Managing General Agents (MGAs)
Accounting for managing general agents
Managing general agents that collect premium, remit to carriers, and settle with sub-brokers — where bordereaux, fiduciary funds, and remittance timing all have to reconcile.
The pain points we hear
- Bordereaux that don't reconcile to what was collected and remitted
- Premium remittance timing to carriers that is hard to track
- Sub-broker settlement and commission owed across many partners
- Fiduciary funds that must stay clearly accounted for
- Carrier reporting that demands accuracy and speed
How we help
- Bordereaux reconciliation against collections and remittances
- Premium remittance and premiums-payable scheduling
- Sub-broker settlement and commission statements
- Fiduciary / trust funds reconciled monthly
- Carrier-ready reporting produced on time
Why MGA accounting is a settlement problem
An MGA sits in the middle of the money, which makes its accounting a settlement problem in both directions. Premium comes in from retail brokers, is remitted to carriers under a binding authority, and commission is split with sub-brokers on the way through. Almost none of the cash that moves belongs to the MGA.
Bordereaux are the control point. The premium and claims bordereaux reported to each carrier have to reconcile to what was actually collected, what was actually remitted, and what the general ledger says. When those three disagree, an MGA usually finds out during a carrier audit rather than at month-end.
Remittance timing is the second exposure. Binding authority agreements set when premium has to reach the carrier, and the fiduciary funds held in the interim need to stay clearly accounted for and unmixed with operating cash. Sub-broker settlement then runs on its own cycle, with commission owed to counterparties who expect their own statements. Three settlement calendars, one set of books.
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