisons or bridge gaps between agents and insurance companies. However, their offerings are typically niche markets that other agents cannot access. They also tend to work with several companies to find the best deal for the client. They access nontraditional markets and products, but they cannot underwrite policies.

MGAs do have underwriting authority. They can also adjust the insurance policy pricing. They offer customized products and can specialize in specific niche product lines. These professionals work with multiple carriers to create and issue policies, whereas wholesale brokers pull existing products from multiple insurance companies.

How Final Clients Benefit From MGAs

If you have unique insurance needs, you may not find a policy that covers you completely. For example, you may need specialized health insurance that your insurer does not offer, such as cancer care. You can work with MGAs to build a policy that covers the gaps in your current coverage. These professionals will analyze the risk of you contracting cancer based on solid evidence and statistical analysis and build your coverage and payments around this risk.

MGAs play a key role in the insurance industry. These experts manage the insurance markets to provide you with the coverage you need.

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