How does a managing general agent (MGA) operate in relation to the carrier?

A managing general agent (MGA) operates as an intermediary between the insurance carrier and insurance producers, effectively serving as a de facto branch office of the carrier. This means that the MGA has the authority to manage specific insurance functions on behalf of the insurance company, which can include underwriting, binding coverage, and sometimes even claims handling. By taking on these responsibilities, the MGA helps to expand the carrier's reach and streamline operations, allowing for quicker responses to market demands and the ability to serve niche markets that the carrier may not focus on directly.

The relationship between an MGA and the carrier is defined by a contractual agreement that outlines the specific powers and responsibilities of the MGA, giving it the authority to act on the carrier's behalf. This arrangement benefits the carrier by improving efficiency and reducing operational costs, as the MGA can leverage its expertise in a particular market segment.

Options involving solely focusing on captive insurance or claims handling are not representative of the broader scope of the MGA's role, and the notion that an MGA sells insurance directly to the public does not capture the essence of their function. Instead, they typically work through insurance brokers and agents to distribute products under the carrier's guidelines.