Agent Perpetuation Programs Insurance

Insurance remains important for MGAs (Managing General Agents) even when they are considering retirement.  There are several risks associated with passing on the business to someone else, and  Agent Perpetuation Programs Insurance coverage can help mitigate those risks.

Here are a few key considerations that show why this program is so important:

Successor Liability

When an MGA retires and transfers their business to a successor, there is a risk of successor liability.  This means that the successor may become responsible for any claims, errors, or omissions that occurred during the MGA's tenure.

• To protect the successor and ensure a smooth transition, the retiring MGA should maintain adequate insurance coverage, including tail coverage or run-off coverage.
• This coverage can address claims that arise after the MGA's retirement for incidents that occurred before the transfer of the business.

Business Interruption

• If unforeseen circumstances or events disrupt the business operations during the transition, such as natural disasters, cyberattacks, or other significant events, insurance coverage can help provide financial protection.  
• Business interruption insurance can cover lost income, ongoing expenses, and additional costs incurred during the interruption period.

Employee Benefits

If the retiring MGA had provided employee benefits, such as health insurance or retirement plans, it's important to ensure that those benefits are properly transferred or continued under the new ownership.

Professional Liability

The successor taking over the MGA business will need to obtain their own Professional Liability Insurance). This coverage is crucial to protect the successor against claims related to their professional activities as an MGA.