What is an underwriting agent?

An underwriting agency is a specialised type of insurance agent that has been granted underwriting authority and can administer and negotiate policies for an insurer. An underwriting agency’s functions can include issuing insurance policies, underwriting and pricing premiums, settling claims. 

At its core, the underwriting agency manages all or part of the insurance business of an insurer and acts as an agent for the insurer. The insurer will maintain regulatory requirements relating to financial strength requirements and supply the capital requirements and take financial responsibility for claims made on policies issued by their underwriting agent. 

How underwriting agencies benefit insurers, brokers & customers.

Working with underwriting agencies is beneficial to insurers, Insurance Brokers & ultimately Customers because they possess expertise that insurers may not have at their disposal. Working with an underwriting agency, insurers can pass time-consuming and complicated tasks to an outside entity that already has the knowledge to address them. 

If an insurer wants to explore a speciality line of business but does not want to take on the risks or uncertainty of doing so, they can turn to an underwriting agency. UA’s bring to that expertise, and give the underwriting agency the authority to underwrite and issue speciality policies because they are already familiar with the risks. Brokers and customers can get expertise about a particular product or more competitive pricing by working with an underwriting agency because of the specialist nature of many agencies. 

Generally, UA’s are focused on continuous improvement of Customer outcomes while bringing operational advantage through efficiency, agility & innovation. 

Underwriting agencies around the world

In other markets, underwriting agencies are known as managing general agencies (MGAs) or managing general underwriters (MGUs). Many MGA models were created during the 1990s and 2000s, although the role of the wholesale broker, a category that MGAs fall into, dates back to the 19th century. Associations that represent MGAs or underwriting agencies in specific regions today include: 

• Managing General Agents’ Association (MGAA) in the UK, which was formed in 2011
• American Association of Managing General Agents (AAMGA), which was established in 1926 and has since merged with the National Association of Professional Surplus Lines Offices (NAPSLO) to form the Wholesale & Specialty Insurance Association (WSIA)
• Canadian Managing General Agents (CAMGA), a relatively new association formed in 2017
• Underwriting Agencies Council (UAC), based in Australia and formed in 1998 

In Australia, EY revealed that underwriting agencies made up 13% of the broker market in 2016. 

In the UK, the term ‘MGA’ has been adopted by the market to refer to what was once known as a ‘coverholder.’ 

Worldwide, MGAs fall into one of the fastest-growing segments of the insurance industry. 

Information sourced from here (and edited to suit)