Managing General Agent Agreement Template for the United States
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What is a Managing General Agent Agreement?
MGA arrangements are widely used across the United States to reach specialty and regional business an insurer could not economically underwrite risk by risk. Most states have adopted a version of the NAIC Managing General Agents Act, which defines an MGA by premium volume and delegated authority and requires a written agreement containing prescribed terms. The insurer remains responsible to policyholders and to its regulator for business written under the delegation, so oversight provisions are not merely commercial.
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Frequently Asked Questions
What makes a producer a managing general agent?
State law, not the job title. The NAIC model defines an MGA by reference to premium volume relative to the insurer and the delegation of underwriting or claims authority. If the thresholds are met, the statutory requirements apply whatever the parties call the arrangement.
Must the agreement contain specific provisions?
Yes in most states. Statutes based on the NAIC model prescribe terms including termination rights, access to books and records, and audit rights. An agreement missing them can leave the insurer out of compliance in that state even if the commercial terms are sound.
How should premium be held?
Usually in a separate fiduciary account rather than mixed with operating funds. Many states impose trust obligations on premium collected, and commingling is a common enforcement finding as well as a serious problem if the MGA becomes insolvent.
Can an MGA handle claims?
Yes, where the agreement grants it and the MGA is appropriately licensed, but delegated claims handling brings state unfair claims settlement practices obligations with it. Reserve authority limits and reporting thresholds should be set expressly.
What happens to bound policies when the agreement ends?
They remain the insurer's liability until expiry, so the agreement needs a run-off provision covering administration, claims handling and records access after the authority to bind has stopped.
About the Managing General Agent Agreement
A Managing General Agent Agreement delegates an insurer's underwriting authority to an MGA within defined limits. In most states these arrangements are regulated directly, and the statute prescribes terms the written contract must contain, so the agreement carries a compliance function as well as a commercial one.
When do you need this document?
You need one when an insurer wants a specialty intermediary to accept risks on its behalf rather than referring each submission, when entering a class or region through a party with local distribution, or when giving an intermediary delegated claims handling authority alongside the power to bind.
What does it cover?
The agreement grants and bounds the authority by class, limit, territory and excluded risk, and sets the referral triggers requiring the MGA to come back to the insurer. It establishes how premium is collected, whether it is held in a fiduciary capacity and in what account, and it sets commission and any profit sharing. It provides for bordereaux reporting, books and records access, and audit rights, and covers licensing, complaints, market conduct and data security. It then deals with termination and the run-off of risks already bound.
Common pitfalls
The most serious exposure is authority written loosely enough that the MGA binds business the insurer never intended to accept, since the insurer is still liable to the policyholder. Precision on classes, limits and exclusions is the only real protection. The second is premium handling: failing to require a separate fiduciary account is a frequent enforcement finding and becomes acute on insolvency. The third is omitting the provisions the applicable state MGA statute requires, which makes an otherwise sound commercial deal non-compliant.
GOVERNING LAW
Applicable law
This Managing General Agent Agreement is drafted to comply with United States law. Key legislation includes:
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