Managing general agent (MGA)

A managing general agent is a specialist intermediary with delegated authority from an insurer. The insurer, which supplies the capital and its license, lets the MGA decide which homes to accept, set prices within agreed limits, bind coverage and sometimes handle claims. The MGA earns a commission and, in many deals, a profit commission tied to results.

Insurers use MGAs to enter niches, such as coastal or wildfire-exposed homes, without building a full operation. Many technology-driven home insurers began as MGAs writing on another company's paper, often with reinsurers taking most of the risk. Many states license MGAs and, drawing on an NAIC model act, require a written contract and carrier oversight such as audits and underwriting reviews.

Because the MGA typically does not pay the claims, its incentive can lean toward volume, which is why carriers audit results and regulators watch the arrangement. For a homeowner the thing to find is the name of the insurer on the declarations page. That company, and its financial strength, stands behind the policy, whatever brand or MGA sold it.

Ask who handles claims and who the issuing carrier is, and look up its rating and license. The guide to MGAs and fronting carriers explains how the pieces fit, and fronting carrier covers the licensed insurer in the middle.