What is an MGA, and how do they work? 

  Amanda   |   11th January 2023 - 3 min read

Technology | Schemes | Insurance | Knowledge Centre | SchemeServe

A slightly different definition… 

MGAs are often considered the middle-weight boxers of the insurance industry.

Like an insurance broker or agent (who works on behalf of the policyholder) an MGA can act as a broker selling direct to policy holders… however MGAs have a secret power, the power to UNDERWRITE. This means, they are able to underwrite the policies they sell on behalf of the insurer. 

Here’s a more palatable explanation in a very small nutshell…

Steve wants to buy some liquorice with his pocket money. 

He could ask his friend Lucy to go directly to ‘Mega Sweets’, the sweet shop in town, and get as many types of liquorice as she can for £1. 

Or he could take his £1 to the pop-up sweet shop next door ‘Mini Mega Sweets’. It’s answers to its larger sibling, but specialises in liquorice from around the World (and this makes Steve happy).

An MGA still works on behalf of its insurer, but more often than not they have a specialised knowledge and a specific skill set. Having specialised knowledge in an area (such as car insurance, or buildings insurance) means an MGA becomes extremely useful to an insurer if they have not yet had time (or resource) to pursue it. This means an insurer can branch out into new regions, or experiment with new products, without themselves taking on the investment.

Pursuing these opportunities from scratch would be bit like wanting to start a restaurant and spending all your savings on a cookery course, instead of asking your friend who’s a chef to go into business with you. 

Bit bonkers, no?

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manda – website - insurtech

Manda Hinkin-Page

Manda spent the majority of her 20s working for London based non-profits, studying Person-Centred Counselling, and achieving a First Class degree in Creative Writing. Since 2020 she has been freelancing as a Copywriter, and joins us as Marketing Manager.

She loves animals, swing music, psychology, cake, pesto, ballet and walking to the top of really big hills.

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