DistributionApril 9, 20269 min read

What is an MGA? Managing general agents, binding authority and bordereaux

A managing general agent underwrites and administers insurance on behalf of a carrier under delegated authority. MGAs are the fastest-growing distribution channel in specialty insurance — and the most operationally demanding.

By AegisNow
The short answer

A managing general agent (MGA) is a specialised intermediary that performs functions normally reserved for an insurance carrier — underwriting and pricing risks, binding coverage, issuing policies, and often handling claims — under a delegated authority agreement with one or more carriers. The carrier (or Lloyd's syndicate) grants a binding authority: a contract defining exactly what the MGA may write on its paper — classes of business, territories, limits, exclusions, referral triggers and a maximum premium volume (capacity). The MGA earns commission and often a profit share; the carrier gets access to niche underwriting expertise and distribution it would struggle to build internally. The control mechanism holding the model together is the bordereau (plural bordereaux): the periodic detailed report of every risk bound, premium written and claim incurred, which the MGA must deliver to the carrier, typically monthly. Programmes fail operationally in predictable ways — binding outside authority, late or inaccurate bordereaux, stale capacity tracking — and carriers respond by tightening terms or withdrawing the pen. MGAs that automate authority enforcement at bind and bordereaux production from live data turn compliance into a competitive advantage: transparency is what wins more capacity.

The MGA model in one page

An MGA sits between producing brokers and the carriers whose capital backs the risk. Unlike a retail or wholesale broker, which places business for a client, the MGA acts for the carrier: it underwrites, prices, binds and issues within an agreed mandate, as if it were the carrier's own underwriting desk for that programme.

The model thrives in specialty and niche lines — professional liability for a specific profession, coastal property, cyber for small business, equine, cannabis — where deep expertise matters more than balance-sheet scale. The carrier rents the expertise; the MGA rents the paper and the capital.

Binding authority: the contract that defines everything

The delegated authority agreement (in the Lloyd's market, a binding authority agreement with a coverholder) is the constitution of the relationship. It specifies the classes and territories the MGA may write, maximum limits per risk, mandatory exclusions, rates or rating guidelines, risks that must be referred to the carrier before binding, and the overall capacity — the maximum premium the MGA may write in the period.

Everything the MGA binds inside that envelope is the carrier's risk, automatically. That is precisely why carriers audit programmes intensively: a risk bound outside authority is a dispute waiting to happen, and a pattern of them is how programmes die. The operational question for every MGA is whether authority is enforced at the point of binding or discovered at the annual audit.

Bordereaux: the reporting backbone

A bordereau is the periodic detailed statement the MGA delivers to its carrier: the premium bordereau lists every policy bound — insured, coverage, limits, premium, commission — and the claims bordereau lists every claim with its status, reserves and payments. Monthly is the norm; formats are agreed per contract.

Bordereaux are how the carrier books the business, reserves the claims, pays reinsurers and satisfies its own regulators. Late, incomplete or inconsistent bordereaux are the single most common friction in delegated authority — and because many MGAs still assemble them by hand from spreadsheets each month, errors are structural, not incidental.

Where programmes go wrong operationally

The recurring failure modes are mundane: a policy bound above the per-risk limit because the check was manual; capacity tracked in a spreadsheet updated weekly while binding happens daily, so the programme overshoots; referral-required risks bound without referral because the trigger lived in a PDF nobody re-read; bordereaux submitted late because month-end assembly takes a week.

Each failure taxes the relationship. Carriers price opacity into their terms — lower commissions, tighter authority, more exclusions — or exit the programme entirely. In a market where capacity is the scarce resource, operational credibility is commercial leverage.

The modern MGA operating stack

The fix is to make the authority agreement executable. When limits, exclusions, referral triggers and capacity live as configuration in the policy admin system, every bind validates against them in real time; out-of-authority risks are blocked or routed to referral, and capacity utilisation is always current.

Bordereaux then stop being a month-end project: they generate from the same live policy and claims data, validate against the agreed format and tolerances, and submit on schedule. MGAs that operate this way can show carriers a live, accurate picture of the programme at any moment — and that transparency, more than any pitch deck, is what earns bigger pens and better terms at renewal.

FAQ

Common questions, answered.

The questions this guide gets asked most, answered plainly.

MGA stands for managing general agent — an intermediary that underwrites, prices, binds and administers insurance on behalf of a carrier under a delegated authority agreement, effectively acting as the carrier's specialist underwriting desk for a programme.

A binding authority (or delegated authority agreement) is the contract in which a carrier grants an MGA the power to bind coverage on its paper, specifying classes, territories, limits, exclusions, referral triggers and the capacity — the maximum premium the MGA may write.

A bordereau is the periodic detailed report an MGA delivers to its carrier listing every risk bound (premium bordereau) or every claim and its reserves and payments (claims bordereau). It is how the carrier books, reserves and reports the delegated business.

A wholesale broker places risks with carriers on behalf of retail brokers but does not decide acceptance. An MGA holds underwriting authority: it decides which risks to accept and binds the carrier to them, within the limits of its delegated authority.

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