An MGA in the United States needs three things in every state where it writes business: a producer licence for the entity and its people, a separate MGA licence in states that issue one, and a written contract with each insurer that contains the minimum terms set by the state's MGA law. Under the NAIC Managing General Agents Act (#225), which most state laws follow, the insurer must then notify the regulator within 30 days of signing the contract, review the MGA on site at least every six months, and hold audited accounts showing the MGA has positive net worth.
This guide explains who counts as an MGA, which licences an MGA holds, what the carrier agreement must say, and what regulators check before and after the MGA starts writing. For the producer licences that sit underneath, see the full page on US insurance agency and MGA licensing.
What counts as an MGA under US law
The label "MGA" is used loosely in the market. The legal definition is narrower. Under the NAIC model, a person is an MGA if it:
- manages all or part of an insurer's business, including a separate division, department or underwriting office, and acts as the insurer's agent; and
- produces and underwrites gross direct written premium equal to at least 5% of the insurer's policyholder surplus in any quarter or year; and
- either adjusts or pays claims above a set amount (US$10,000 per claim in the model text, set by each state) or negotiates reinsurance for the insurer.
Employees of the insurer, the US manager of a non-US insurer's branch, an affiliated underwriting manager paid other than by premium volume, and the attorney-in-fact of a reciprocal insurer are excluded. A firm that calls itself an MGA but does not meet the test is not an MGA under the law, though it is still a producer.
States can depart from the model. Texas defines an MGA as a person with supervisory responsibility for an insurer's local agency and field operations in Texas, or with authority to accept or process policies sold by other agents for the insurer. The Texas chapter applies to property and casualty business, not life, health and accident cover.
| Test | NAIC model (#225) | Texas Insurance Code, Chapter 4053 |
|---|---|---|
| Core activity | Manages all or part of an insurer's business as its agent | Supervises local agency and field operations, or accepts or processes policies sold by other agents |
| Size threshold | Premium of at least 5% of the insurer's surplus in a quarter or year | Licensed agents become MGAs if 50% or more of their business, or US$500,000 or more, whichever is less, comes from policies sold by other agents |
| Claims or reinsurance | Adjusts or pays claims above a set amount, or negotiates reinsurance | Not required |
| Lines covered | All lines, subject to state law | Property and casualty only |
The insurer has to watch for drift. The model requires it to review its books each quarter to see whether any producer has become an MGA, and if so both must comply with the Act within 30 days.
The licences an MGA holds
An MGA builds on the same licences as an agency, then adds to them.
- Producer licence. The model forbids acting as an MGA for risks in a state unless licensed as a producer there. The NAIC State Licensing Handbook confirms that in most states MGAs must be licensed as producers. The entity names a designated responsible licensed producer (DRLP) on each application.
- MGA licence. Several states issue a separate MGA licence class. Texas requires one licence that covers every insurer the MGA represents, with each appointment reported to the department.
- Surplus lines licence. An MGA writing on non-admitted paper places that business through a surplus lines licensee in the insured's home state.
- Adjuster or TPA licence. Claims handling may need an independent adjuster licence. A TPA licence covers life, health, stop-loss and, in some states, workers' compensation business, though a licensed MGA acting within its licence is excluded from the NAIC TPA guideline.
NIPR lists an MGA licence class for non-resident business entities in these states, with the state fee shown:
| State | Non-resident MGA licence fee | DRLP |
|---|---|---|
| Texas | US$50 | Required |
| Oklahoma | US$100 | Required |
| Kentucky | US$100 | Required |
| Nebraska | US$50 | Required |
| Ohio | US$20 | Not required for the MGA class |
| Utah | US$85 | Required, and must hold a Utah MGA or producer licence |
Source: NIPR non-resident state requirements, as at 20 October 2026. NIPR transaction fees are charged in addition.
The carrier agreement: terms the law requires
No MGA may place business with an insurer until a written contract is in force. The model requires the contract to set out each party's responsibilities, divide shared functions clearly and contain at least the following terms.
| Contract term | NAIC model requirement |
|---|---|
| Termination | Insurer may terminate for cause on written notice and suspend underwriting authority during a dispute |
| Accounting | MGA accounts for all transactions and remits funds at least monthly |
| Fiduciary account | Funds held in a fiduciary account at an FDIC-insured institution; no more than three months' estimated claims and allocated loss expenses retained |
| Records | Separate records of business written; insurer and regulator have access |
| Assignment | MGA may not assign the contract in whole or part |
| Underwriting guidelines | Maximum annual premium, rating basis, risk types, maximum limits, exclusions, territory, cancellation provisions and maximum policy period |
| Surety bond | At least US$100,000 or 10% of the MGA's prior-year written premium for the insurer, capped at US$500,000 |
| Errors and omissions | Insurer may require the MGA to hold E&O cover |
| Claims | Timely reporting; claim files sent on request or when a claim may exceed limits, involves a coverage dispute or is open for more than six months |
| Advertising | Only material approved in writing by the insurer |
| Interim profits | Not paid until one year after earned on property business and five years on casualty business |
The model also lists what an MGA may not do. It may not bind reinsurance except facultative cover under an obligatory facultative agreement written into the contract, commit the insurer to syndicates, appoint producers who are not properly licensed, pay or commit to a claim above 1% of the insurer's surplus without approval, jointly employ an insurer employee, or appoint a sub-MGA.
Texas adds its own rules. The contract must address responsibilities, termination, reporting and audit, and where relevant premium limits, agent appointments, claims, underwriting and reinsurance. The MGA must send each insurer an account report at least quarterly, keep separate records for each insurer, and hold insurer money in an escrow account at a bank that is a Federal Reserve member with FDIC-insured accounts.
What the insurer must do
State MGA laws put duties on the insurer as well as the MGA. That is why carriers and fronting insurers run detailed due diligence before signing. Under the model, the insurer must:
- hold independent audited financial statements for the MGA's two most recent fiscal years showing positive net worth, or officer-certified GAAP statements for a younger MGA
- obtain an actuary's opinion each year on the adequacy of loss reserves the MGA sets
- conduct an on-site review of the MGA's underwriting and claims operations at least every six months
- keep binding authority for reinsurance with an insurer officer who is not affiliated with the MGA
- notify the regulator in writing within 30 days of entering into or ending an MGA contract, with the MGA's duties and lines of business
- keep the MGA's bond on file for the regulator
- not appoint the MGA's officers, directors, employees, subproducers or controlling shareholders to its board, subject to holding company exceptions
An MGA that can show audited accounts, a claims and underwriting audit trail and a clean licensing record is easier for an insurer to appoint. Building that evidence before approaching carriers shortens their review.
What regulators check
Regulators look at an MGA at three points.
At licensing, the department reviews the business entity application, the DRLP, the ownership and officers, and the background answers. In Texas, each appointment is reported on a form that states whether the MGA may settle claims, whether that authority exceeds US$25,000 on any one claim, and whether it customarily holds more than US$100,000 to pay losses. An additional appointment carries a fee of up to US$16 and is treated as approved if the department has not disapproved it before the eighth day.
During the relationship, the insurer's notice and the MGA contract are open to review. The model treats the MGA's acts as the insurer's acts and allows the regulator to examine the MGA as if it were the insurer. Texas requires the MGA to tell the department within 30 days if:
- balances due to an insurer for more than 90 days exceed US$1 million or 10% of the insurer's surplus
- balances due for more than 60 days from agents reporting to the MGA exceed US$500,000
- claims settlement authority is withdrawn
- funds held for losses exceed by US$100,000 what is needed for the next 60 days
- the MGA contract is cancelled or terminated
At renewal, licence status depends on appointments. In Texas, if an MGA is not under appointment with any insurer when its licence comes up for renewal, the licence lapses and renewal is refused.
Where things go wrong, penalties can reach the MGA directly. The model allows fines for each violation, licence suspension or revocation, and a civil action for the insurer's losses. In Texas, if a court finds that an MGA's violation contributed materially to an insurer's insolvency, the MGA must reimburse the guaranty fund.
Launching an MGA: sequence and timing
| Stage | Action | Timing reference |
|---|---|---|
| Structure | US entity, home state, DRLP and underwriting team | Before any filing |
| Producer licences | Resident then non-resident licences for entity and individuals | NIPR: states typically review in 7 to 10 days |
| MGA licences | MGA licence class in states that issue one | Filed with or after the producer licence |
| Carrier agreement | Contract drafted against each state's MGA law | Before any business is placed |
| Insurer notice | Insurer notifies each regulator | Within 30 days of signing |
| Appointments | Insurer appoints the MGA and its producers | Within 15 days of contract in appointment states |
| Oversight | Insurer on-site reviews | At least every six months |
The licensing steps for the producer layer are set out in our guide on how to license an insurance agency in all 50 states. Insurtech MGAs that also sell through partner platforms should read our guide to when an embedded or comparison platform needs a producer licence.
UK and Lloyd's MGAs entering the US
UK MGAs often hold FCA permissions and Lloyd's coverholder status and want to write US risks. The US framework is different in kind: there is no passport, and every state where risks are located needs its own producer licence, plus an MGA licence where the state issues one. Writing on admitted paper means a US insurer's appointment and an MGA contract meeting state law. Writing on surplus lines paper, including Lloyd's, means placing through a surplus lines licensee in each insured's home state, with diligent search and tax filings. Our insurance, MGA and broker sector page covers the UK side of the same group.
Checklist for an MGA launch
- Confirm whether the business meets the MGA definition in each target state
- License the entity, DRLP and underwriters as producers in every state with risks
- File MGA licences in states that issue them
- Draft each carrier agreement against the state MGA law, including bond, fiduciary account and underwriting guidelines
- Prepare audited financial statements, or certified statements for a new MGA
- Agree the insurer's 30-day regulator notice and on-site review schedule
- Set claims authority limits below the thresholds that trigger insurer approval or state notices
- Arrange surplus lines and adjuster licences where the programme needs them
- Diarise appointment renewals so no MGA licence lapses at renewal
Frequently asked questions
Every MGA needs a producer licence in each state where its risks are located. Some states also issue a separate MGA licence: on NIPR, Texas, Ohio, Oklahoma, Kentucky, Nebraska and Utah list one for non-resident business entities.
Under the NAIC model, a firm that manages all or part of an insurer's business as its agent, writes premium of at least 5% of the insurer's policyholder surplus in a quarter or year, and either handles claims above a set amount or negotiates reinsurance. States can use their own definitions, as Texas does.
At minimum under the model: termination rights for the insurer, monthly accounting and remittance, a fiduciary account at an FDIC-insured bank, separate records, underwriting guidelines, a surety bond, claims reporting rules, advertising approval and limits on interim profit payments.
Under the NAIC model, at least US$100,000 or 10% of the MGA's prior-year written premium for the insurer, but no more than US$500,000. The insurer may also require errors and omissions cover.
The insurer must notify the regulator in writing within 30 days of entering into or ending an MGA contract, describing the MGA's duties and the lines it will write. It must also notify the regulator if a producer has become an MGA.
Not under the NAIC model. The model also bars an MGA from binding reinsurance outside an obligatory facultative agreement and from committing to a claim above 1% of the insurer's surplus without approval.
Yes, but there is no passport. It needs producer licences in each state with risks, MGA licences where states issue them, and either an appointment and MGA contract with a US insurer or placement through surplus lines licensees in each insured's home state.
References
- NAIC Managing General Agents Act (#225)
- NAIC State Licensing Handbook, Chapter 24: Managing General Agents
- NAIC Producer Licensing Model Act (#218)
- NAIC Registration and Regulation of Third Party Administrators (GL 1090)
- Texas Insurance Code, Chapter 4053: Managing General Agents
- NIPR state requirements: Texas non-resident business entity
- NIPR state requirements: Ohio non-resident business entity
- NIPR state requirements: Utah non-resident business entity
- NIPR: Apply for a new licence
About Regulatory Counsel
Regulatory Counsel licenses MGAs and program administrators across the United States, drafts carrier agreements to each state's MGA law and prepares the evidence insurers ask for before appointment. We also advise UK and Lloyd's market MGAs on the US licences that sit alongside their FCA permissions. Every enquiry is answered the same business day with a written proposal: contact us.
This article is general information as at 20 October 2026 and is not legal advice.
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