Managing General Agent (“MGA”) Agreements are unique and can be exceedingly complex. They often include detailed underwriting guidelines and strict limits on an MGA’s authority. After all, an MGA is authorized to bind an insurer on substantial risks often with little direct supervision by the insurer. While no two MGA Agreements are the same, all must incorporate certain required provisions. The NAIC has promulgated the Managing General Agents’ Act (NAIC Model No. 225) (“Act”), which has been adopted in some form in every state. The Act sets forth the minimum requirements for an MGA Agreement, and those requirements are the subject of the chart that follows. Because states often modify an NAIC Model law, the chart is only a starting point for analyzing an MGA Agreement’s compliance. A complete analysis requires a review of governing state law.

The Act defines Managing General Agent as any person who: (1) manages all or part of the insurance business of an insurer (including management of a separate division, department or underwriting office);and (2) produces separately or together with affiliates an amount of gross direct written premium equal to or greater than 5% of the insurer’s policyholder surplus as reported on its last annual statement and who (i) adjusts or pays claims in excess of $10,000 per claim; or (ii) negotiates reinsurance on behalf of the insurer. The Act requires a written contract which sets forth the responsibilities of each party and contains the following provisions:

^1. This article addresses only the required contract provisions. Insurers entering into an MGA Agreement also are required to take certain steps to audit and monitor the MGA.