MGA vs. Wholesaler

[ITguy]

Can someone explain the differences between a Managing General Agency and a Wholesaler. I've always thought they were two separate types of companies but recently found a website saying they were the same thing.

[LadyBroker]

It's a fine point, but typically the difference is an MGA, or Managing General Agent, has binding authority, or 'the pen' for one or more carriers. A wholesaler, or broker, has no binding authority with the carrier. Usually a wholesale broker has access to more markets than an MGA. This makes sense because the MGA has a duty to feed, and protect, it's pen markets.

Most retail brokers use both MGA's and Wholesale brokers, depending on the risk the retail broker is trying to place. Your smaller (in premium) risks will more usually go to an MGA, while the larger(in premium) and more complicated placements are better handled by a wholesale broker.

[doyourhomework]

Many, if not most, large wholesalers have either internal or related MGA's. That way your wholesale broker can handle all size accounts. If he/she receives your account and its a small premium issue, he/she will send it to their inhouse underwriters to quote.

Using a free-standing, non-wholesale MGA to me is an options only if they have super special programs that you cannot get anywhere else. Otherwise, if they cannot quote an issue you have to find another MGA.