New to insurance, please can someone explain what "capacity" means in the context of a managing general agent or coverholder in the insurance world? E.g. "An MGA securing more capacity to write D&O lines"

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Not a total expert but this is my understanding: MGAs typically get a pool of money or authority (if they have their own funds) to write up to a specific amount on an established carrier's paper. That amount is their capacity. If they run out, they have to ask for more.

Hopefully someone who knows more can let us both know if I'm wrong.

likehelpful

Hi, MGA employee here. Capacity is what our carriers will cover, as we write on their behalf. Obviously there’s a limit to how much $ carriers will put up in the event of a claim where we pay out.

helpful

Thanks all for your help!

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