MGA / MGU / Coverholder

14.11.2016

A Managing General Agent (MGA), also called Managing authorized by an insurance carrier (an insurance company or a Managing Agent at Lloyd’s) to underwrite, issue and manage insurance policies within a defined class of business and agreed guidelines, using the insurance carrier’s license and risk capital. The MGA acts as the Managing Agent of the insurance carrier, managing distribution, issuing policies, collecting premiums(incl. payment of local taxes) and sometimes handling claims. This type of agreement is called Delegated Authority.
MGAs allow insurance carriers to establish a global presence and a diversified portfolio without the burden of hiring staff, opening offices and maintaining a local business presence. It can therefore be an attractive outsourcing model for insurance carriers enabling them to manage their costs and optimize capital.
MGAs gain the benefit of the financial strength and reputation of the companies they represent and allow them to distribute products they would not be able to otherwise. They therefore act like small insurance companies but without the stringent capital requirements of an insurer. In some cases, they will be regulated as insurance agents by their local insurance regulators; regardless of that they must always comply with their insurance partners’ insurance compliance requirements. Being a Coverholder of Lloyd’s means complying with a complex set of regulations that any Lloyd’s Agent has to comply with. This includes Financial Crime & Sanctions (anti-money laundering, international sanction and bribery) and Conduct Risk. MGAs are audited on a regular basis by their insurance carrier or by independent auditors appointed by the insurance carrier.  
MGA agreements are essentially issued by the London market (Lloyd’s), but this is also a valid outsourcing model for any insurance company in any class of business. Whereas the MGA model is quite common in the Anglo-Saxon world, there is still a lot of scope for development in Continental Europe.
The main lines underwritten under MGAs agreements are:
  • Marine liability
  • Accident & Health
  • Property
  • Professional Indemnity
  • Life
  • Lloyd’s is by far the largest provider of Coverholder agreements, although a number of providers can be found in Gibraltar and Malta.
    Assithèque AG is a regulated Insurance Agency (MGA/MGU) domiciled in Vaduz, Liechtenstein.
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