Understanding these differences between an MGA and an MGU can put you on the path to forming your own insurance business. It can also help you make better insurance decisions for your business or personal use. This information can further help you decide if you want to pursue an insurance career.
MGA stands for managing general agent, who helps clients find insurance coverage that matches their needs. An MGA sells insurance policies from an independent office that connects with a network of other insurance agents. The MGA then becomes the contact for policyholders when it's time to file claims. An MGA may also sell other services such as financial planning or be in charge of training new employees.
MGU stands for managing general underwriters. It can be an insurance company or intermediary with the authority to write insurance policies for clients via a software platform. An MGU works with various insurance agents to sell insurance products. MGUs typically charge clients commission fees when underwriting an insurance policy.
From an insurance business perspective, an MGA helps cut overhead costs. MGAs can handle many responsibilities on their own without hiring extra help or investing in expensive technology. They often work remotely and set their hours without charging commissions. Many times an MGA provides better service than an MGU. As an insurance customer, you can often get lower rates from an independent MGA, who knows multiple insurance plans.
As helpful as an MGA can be, an MGU is the cheaper option. MGUs don't handle back-end processes or offer expensive marketing campaigns. They work more directly with prospects via mailers and they stage advertising campaigns without expensive software.
If you are considering a career in the insurance industry, you may be interested to know that an MGU is easier to launch. It doesn't necessarily require a physical office, since the work can be done remotely. An MGU is also the more advantageous choice if you want to keep overhead costs to a minimum.
Unlike an MGA, an MGU isn't required to be licensed. But MGAs have more control over their operations. While an MGU is often more reliable for delivering faster results, it's important to note that an MGU doesn't handle administrative tasks. MGAs are often known to provide better quality service.
Ultimately, an MGU provides a software platform for selling insurance while an MGA has more layers of professional depth that involve client interaction. If you are interested in launching an insurance business, ask yourself which mode works best for your lifestyle and career goals. For more information about VRC Insurance Systems, contact us today at 541-209-5509.