Managing General Agents: Life Insurance Money-Makers

Life insurance agents have a tough job, but it can be a lucrative one. Agents are typically paid via commission, receiving a percentage of the premiums paid by the client in the first year, and then smaller commissions in subsequent years. This commission can be anywhere from 30% to 90% in the first year, and 3% to 10% in the following years.

However, life insurance agents can also be salaried employees, receiving benefits and a base salary, but they are often required to meet monthly sales quotas.

Managing General Agents (MGAs) are a type of insurance agent with more decision-making power. They are vested with underwriting authority, meaning they decide what risks the company will insure and help shape the insurance products the company provides. MGAs also have a say in hiring independent agents and determining commission rates.

Managing general agents (MGAs) are vested with underwriting authority, meaning they decide what risks the company will insure

MGAs are typically required to have an active producer license in their state of residence and obtain a surety bond. While no higher education degree is mandated, many MGAs hold a bachelor's degree in business, finance, risk management, or insurance.

The MGA role is an attractive career progression for insurance agents, offering increased earnings and more professional opportunities. MGAs can influence product development, increase their industry specialisation and knowledge, and expand their industry connections.

MGAs can influence product development and underwriting decisions

Managing General Agents (MGAs) are vested with underwriting authority, meaning they decide what risks the company will insure. MGAs have the opportunity to influence product development and underwriting decisions, which can be a logical step in advancing one's career in the insurance industry.

MGAs have a unique role as they are hired by the insurer but act as an intermediary between the insurer and the consumer. They get to help shape the insurance products the company provides and contribute to decisions such as hiring independent agents, determining commission rates, and handling claims.

• Specialization and Industry Knowledge: MGAs can develop a deep understanding of specific insurance products and the industry as a whole. This expertise allows them to identify gaps in the market and work with insurers to develop innovative solutions that meet the needs of consumers.
• Data Analysis: MGAs can analyze data and market trends to make informed underwriting decisions. By staying abreast of industry changes and consumer preferences, they can help insurers create products that are competitive and relevant to the target market.
• Product Customization: With their knowledge of the market and close relationships with agents and clients, MGAs can provide valuable insights to insurers on product customization. They can help design insurance products that are tailored to the specific needs of different consumer segments, making the offerings more attractive and competitive.
• Risk Assessment: MGAs play a crucial role in risk assessment and management. They can use their expertise to evaluate the potential risks associated with different insurance products and advise insurers on the development of policies that balance risk and profitability.
• Feedback and Collaboration: MGAs serve as a bridge between insurers, agents, and clients. They can gather feedback from agents and clients, identify common pain points, and work collaboratively with insurers to address these issues through product enhancements or new offerings.

By leveraging their industry knowledge, data analysis skills, and strong relationships, MGAs can play a strategic role in influencing product development and underwriting decisions. This not only benefits the insurers they represent but also ensures that consumers have access to insurance products that meet their needs and provide value.

MGAs can increase their specialisation and industry knowledge

Additionally, MGAs can stay up-to-date with industry trends and market changes. By analysing data and market trends, MGAs can make strategic underwriting decisions and create specialised insurance products that meet the evolving needs of consumers. They can also contribute to determining commission rates, ensuring that these rates are competitive and aligned with industry standards.

Furthermore, MGAs can expand their professional network and build relationships with insurers, agents, and clients. This will enable them to gain insights from diverse perspectives, stay abreast of industry developments, and identify opportunities for collaboration or innovation.

MGAs can also seek out mentorship opportunities or find a business mentor who can provide guidance and insights on business management and the insurance industry. By continuously learning and adapting to market changes, MGAs can ensure that their knowledge remains current and relevant.

MGAs can expand their industry connections and relationships

As an MGA, you will have the opportunity to expand your industry connections and relationships. This is a valuable aspect of the role, as it can help you grow your professional network and build mutually beneficial partnerships. Here are some ways you can achieve this:

• Networking Events: Attend industry conferences, seminars, and networking events to meet potential clients, insurers, and peers. Building a strong network can open doors to new opportunities, collaborations, and business referrals.
• Industry Associations: Join relevant industry associations and organisations to connect with like-minded professionals. These associations often host events, provide resources, and offer networking opportunities to their members.
• Social Media: Leverage professional social media platforms like LinkedIn to connect with industry professionals, join relevant groups, and participate in industry discussions. This can help you expand your reach and establish yourself as a thought leader.
• Mentorship: Seek out mentorship opportunities with established MGAs or industry leaders. Their guidance and insights can be invaluable as you navigate your career path.
• Community Involvement: Get involved in community initiatives, charitable events, or industry-related volunteer work. This allows you to connect with others in a more informal setting while demonstrating your commitment to social responsibility.
• Cross-Selling and Referrals: Collaborate with other professionals in complementary fields, such as financial advisors or estate planners. By referring clients to each other, you can create mutually beneficial partnerships and expand your network.
• Online Presence: Establish a strong online presence through a professional website, blog, or industry-specific forums. Sharing your expertise and engaging with others online can help you reach a wider audience and attract potential clients or partners.
• Public Speaking: Consider speaking at industry conferences, workshops, or webinars. This positions you as an expert and allows you to connect with a broader audience. It also demonstrates your knowledge and enhances your credibility.
• Thought Leadership: Contribute articles or thought pieces to industry publications or blogs. Sharing your insights and expertise can help establish you as a leader in your field and attract the attention of potential connections.
• Alumni Networks: Tap into your alumni network from college or university. Many educational institutions have alumni associations or networking groups that can connect you with professionals in the insurance industry.

By actively working on expanding your industry connections and relationships, you will be able to enhance your professional network, gain valuable insights, and create collaborative opportunities that can benefit your career as an MGA.

MGAs can decide commission rates

Managing General Agents (MGAs) are vested with underwriting authority, meaning they decide what risks the company will insure. They also have a say in what insurance products the company provides. As an MGA, you can contribute to decisions like hiring independent agents, determining commission rates, handling claims, and other administrative and management tasks.

Commission rates are dependent on the type of life insurance policies sold. For instance, insurance agents receive the highest commission rates for whole life insurance plans, which are often more than 100% of the total premiums for the first year. The exact percentage depends on the age of the policyholder.

Universal life insurance plans also offer high commission rates. Agents typically receive a commission of at least 100% of the premiums the policyholder pays in the first year, up to the amount of the target premium. However, the rate decreases for any premiums paid above the target level in the first year.

Term life insurance plans pay lower commissions, often a percentage of the annual premiums ranging from 30% to 80%.

MGAs can also be salaried employees of an insurance agency. In this case, they receive a base salary and employee benefits but are usually required to meet a monthly sales quota.

Frequently asked questions