According to the NAIC model law, an MGA agreement must have at least the following provisions:

The insurer may terminate the contract for cause upon written notice to the MGA. The insurer may suspend the MGA's underwriting authority during the pendency of any dispute regarding the cause for termination.
The MGA must render accounts and remit all funds due to the insurer at least monthly.
All funds collected for the insurer's account must be held by the MGA in a fiduciary capacity in an FDIC-insured institution. The MGA may retain no more than three months estimated claims payments and allocated loss adjustment expenses. (It is worth noting here that, even in the case of non-MGA producers, many states impose similar requirements regarding a producer's handling and remittance of premiums.)
The MGA must maintain separate records of business written by the MGA, to which the insurer and the state insurance commissioner must have access.
The contract may not be assignable in whole or part by the MGA.
The carrier must be able to cancel or non-renew any policy. The scope of an MGA's underwriting discretion, and the insurer's retention of ultimate underwriting authority, are often sensitive topics in program management discussions. According to the model law, the MGA is required to observe appropriate underwriting guidelines, including:
- The maximum annual premium volume;
- The basis of the rates to be charged;
- The types of risks which may be written;
- Maximum limits of liability;
- Applicable exclusions;
- Territorial limitations;
- Policy cancellation provisions; and
- The maximum policy period."
The MGA must obtain and maintain a surety bond for the protection of the insurer, in an amount at least equal to $100,000 or 10% of the prior year's total annual written premium produced by the MGA nationwide, with a $500,000 maximum.
The insurer may require the MGA to maintain an errors and omissions (E&O) insurance policy.
If the contract permits the MGA to settle claims on behalf of the insurer:
All claims must be reported to the insurer in a timely manner.
A copy of the claim file must be sent to the insurer at its request or as soon as it becomes known that the claim:
Has the potential to exceed an minimum threshold amount determined by the state insurance commissioner or the insurer;
Involves a coverage dispute;
May exceed the MGA's claims settlement authority;
Is open for more than six months; or
Is closed by payment of an amount set by the insurance commissioner or the insurer.
All claim files must be the joint property of the insurer and MGA.
Any settlement authority granted to the MGA may be terminated either for cause upon the insurer's written notice to the MGA or upon the termination of the contract. The insurer may suspend the MGA's settlement authority during the pendency of any dispute regarding the cause for termination.
In the case of electronic claims files, the contract must address the timely transmission of such data.
In using advertising material pertaining to the business issued by an insurer, the MGA may use only material that has been approved by the insurer.
If the contract provides for the MGA to participate in interim profits, and the MGA has the authority to determine the amount of the interim profits by establishing loss reserves or controlling claim payments or otherwise, interim profits will may be paid to the MGA until one year after they are earned for property insurance business and five years after they are earned on casualty business and, in either case, not until the profits have been verified.
The MGA may not
Bind reinsurance or retrocessions on behalf of the insurer, except that the MGA may bind facultative reinsurance contracts if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which such automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured and commission schedules;
Commit the insurer to participate in insurance or reinsurance syndicates;
Appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he is appointed;
Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, which may not exceed 1% of the insurer's last year-end surplus;
Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer, without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer;
Permit its sub-producer to serve on the insurer's board of directors (except where the insurer and MGA are affiliated, and thus covered by provisions of insurance law governing holding company groups);
Jointly employ an individual who is employed with the insurer; or
Appoint a sub-MGA.

Duties of insurers

According to the model law, the insurer is required to have on file an independent audited annual financial statement or reports for the two most recent fiscal years (or, if the MGA has been in existence less than two years, monthly financials certified by an officer) that "prove that the MGA has a positive net worth."

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