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📝 '''Management agreement''' is a formal contract in the insurance industry that defines the terms under which one party manages the operations, [[Definition:Underwriting | underwriting]], [[Definition:Claims | claims handling]], or administrative functions of an insurance entity on behalf of another. These agreements are especially prevalent in structures involving [[Definition:Managing general agent (MGA) | managing general agents]], [[Definition:Third-party administrator (TPA) | third-party administrators]], and [[Definition:Program administrator | program administrators]], where the entity performing day-to-day insurance operations is distinct from the [[Definition:Insurance carrier | carrier]] bearing the [[Definition:Underwriting risk | underwriting risk]]. A management agreement can also govern relationships within [[Definition:Insurance group | insurance groups]], where a parent company or specialized management entity provides services to affiliated insurers.

🔗 The agreement typically specifies the scope of [[Definition:Delegated authority | delegated authority]], performance standards, [[Definition:Management fee | fee structures]], reporting obligations, and termination provisions. For example, a management agreement between a carrier and an MGA will detail the classes of business the MGA can write, the [[Definition:Premium | premium]] volume limits, [[Definition:Claims authority | claims-handling authority]], and the [[Definition:Management fee | management fees]] or [[Definition:Commission | commissions]] the MGA earns. [[Definition:Regulatory | Regulatory]] frameworks in many jurisdictions require these agreements to be filed with the [[Definition:State insurance department | state insurance department]], particularly when they involve affiliated parties, to ensure that the arrangement does not disadvantage [[Definition:Policyholder | policyholders]] or siphon value from the regulated entity. Provisions addressing [[Definition:Data ownership | data ownership]], [[Definition:Errors and omissions insurance | errors and omissions]] coverage, and [[Definition:Audit | audit rights]] are standard inclusions.

⚖️ A well-drafted management agreement protects all parties by establishing clear accountability and preventing disputes over authority, compensation, and performance. For carriers, it is the primary mechanism for maintaining control over outsourced functions while still benefiting from the specialized expertise or distribution reach of the managing party. Regulators scrutinize these agreements closely — particularly in situations where a carrier appears overly dependent on a single manager — because poorly structured arrangements have historically contributed to insurer insolvencies. In the [[Definition:Insurtech | insurtech]] era, management agreements are evolving to address new realities such as [[Definition:Application programming interface (API) | API]]-based data sharing, [[Definition:Artificial intelligence | AI]]-assisted underwriting decisions, and real-time [[Definition:Bordereaux | bordereaux]] reporting requirements.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Managing general agent (MGA)]]
* [[Definition:Third-party administrator (TPA)]]
* [[Definition:Delegated authority]]
* [[Definition:Management fee]]
* [[Definition:Binding authority agreement]]
* [[Definition:Management expense]]
{{Div col end}}

Definition:Management agreement - Revision history

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