The MGA business model, from first principles
Delegated authority, commission, reinsurance and account settlement: how the model works in mature markets, and what changes in Brazil.
An MGA — a managing general agent — underwrites risk on behalf of an insurer. It is not a broker, because it sets price and decides acceptance. It is not an insurer, because it does not carry the risk on its own balance sheet. It sits in between, and that design is what makes it efficient.
Delegated authority
The central contract is the authority letter. In it the carrier defines exactly what the MGA may do alone: which risks, up to which limit, with which exclusions, at what minimum price. Inside that envelope the MGA quotes, accepts and issues without prior referral. Outside it, it refers.
In the United States and the United Kingdom this arrangement carries a meaningful share of the specialty market: the carrier gains access to a niche it would not serve with its own structure, and the MGA gains capacity without needing regulatory capital.
How an MGA earns
- Underwriting commission — a percentage of written premium, paid by the carrier for originating, assessing and administering the risk.
- Profit commission — a share of the result when the book closes the period below an agreed loss ratio.
- Fee services — policy administration, claims handling and reporting, where delegated.
Out of that total comes the payout to the distribution channel. What remains is the program’s margin — and it is why profit commission matters so much: it aligns the MGA to profitability rather than volume.
Volume without technical discipline is not growth. It is a problem with a delivery date.
Reinsurance and account settlement
Capacity rarely comes from a single source. The carrier lending the paper typically cedes part of the risk to reinsurers, and the structure of that programme determines how much limit the MGA can offer. In parallel, the MGA settles accounts on fixed cycles — the premium and claims bordereaux — which underpin everything: collection, reserving and contract renewal.
What changes in Brazil
The model is the same; the ecosystem is not yet. There are fewer established MGAs, fewer contractual precedents, and a higher expectation that a program will arrive with governance already in place. In practice that raises the barrier to entry — and it is exactly the barrier a platform like Tegia exists to remove.
The first conversation is technical, with no commitment.