Insurance regulation in a nutshell

Section VI.5.Reinsurance Intermediaries

The NAIC Reinsurance Intermediary Model Act defines two different kinds of reinsurance intermediaries – a broker and manager – as follows:
“Reinsurance intermediary-broker” (RB) means a person, other than an officer or employee of the ceding insurer, firm, association or corporation who solicits, negotiates or places reinsurance cessions or retrocessions on behalf of a ceding insurer without acting as a RM on behalf of the insurer.⁹⁷
“Reinsurance intermediary-manager” (RM) means a person, firm, association or corporation, whether known as a RM, manager or other similar term, who has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department or underwriting office) and acts as an agent for the reinsurer [subject to certain exceptions]⁹⁸
In other words, the broker represents the purchaser of reinsurance (the ceding insurer) and the manager represents the seller of reinsurance (the reinsurer).
Under the Model Act, a reinsurance intermediary-broker must usually be licensed in a state in which it has an office (State A) and can usually act in another state where it has no office (State B) without a license if State A’s reinsurance intermediary law is substantially similar to that of State B’s.⁹⁹
Under the Model Act, a reinsurance intermediary-manager must usually be licensed as an insurance producer or reinsurance intermediary (i) in the state of domicile of the reinsurer for which it acts as manager, and (ii) in a state in which it maintains an office. ¹⁰⁰

Section VI.6.Managing General Agents

The NAIC Managing General Agents Act defines a managing general agent (“MGA”) as follows:
“Managing general agent” (MGA) means any person who:
(1) Manages all or part of the insurance business of an insurer (including the management of a separate division, department or underwriting office); and
(2) Acts as an agent for such insurer whether known as a managing general agent, manager or other similar term, who, with or without the authority, either separately or together with affiliates, produces, directly or indirectly, and underwrites an amount of gross direct written premium equal to or more than five percent (5%) of the policyholder surplus as reported in the last annual statement of the insurer in any one quarter or year together with the following activity related to the business produced adjusts or pays claims in excess of $10,000 per claim or negotiates reinsurance on behalf of the insurer.¹⁰¹
The Model Act provides that no person shall act in the capacity of an MGA with respect to risks located in this state for an insurer licensed in this state unless such person is a licensed producer in this state.¹⁰² Some state laws vary from this and require that a special MGA license be acquired. In any case, licensing is required in each state in which the MGA acts. So, if an entity acts as an MGA for an insurer in all states, licensing as a producer or MGA will generally be required in all states. Although the Model Act does not expressly exclude third party administrators from the definition of an MGA, the third party administrators law (see Section VI.7.) excludes MGAs. So the general expectation is that MGAs are to property/casualty insurance what third party administrators are to life and health insurance and annuities.