A Managing General Agent (MGA) is an intermediary that holds delegated underwriting authority from one or more insurance capacity providers. Unlike a conventional broker, which represents the client and shops the market, an MGA sits closer to the insurer end of the chain — it can quote, bind, issue documents, and often handle claims on the capacity provider's behalf, within limits set out in a binding authority (BA) agreement. In UK PI, MGAs are common in specialist segments — cyber, technology, design-and-construct, medical malpractice and niche solicitor books — where the capacity provider wants specialist expertise without an in-house team.
An MGA operates under a written binding authority granted by an insurer or, in the London market, by one or more Lloyd's syndicates. The BA sets the classes of business, geographic scope, aggregate and per-risk limits, referral triggers (risks that must go back to the capacity provider before binding), commission and profit-share terms, and reporting cadence. Binding authorities are typically renewed annually; a capacity provider unhappy with the loss ratio can non-renew or withdraw authority on notice.
MGAs in the UK are authorised and regulated by the Financial Conduct Authority in their own right for insurance distribution, and must meet SYSC requirements on governance, systems and controls. Client money held by the MGA — premiums on the way to the insurer, or claims payments on the way to the insured — is subject to FCA CASS 5, the client money rules for insurance intermediaries. Some smaller MGAs operate as appointed representatives of a principal firm under the FCA SUP 12 regime; where that is the case, the principal carries regulatory responsibility for the MGA's conduct.
The two terms overlap but are not identical. A coverholder is a Lloyd's-specific designation — a firm approved under the Lloyd's Coverholder guidelines to accept business on behalf of one or more syndicates. Every Lloyd's coverholder is, in substance, an MGA, but the term MGA is broader: an MGA might hold authority from a company market insurer, a Lloyd's syndicate, a Bermudian carrier, or several at once. When a PI policy is issued through a coverholder, the security is the Lloyd's syndicate stamp; through a company market MGA, it is the balance sheet of the authorising insurer.
The attraction for the insurer is specialist expertise and speed to market. A syndicate that wants to write technology PI can appoint an MGA whose underwriters know the sector, understand the wordings, and turn quotes around in hours rather than days. For the broker and the insured, the attraction is a tailored product and a shorter route to a decision. MGAs typically operate with lower overheads than a full underwriting team and often consider risks a mainstream carrier's automated appetite would decline.
Placing PI through an MGA is common and, in the specialist end of the market, often the right answer. But there are considerations. The MGA itself is capital-light — the underlying cover is only as strong as the capacity provider behind it, and that provider's identity and financial strength matter. Binding authorities are renewed annually, so the market that quoted this year may not be there next year. Claims escalation can be less direct: for smaller claims the MGA settles under its delegated authority, but larger or contentious matters are referred back to the capacity provider. If an MGA becomes insolvent, client money and the run-off of open policies need careful handling — the FSCS position depends on the underlying insurer, not the MGA.
Worked example — Apex places tech PI through a specialist MGA. A software consultancy needs PI cover including cyber liability and IP infringement extensions. Apex approaches a specialist MGA that writes technology PI under delegated authority from three A-rated Lloyd's syndicates. The MGA's underwriters understand code-development risks, offer a bespoke wording, and quote within 48 hours where a mainstream carrier had declined. Before recommending the placement, Apex checks three things: (i) the MGA's own solvency and CASS 5 client money arrangements, since capital adequacy at the MGA level is thinner than at a carrier; (ii) the identity and financial strength ratings of the three capacity syndicates, since those are the security the client is actually buying; and (iii) the binding authority renewal date, so the client is not surprised if the panel of capacity providers changes at renewal. Apex also confirms that the MGA handles claims within its delegated limits — often up to a defined figure such as £100,000 or £250,000 — with major claims escalated to the syndicates, and that the wording is back-to-back with the underlying reinsurance treaty.
Where PI is placed through an MGA, the broker's due diligence is broader than a straight placement. Apex looks at the MGA's regulatory status and CASS 5 compliance, the identity and rating of the capacity providers, the terms and renewal date of the binding authority, the claims-handling protocol, and whether the wording issued by the MGA is genuinely back-to-back with the reinsurance sitting behind it.
For where a PI risk is best placed, see Lloyd's versus company market for UK PI. Profession-specific pillars: solicitors' PI, architects' PI, IFAs' PI, accountants' PI and surveyors' PI.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.