An underwriting agency is a specialist firm that writes insurance, and often handles claims, on behalf of insurers under delegated authority. MGA, short for managing general agent, is the term used in the United States and United Kingdom. The agency brings expertise in a niche; the insurer behind it provides the capital and carries the risk.
Key takeaways
- According to the Underwriting Agencies Council, its more than 130 member agencies are responsible for over $10.5 billion of premium a year.
- An underwriting agency acts for insurers, while a broker acts for the client, so the two sit on opposite sides of a placement.
- Agencies are authorised through binders, defined in section 761A of the Corporations Act, and the insurers granting them are called capacity providers.
- Many agencies also hold claims authority, which brings settlement limits, referrals and regular reporting to each insurer.
What is an underwriting agency?
An underwriting agency is a firm that underwrites insurance on behalf of one or more insurers, under authority those insurers delegate to it. It assesses risks, sets terms, binds cover and issues policies in a specialist area. Many also handle the resulting claims. The insurers carry the risk and supply the capital.
Agencies usually specialise. One might write marine cargo, another professional indemnity for engineers, another strata or sporting clubs. That depth of expertise in a niche is what insurers pay for. Building it in-house for a small line would cost them more.
The scale is substantial. According to the Underwriting Agencies Council (UAC), its more than 130 members represent the vast majority of Australian underwriting agencies. Those members are responsible for more than $10.5 billion of premium spent by Australian businesses and consumers each year.
How is an underwriting agency different from a broker or an insurer?
An underwriting agency acts for the insurer, a broker acts for the client, and an insurer carries the risk. The agency decides whether to offer cover and on what terms, within its authority. A broker, meanwhile, finds the right cover for its client. Behind both, the insurer provides the capital and stays responsible to the regulator.
- Acts for. Underwriting agency: The insurer; Broker: The client; Insurer: Itself.
- Carries the risk. Underwriting agency: No; Broker: No; Insurer: Yes.
- Decides cover and terms. Underwriting agency: Yes, within its authority; Broker: No, it recommends; Insurer: Yes.
- Handles claims. Underwriting agency: Often, within claims authority; Broker: Advocates for the client; Insurer: Yes, or delegates it.
- Regulated by APRA as an insurer. Underwriting agency: No; Broker: No; Insurer: Yes.
The lines blur in practice. Some brokers hold binders for particular products, which makes them act for the insurer on that business. For that reason, the binder, not the firm's name, decides whose side a party is on for a given policy.
How are underwriting agencies authorised?
Underwriting agencies are authorised by the insurers they work for, through binders. According to section 761A of the Corporations Act, a binder lets a party enter into insurance contracts, settle claims, or both, for an insurer. Agencies also need the right financial services licensing, either their own or as an insurer's authorised representative.
The insurers behind an agency are called its capacity providers, because they provide the capacity to write business. An agency may have one capacity provider or several, each with its own binder, limits and reporting requirements. The delegated authority explainer covers how that authority works.
Some agencies hold authority from Lloyd's syndicates as coverholders, rather than from an Australian insurer. The guide to binders and coverholders explains the differences.
How do claims work inside an underwriting agency?
Many agencies hold claims authority as well as underwriting authority. Within its limits, the agency assesses and settles claims on the insurer's behalf, and refers larger or complex claims back. It then reports on every claim to each insurer, usually through a monthly claims bordereau.
That makes an agency's claims team answerable to several masters. Each insurer has its own limits, referral rules and reporting format. The agency must apply the right ones to every claim. The bordereau explainer covers the reporting side.
As agencies grow, their claims process often outgrows email and spreadsheets. Some move to a claims platform. For example, ClaimsGateway (claimsgateway.com) offers configurable claims workflows for underwriting agencies, kept separate from the agency's policy system.
The claims software list for agencies compares the options.
The ClaimsGateway underwriting agencies page describes that approach.
How do you set up an MGA in Australia?
Setting up an underwriting agency comes down to three things: capacity from one or more insurers, the right licensing, and systems to write and manage the business. Capacity comes first, because without an insurer willing to grant a binder there is nothing to underwrite.
Capacity is usually won on expertise and a track record in a niche, plus a credible business plan. Licensing means either holding an Australian financial services licence or acting as an insurer's authorised representative, which the capacity provider will want settled. Systems cover policy administration, claims handling and the reporting each insurer requires.
This is an outline rather than a guide, because each step depends on the line of business and the insurers involved. An agency founder should take legal and compliance advice before approaching capacity providers.
Frequently asked questions
What does an MGA do?
An MGA, or underwriting agency in Australian usage, writes insurance on behalf of insurers under delegated authority. It assesses risks, sets terms, binds cover and issues policies in a specialist area, and often handles the claims too. The insurers behind it provide the capital and carry the risk, while the agency brings niche expertise.
Is an underwriting agency an insurer?
No. An underwriting agency acts for insurers but does not carry the risk itself, so it is not regulated by APRA as an insurer. The insurers that grant it authority, called capacity providers, carry the risk and remain responsible for the policies and claims the agency handles in their name.
How does an underwriting agency get paid?
An underwriting agency is typically paid a commission on the premium it writes, and sometimes a profit commission linked to how well the business performs over time. The exact terms sit in each binder agreement with each capacity provider, so they vary between agencies and between the insurers they work for.
Do underwriting agencies handle claims?
Many do. An agency can hold claims authority alongside underwriting authority, which lets it assess and settle claims up to set limits on the insurer's behalf. Claims above the limit are referred back to the insurer. Some agencies instead pass claims to the insurer or a TPA, depending on the binder.
How do you set up an MGA in Australia?
Setting up an MGA in Australia needs capacity from one or more insurers, the right licensing, and systems for policy administration, claims and reporting. Capacity comes first, usually won on niche expertise and a business plan. Licensing means an Australian financial services licence or authorised representative status. Take legal advice before starting.
About the author
ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.
Related reading
- Delegated authority claims software: systems for claims under a binder.
- Choosing agency claims software: a step-by-step decision guide.
- MGA software in Australia: policy, claims and bordereaux systems for agencies.
Sources
- Underwriting Agencies Council. Home page, checked 16 October 2026. https://www.uac.org.au
- Corporations Act 2001 (Cth), section 761A, definition of "binder". https://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s761a.html
- Legalwise Seminars. "Can an AFS licensee act as an authorised representative of another AFS licensee?" https://legalwiseseminars.com.au/insights/can-an-afs-licensee-act-as-an-authorised-representative-of-another-afs-licensee
