Managing General Underwriter – the differences between an MGU and an Insurance Agency

An MGU is a specialized insurance provider that, unlike traditional insurance agents, is vested with substantial authority from the insurers it represents. The MGU authority extends to the evaluation of risks, underwriting of risks, binding of risks, fiscal representation, pricing, wordings, special conditions, the appointment of retail agents, handling and adjusting of claims as well as claims payments.

As one of Europe’s largest MGU’s and Coverholder with Lloyd’s of London, RiskPoint is empowered to act on behalf of its insurers to perform these duties and others with binding consequences. The outsourcing agreement between RiskPoint and its insurers is in fact called a “Binding Authority Agreement” or “Binder”.

RiskPoint has Binding Authorities with over 20 different insurers, who benefit by accessing RiskPoint’s underwriting, industry and claims expertise in the products and/or territories which we operate. This local expertise and/or representation is typically not available to the insurers we represent and would be more expensive for our insurers to develop the “in-house” resources, set up offices or branch operations needed to deliver these solutions for the products we offer and/or in the territories we operate. This makes the MGU model an efficient means of offering insurance solutions in territories where the insurer isn’t  represented or doesn’t provide particular products. The MGU model is currently being adopted by many of the worlds leading insurers to assist in delivering insurance solutions to its clients and their advisors in a more efficient and cost effective manner.

Our Insurers

Each of the insurance companies RiskPoint represent is subject to their respective home country’s regulatory authority and RiskPoint is likewise registered and licensed in the countries in which it conducts business. Whilst RiskPoint has been appointed underwriting agent to underwrite risks, collect premium, handle claims and pay claims, the risk carrier of any given risk lies with our insurers. Binders are only established with insurers who meet the strictest requirements in terms of financial security, longevity in the market and product knowledge. All insurance quotes and policies issued by RiskPoint are issued in accordance with our Binder Authority as are claim payments and therefore having a binding effect. Premium Payments to RiskPoint are done so with full release of responsibility to the insured, i.e. payments made to RiskPoint or deemed to have been made directly to our insurers with no recourse against the insured. Likewise, service of suit and other formal legal action can be received by us on behalf of our insurers with binding effect. In addition, claims payments made by RiskPoint to our insureds are done so with full release from our insurer, i.e. payments/decisions made by RiskPoint our final and can not be rebutted by our insurers.

MGU vs. Insurance Agency

As part of the Binding Authority, RiskPoint is delegated to provide of number of day to day tasks and services on behalf of its insurers delegates to the insured and its advisors. Such services include:

Insureres & Products MGU Typical Insurance Agent
Binding Authority (Underwriting & Claims) Yes No - Subagent agreement
"Manufacturer" of Insurance in accordance with IDD Yes No
Sales of other local insurers products No Yes
Underwriters & Engineering Staff Yes No
Authority to quote standard solutions Yes Limits Authority
Authority to quote specialized solutions Yes No
Authority to change & develop new wordings Yes No
Authority to set premium Yes No or Limited
Authority to collect & disburse insurance tax Yes No
Legal & Technical in-house Staff Yes No
Authority to receive claims as fiscal representative Yes No
Authority to handle & adjust claims Yes No
Authority to pay claims Yes No
Availability of claims funds from insurers Yes No
Loss Reserving & Development Yes No