MGA’s Global Study #2

---

Publié le 24/09/2024 par Jérôme Goy

INSURANCE LAW

We continue our study of MGA’s, which began in June 2024, in the Americas and Africa.

MGA’s (Managing General Agents) are a fast-growing category of insurance intermediaries in Europe. However, this model originated in Anglo-Saxon countries, particularly the United States, where the legal framework and practice are far more developed.

440 MGAs in the USA, 200 in the UK

Our first state-by-state survey in the USA covers 440 MGA’s (compared with 200 in the UK). Some are based in a single state, while others cover the whole of the USA. Insurance law, and MGA law in particular, is not federal but state law. For example, Texas holds the record for the highest number of MGA’s, with 70 (1), while Oregon has just 9.

Although each state has its own legal standards, the NAIC (National Association of Insurance Commissioners) has drafted the Managing General Agent Act (2), which is intended as a model for the regulation of MGA’s. This model has been adopted as the basis for legislation in many states, including South Carolina, Colorado, Louisiana and Texas.

It distinguishes between the following activities within MGA’s:

• MGA’s with underwriting authority : they can underwrite insurance policies on behalf of insurers, but must be licensed and comply with the specific guidelines of the insurance companies for which they underwrite these policies.
• MGA’s with Premium Collection Authority : they can collect insurance premiums from policyholders on behalf of insurers, and must comply with legal requirements regarding the management of customer funds.
• MGA’s with Marketing and Distribution Authority : they manage the distribution of insurance products, their promotion and relations with brokers.
• MGA’s with Claims Authority : manage policyholder claims and payouts.
• MGA’s with Administrative Authority : manage policy administration and compliance reporting.
• MGA’s with Policy Insurance Authority: can issue insurance policies with the approval of the insurance company.
  Reinsurance MGA’s : their role is to help insurance companies cede part of their risks to reinsurers.
• MGA’s with limited authority : these MGAs have authority in certain areas up to a certain limit, or amount, set by the insurance company.
• MGA’s present in several states, whose functions and powers will vary according to the regulations specific to each state.

In most federal states, it is necessary to obtain a specific license in order to be recognized as an MGA.

Dans la plupart des états fédérés, il est nécessaire d’obtenir une licence spécifique pour pouvoir être reconnu comme un MGA.

Soon MGA’s in Africa?

The next era of MGA development could be Africa. The take-off of a local insurance market on the African continent logically creates in its wake a need for capacities that MGA’s can fill. It’s already worth noting that the Beninese broker Dayo (also present in Guinea and Burkina Faso) has been aiming to become the continent’s leading MGA since 2024.