What Is an MGA? A Complete Technical Guide for 2025

1. Definition: What Is an MGA?

A Managing General Agent (MGA) is a specialized insurance intermediary that operates with delegated authority from one or more insurers. Unlike a standard broker, an MGA can:

• Underwrite risks
• Bind coverage
• Issue policies and endorsements
• Price business using agreed rating models
• Often handle claims and other back-office functions

In other words, an MGA performs functions that would normally be done by the insurer itself.

Legal or regulatory definitions typically emphasize:

An MGA is "appointed by an underwriting insurer to solicit applications… and, if authorized, to effectuate and countersign insurance contracts," often including underwriting, policy issuance, premium collection, and reporting.

MGAs may also be called:

• MGUs (Managing General Underwriters) – often similar but with more emphasis on underwriting than distribution.
• Program Administrators / Program Managers – especially in US program business.

2. Where MGAs Sit in the Insurance Value Chain

Think of the traditional distribution chain like this:

Insurer (carrier) → Wholesaler / MGA → Retail broker → Insured

Unlike standard agents or brokers (who arrange coverage but don't underwrite), MGAs occupy a hybrid role:

• They have front-line underwriting authority (within agreed parameters).
• They manage distribution through brokers, agents, digital channels, or direct.
• They often design products and build niche expertise in specific segments (e.g., construction, sports, cyber, marine).

For carriers, MGAs provide:

• Access to niche segments and specialist underwriting talent
• Local presence in markets where the carrier has no physical operations
• Variable cost structure (commission-based rather than fixed overhead)

For brokers and insureds, MGAs provide:

• Faster answers from empowered underwriters
• Tailored products and wordings
• Capacity from multiple carriers through one specialist channel

3. MGA vs Broker vs Insurer: Key Differences

3.1 MGA vs Retail Broker

A retail broker:

• Represents the insured (client)
• Shops coverage with carriers/MGAs
• Earns commission from premium placed
• Cannot normally underwrite or bind on their own authority

An MGA:

• Represents the insurer(s) for underwriting purposes
• Has delegated authority to underwrite and bind
• Can issue policies and endorsements
• May or may not distribute directly to retail clients

So while both are intermediaries, the MGA has insurer-like authority, whereas a broker has customer-facing advisory responsibilities.

3.2 MGA vs Insurer (Carrier)

An MGA is not an insurer:

• It usually doesn't hold the risk capital itself.
• It writes business on behalf of insurers and reinsurers.
• It is compensated via commission, profit share, and/or fees.

However, a mature MGA will look very "carrier-like" operationally:

• Product design
• Underwriting guidelines
• Claims oversight (sometimes handling)
• Compliance and reporting
• Data & portfolio management

This is why MGA software and PAS requirements are closer to a carrier core system than a simple broker CRM.

4. The MGA Market: Growth & Regulatory Spotlight

The MGA / DUAE (Delegated Underwriting Authority Enterprise) segment has been one of the fastest-growing parts of the insurance industry:

• In the U.S., premium generated through MGAs and other DUAEs reached around $89.9 billion in 2024, a 15% year-on-year increase and the fourth consecutive year of double-digit growth, according to AM Best.
• In 2024, estimates put the total US MGA market at over $110 billion in direct premiums written.
• Globally, revenues earned by MGAs/MGUs/coverholders reached roughly $23.9 billion in 2023, with more than 1,650 enterprises on track to write >$10M in premium each.

This rapid growth has triggered greater regulatory and rating-agency oversight:

• AM Best created a Performance Assessment framework specifically for MGAs/DUAEs and has warned that rapid premium growth warrants stronger governance.

Implication:

Modern MGAs must demonstrate tight controls, data quality, and risk governance, not just top-line growth. That's where the tech stack becomes existential.

Learn more: See our PAS Buyer's Checklist to understand what systems modern MGAs need for compliance and governance.

5. Delegated Authority: The Core of the MGA Model

At the heart of the MGA concept is delegated authority: the insurer outsources some or all of the following to the MGA under a contract:

• Product design (within guidelines)
• Underwriting & rating
• Binding and issuance
• Premium collection
• Bordereaux and regulatory reporting
• Claims handling or at least FNOL & triage

This is governed by a Delegated Authority Agreement, often called:

• Binding Authority (Lloyd's context)
• Program Administration Agreement
• Delegated Underwriting Agreement

These contracts specify:

• Lines of business & territories
• Underwriting criteria and exclusions
• Limits, aggregates, and line sizes
• Pricing/rating models and referral rules
• Documentation and wording requirements
• Reporting frequency and bordereaux formats
• Audit, oversight, and performance targets

Because the MGA acts "as the insurer" within these parameters, regulators and rating agencies expect carrier-grade controls around:

• Data
• Process
• Compliance
• Systems & controls

For Lloyd's Coverholders: See our detailed guide on Lloyd's Coverholder Software and binding authority requirements.

6. Core Functions of an MGA (Operational View)

From a systems and process perspective, a typical MGA will:

1. Design & manage products
   • Product structures, coverages, endorsements
   • Wordings & documentation
   • Pricing/rating models
2. Distribute
   • Through brokers, sub-agents, digital channels, embedded APIs
3. Underwrite
   • Risk selection & pricing
   • Referrals & approvals
   • Manual or semi-automated underwriting
4. Administer policies
   • Issuance, endorsements, cancellations, renewals
   • Segment-specific workflows (e.g., construction, sports, cyber)
5. Manage bordereaux & regulatory reporting
   • Risk bordereaux
   • Premium bordereaux
   • Claims bordereaux
6. Handle or oversee claims
   • FNOL intake
   • TPA collaboration
   • Authority levels for payments
7. Manage data & portfolio performance
   • Loss ratios
   • Aggregate exposure
   • Rate adequacy & mix of business
   • Carrier performance and profit-share

This operational reality drives the technical architecture.

7. The Technical Stack of a Modern MGA

A serious MGA (or aspiring Lloyd's coverholder) typically needs:

7.1 Policy Administration System (PAS) – The Core

The PAS is the transaction engine:

• Policy lifecycle (quote, bind, issue, MTA, renew, cancel)
• Rating & underwriting rules
• Product configuration
• Document generation
• Bordereaux export

For MGAs, the PAS must also deal with:

• Multi-carrier, multi-binder complexity
• Delegated authority enforcement (limits, referrals)
• Binders and programs as first-class objects
• Data structured for bordereaux, audits, and analytics

This is where FacioMGA positions itself: as a low-code, AI-native PAS specifically for MGAs and delegated authority.

Compare options: See our comprehensive comparison of MGA software platforms and PAS Buyer's Checklist.

7.2 CRM & Distribution

• Broker/agent management
• Lead & opportunity tracking
• Commission and incentive management
• Portal authentication & permissions

Some platforms (like Salesforce-based MGA systems) blend CRM and PAS; others integrate the two via APIs.

7.3 Rating, Pricing & Data

• Rating engines (internal or external)
• Data enrichment (geospatial, credit, firmographics, IoT, etc.)
• Portfolio and pricing analytics
• Exposure & aggregate management

Advanced MGAs also integrate:

• Predictive models
• AI-based pricing suggestions
• Scenario tools for reinsurance and capital planning

Learn more: See our guide on AI agents for MGAs and how modern MGAs are using AI to automate operations.

7.4 Claims & TPAs

• FNOL intake (web, API, call center)
• Integration with TPAs or carrier systems
• Authority limits for claim settlements
• Fraud checks & analytics

7.5 Finance, Accounting & Reconciliation

• Premium and commission flows
• Bordereaux-reconciled postings
• Cash reconciliation
• Profit-share and override calculations

Often handled via integration between PAS, finance systems (ERP), and carrier reporting.

8. Why Generic Systems Fail MGAs

Many MGAs start with:

• Broker systems + spreadsheets
• Generic PAS built for single-carrier personal lines
• Custom-built systems that grow brittle

These quickly break down when:

• You add a second or third capacity provider
• You expand into new geographies
• Carriers start asking for cleaner bordereaux and audits
• You seek Lloyd's approval or rating agency scrutiny

Typical failure points:

• Bordereaux produced as chaotic Excel files
• No enforcement of delegated authority limits
• No true binder-level visibility or aggregates
• Underwriting rules scattered across emails and people's heads
• Long delays to launch or modify products

At a certain scale, this stops being an inconvenience and becomes a strategic risk.

Solution: Use our PAS Buyer's Checklist to identify systems built specifically for MGA operations.

9. The MGA PAS of the Future: Low-Code, AI-Native, DA-Centric

Future-proof MGAs increasingly need a PAS that is:

1. DA-centric
   • Binders, programs, and authority rules modeled natively
   • Bordereaux and reporting automated by design
2. Low-code & configurable
   • Business users can create/modify products
   • Changes shipped in days, not months
3. AI-native
   • AI can read the product, the binder, and the workflows
   • Underwriting agents, portfolio copilots, and compliance bots built on real structure
4. Cloud-native & API-first
   • Easy to plug into CRMs, portals, rating engines, TPAs, carriers

10. Where FacioMGA Fits in the MGA Landscape

FacioMGA is built specifically to be:

• A Policy Administration System for MGAs and Lloyd's coverholders
• A delegated authority engine rather than a generic policy system
• A low-code blueprint platform where:
  • products, binders, wordings, and workflows are modeled structurally
  • AI can safely interact with and optimize your operations

Key differentiators for MGAs:

• Delegated Authority Modeling
  • Binders, sections, aggregates, authority levels, and referrals defined explicitly.
• Bordereaux Automation
  • Risk, premium, and claims bordereaux created automatically in carrier/Lloyd's formats.
• Speed to Market
  • New products and binders launched in days, not months.
• AI Built-In
  • AI agents can assist with underwriting, data validation, compliance checks, and product design.
• Affordability & TCO
  • Low-code means fewer developers, fewer integrators, and significantly lower long-term cost than legacy carrier PAS.

For MGAs that want to scale while satisfying carriers, regulators, and rating agencies, a system like FacioMGA turns the tech stack from a liability into a competitive advantage.

Compare platforms: See our full comparison of MGA software and understand why FacioMGA ranks #1 in speed, AI, and affordability.