A specialized type of insurance agent/broker that, unlike traditional
agents/brokers, is vested with underwriting authority from an insurer.
Accordingly, MGAs perform certain functions ordinarily handled only by
insurers, such as binding coverage, underwriting and pricing, appointing retail
agents within a particular area, and settling claims.
Typically, MGAs are involved with unusual lines of coverage, such as
professional liability and surplus lines of insurance, in which specialized
expertise is required to underwrite the policies. However, MGAs also write some
personal lines business, especially in geographically isolated areas (e.g.,
western Oklahoma, North Dakota) where insurers do not want to set up a branch
office.
MGAs benefit insurers because the expertise they possess is not always
available within the insurer's home or regional offices and would be more
expensive to develop on an in-house basis.