What Is a Managing General Agent (MGA) in Insurance?
Updated June 24, 2022
What is an MGA in insurance?
A managing general agent (MGA) is a type of insurance agent who has the authority to underwrite insurance policies. Underwriting means an MGA can assess a customer's risk and offer them insurance. Traditional insurance agents sell insurance policies to customers. An MGA can sell policies and also approve them, set prices and settle claims.MGAs typically specialize in a particular topic and become experts in their field. They can focus on the following specialties:- Coverage fields: Some MGAs become experts in specific coverage areas. For example, they can provide coverage for employee benefits or medical malpractice. Companies and insurance agencies may reach out to an MGA to provide a detailed risk evaluation for a specific field. For example, if an insurance agency wants to begin offering coverage to medical companies, they can partner with an experienced MGA to create new policies.
- Geographic location: MGAs can also focus on a specific location. This is common in rural areas without large insurance agencies. A national insurance company may contact a local MGA to provide insurance coverage outside of the insurer's typical network.
What does an MGA do?
An MGA works independently or with an insurer to produce insurance policies. Their duties may include:- Evaluating risks for companies or individuals before providing coverage
- Underwriting or approving coverage for a client
- Pricing an insurance plan by assigning a cost
- Settling claims and providing individuals with funds
- Binding risk by providing a written agreement called an insurance binder
How to become an MGA
If you are interested in a career as an MGA, consider following these steps:1. Complete your education
To become an MGA, you will need a high school diploma or GED. Some MGAs also earn a bachelor's degree to help them advance their career. In your studies, consider taking courses on the following subjects to help you develop skills and industry knowledge:- Mathematics
- Statistics
- Risk management
- Marketing
- Communications
2. Pick an area of focus
MGAs specialize in certain topics or areas, and they often sell or provide certain insurance products. Depending on your location, you may need specific licenses for each insurance product you sell. Choosing your insurance specialty can help you complete the next steps for your career.3. Complete licensing regulations
Each state has its own licensing regulations for insurance agents and MGAs. These requirements will vary depending on your location, but you may need to attend courses or earn a certain number of training hours before applying for a license. Depending on the products you sell, you may need multiple licenses. For example, if you sell policies for home and auto policies, you may need to have a license for both.4. Apply for a license
Each state has its own application process. In most locations, MGAs can apply for an MGA license online or through a government office. Depending on your location, you may need to pass an exam or provide proof that you've met certain licensure requirements.5. Consider employment options
Once MGAs obtain their license, they have a few employment options, including:- Creating a startup: MGAs can start their own wholesale insurance agencies if they meet certain state requirements. Retail agents, who buy policies for customers, can reach out to MGAs to secure policies and plans. MGAs can also market and sell their own policies.
- Partnering with an insurance agent: Some MGAs begin their careers by partnering with an insurance agency. Insurance agencies can provide necessary funds in exchange for a percentage of the MGAs sales.
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Skills required for an MGA
To be successful in their careers, MGAs should develop the following skills:Communication
MGAs frequently talk to customers and insurance agents. They need strong verbal communication skills to help them explain concepts, negotiate prices and reach settlements. They can also use active listening and emotional intelligence to understand customers' wants and needs, helping them find the right policy. MGAs can also use communication skills to foster business relationships with clients and insurance agents.Related: 7 Tips for Improving Communication SkillsMath skills
To underwrite policies, MGAs need to evaluate risks to determine whether they can provide coverage for a client. Mathematical skills and statistical knowledge can help MGAs measure, evaluate and predict these risks.Analytical reasoning
Analytical reasoning is another skill MGAs can use to make coverage decisions. When underwriting, they need to reach conclusions based on their mathematical models and research. They can use analytical skills to evaluate all the information and make a decision.Related: 10 Ways To Improve Your Analytical SkillsDetail-orientation
MGAs draft and read important insurance documents, and they may create insurance binders to reflect an insurance agreement. These documents need to be clear and accurate. MGAs can use detail-orientation skills to produce and revise strong written documents.Computer skills
Most MGAs use computer software to create insurance documents. They may use software to underwrite, input data and produce documents. They can develop these technical skills during training and coursework.Time management
MGAs often work with many clients at the same time. Strong time management skills can help them balance multiple responsibilities and shifting deadlines.Sales and marketing
Some MGAs provide insurance retail. This means they sell plans in addition to underwriting and pricing them. They can use selling and marketing skills to advertise and explain new plans to potential customers. If an MGA starts their own agency, they can use marketing skills to attract potential insurance partners.Financial knowledge
MGAs may require strong entrepreneurship skills and financial knowledge if they work as a wholesale insurance agent. If they start their own agency, they can use financial and business skills to operate their company.Networking
Networking is an important skill for an MGA career. MGAs can network in their local area to build connections and find possible insurance partners or clients. For example, if an MGA specializes in hospital coverage, meeting local health professionals could help them find new customers.
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