As previously mentioned, insurance distribution partners are tasked with recruiting agents to sell insurance products. This includes several responsibilities, such as:
Regardless of how these businesses refer to themselves, any insurance business that isn’t a carrier or MGA is likely going to be grouped as an “agency” or “business entity” for the purposes of regulation or to define the partners in an insurance distribution sales channel. For more on some of the responsibilities in the relationship between agencies and individual agents, check out this piece on agent affiliations and designated responsible licensed producers.
One distinguishing feature of a managing general agent (MGA) or managing general underwriter (MGU) that differentiates them from other insurance distribution partners is that they take on some of the carrier’s responsibilities that may include any combination of the following:
MGAs/MGUs must follow some of the same compliance standards as carriers in addition to any regulations they are obligated to follow as a distribution partner.
For more on MGAs, MGUs, and their unique role in the insurance distribution channel, check out an explanation of the MGA Act.
From carriers to producers and with every agency or MGA/MGU in between, maintaining producer compliance for insurance sales channels spread across 50 states is no walk in the park.
Book a demo with us and learn how AgentSync Manage can grow your insurance distribution channels.
From a liability perspective, all entities are responsible. Any agent found to be operating out-of-bounds is a liability for everyone in the distribution pipeline.
MGAs and MGUs often act as agencies for some carriers, but what sets true MGAs and MGUs apart is that they have at least one carrier for which they take on significant responsibilities such as maintaining a reserve or underwriting policies. Some of these regulations are tied less to the “carrier” identity as they are to the underlying responsibility that the carrier represents. So, in relationships where MGAs/MGUs are acting as agencies, they will be regulated as such, but for relationships in which their responsibilities are those traditionally undertaken by carriers, they will have to follow the same regulations a carrier would.
