Where does currency risk sit in an MGA?
Mostly in the commission you keep, and in any gap between the currency you collect in and the currency a binder tells you to remit in. Premium that comes in and goes out in the same currency carries little currency risk for the MGA itself.
A London MGA writing US business typically collects dollars, keeps its commission in dollars and remits the rest to capacity in dollars. Its salaries, premises and systems are paid in sterling. The exposure is the commission and profit commission it has to turn into sterling, plus any premium it collects in one currency but must remit in another.
| Flow | Usual currency | Who sets the timing | The FX question |
|---|---|---|---|
| Premiums from producing brokers | The policy currency, or the producing broker's own currency | Your terms of business with each producing broker and the credit terms in them | Do we collect in the currency we must remit in, and if not who carries the difference? |
| Remittances to capacity providers | The currency or currencies named in the binder | The binder's settlement clause, usually a set period after each bordereau period closes | Does the binder let us convert, and does it name a rate of exchange or a date for doing so? |
| Claims paid under delegated authority | The claimant's currency, paid from a claims fund held in the binder currency | The binder or claims agreement, and the payment date agreed with the claimant | Who funds the conversion, at whose rate, and how does it show on the claims bordereau? |
| Commission and profit commission | The premium currency, deducted before remittance or settled after the year closes | The binder's commission terms, then your own decision on when to convert | When do we turn dollar and euro income into sterling, and at what markup to mid? |
| Expenses in sterling | Sterling | Payroll and supplier dates each month | Do we hold enough sterling for payroll without converting at short notice? |
Binder terms vary from one capacity provider to the next. Read the settlement, currency and commission clauses in each of yours. We describe common terms and do not interpret any binder.
What do binder remittance terms say about currency?
Each binder says what you remit, in which currency and by when. Read those clauses before you change how premiums are converted, because a conversion that suits your MGA can break a binder term.
Binding authority agreements differ, but the clauses that matter for FX tend to cover the same ground. Questions to ask of each binder:
- Which currency are premiums remitted in, and may we convert premium collected in another currency?
- How many days after each bordereau period is the remittance due, and are those calendar days or business days?
- Is premium remitted gross or net of our commission, and in which currency is commission calculated?
- Does the binder name a rate of exchange for reporting or converting premium, and which date's rate applies?
- Must premium sit in a named trust or client account before remittance, and does the capacity provider have to approve a change of account?
- Who keeps any interest earned on premium held before it is remitted?
A rate of exchange clause fixes which exchange rate is used to turn one currency into another for a stated purpose, such as reporting premium on a bordereau or measuring a limit. The wording varies and the effect depends on it, so check any such clause with your own advisers or your capacity provider. We do not interpret contract wording.
If your capacity is a Lloyd's syndicate, remittances usually reach it through a Lloyd's broker and Lloyd's central settlement. Lloyd's says its Currency Conversion Service translates premiums and claims between currencies at the point of settlement according to the managing agents' standing instructions. Our page on Lloyd's syndicates and managing agents explains how that works, and our page on converting premiums received in other currencies covers when to convert, hold or match.
Still setting up your MGA and negotiating its first binder? First MGA covers MGA set-up. The currency questions above are worth raising before the binder is signed rather than after.
How do we pay claims under delegated authority in other currencies?
From the claims fund your capacity provider agrees, in the claimant's currency where the binder or claims agreement allows, with each conversion and charge recorded so it can go on the claims bordereau.
Where an MGA or a claims handler has delegated claims authority, the capacity provider usually funds claims through a loss fund or claims account held in the binder currency and topped up as claims are paid. Paying a claimant in Spain or Canada then means converting from that balance, either at the bank's standard rate or at a rate you have priced.
Points to settle before the next claims run:
- Whether the claims fund can hold the currencies you pay most often, so you are not converting every claim separately.
- Whether payments go over a local payment system in the claimant's country or by SWIFT, and who pays the charges (OUR, SHA or BEN), so the claimant receives the full amount agreed.
- How beneficiary details are verified before the first payment, especially where they arrive by email.
- Sanctions screening. The payment provider screens each payment. Your MGA, your capacity provider and any claims handler keep their own sanctions obligations. Guidance is published by the Office of Financial Sanctions Implementation.
- A payment confirmation showing the rate, the charges and the amount received, for the claim file and the bordereau.
Our page on paying insurance claims overseas goes through each of these in more detail.
Are our premiums client money or held under risk transfer?
It depends on your agreements with each capacity provider, and the answer can differ by binder and by flow. Risk transfer changes the analysis. Where the client money rules apply, CASS 5 generally requires the money to be held in a client bank account at an approved bank.
Under risk transfer the MGA holds money as agent of the insurer, which is how CASS 5 describes it. Some MGAs have risk transfer under some binders and not others, or for premiums but not for claims money. Each firm has to check its own position, and the conversation belongs with your compliance officer and your CASS auditor before you change provider. The rules are in CASS 5 of the FCA Handbook.
Questions for your compliance officer and CASS auditor:
- Which binders give us risk transfer, and does it cover premiums in every currency we collect?
- Does risk transfer extend to claims money, return premiums and any claims fund we hold?
- For money that is client money, what would our client money rules require of a conversion?
- Where must money sit between collection and remittance, and does any binder add requirements of its own?
- How would conversions and charges appear in our client money calculation and reconciliation?
- Has our CASS auditor reviewed the proposed account structure before we sign with a provider?
Money held by a payment or e-money institution is safeguarded rather than protected by the FSCS, and the FSCS does not cover payment or e-money services. The FCA's new safeguarding rules for those firms took effect on 7 May 2026. Our page on client money, CASS 5 and FX covers where money sits at each step. InsuranceFX never holds client money or premiums.
Which currency should our bordereaux and remittances be in?
The currency each binder specifies. Where you collect in one currency and remit in another, show the original amount, the converted amount, the rate and the date on the bordereau so the capacity provider can reconcile the remittance to it.
Trouble tends to start when the bordereau and the remittance are converted differently: the bordereau at a binder rate of exchange, say, and the remittance at whatever rate the bank gave on the day of payment. The difference is small on one risk and noticeable across a year. Who carries it depends on the binder wording, which is a question for your capacity provider and your own advisers.
- Report each risk in its original currency, with any converted amount alongside.
- Record the rate and date of every conversion, and the source of the rate where the binder names one.
- Match the remittance to the bordereau total in each currency before it is paid, not after.
- Keep the bank or provider confirmation for each conversion with the bordereau it relates to.
A cost review can work from your bordereaux and bank statements together to show what each conversion cost against the mid.
How do we know if our MGA is paying too much for FX?
Compare the rate on each conversion with the market mid at the moment it was dealt. The gap in basis points is what you paid on top, and a cost review works it out across 6 to 12 months of your own conversions.
markup (bps) = |your rate − mid| ÷ mid × 10,000
These are the patterns we look for. They are described so you can check your own statements. None of them is a figure about any MGA or any bank.
| Pattern | How it shows | What to check |
|---|---|---|
| Forced conversion on arrival | Dollar and euro premiums appear as sterling credits at a rate nobody asked for. | Whether the bank can credit a currency account instead. |
| Double conversion | Premium converted into sterling on arrival, then bought back to remit to capacity in dollars. | Two markups on the same money with nothing gained. |
| Small amounts priced one by one | Each premium converted as it lands, at a wider markup than a larger amount would get. | Whether the binder's remittance timing lets you convert in fewer, larger amounts. |
| Commission converted at short notice | A large conversion a day or two before payroll. | A sterling buffer and a regular conversion date. |
| Receiving charges and deductions | Premiums arrive a little short of the amount invoiced. | Who pays the charges at the producing broker's end, and whether a local account in that currency would avoid them. |
| Claims paid by SWIFT at the sending bank's rate | Claimants receive less than the amount agreed. | Paying in the claimant's currency over local payment systems where they are available. |
| Rate creep | The markup on the same kind of conversion widens from year to year. | Your markup by quarter for the same currency pair and size. See FX rate creep. |
Illustration only, with stated assumptions. An MGA collects USD 20 million of premium a year into a sterling account that converts on arrival. It keeps USD 5 million as commission and buys back USD 15 million to remit to capacity. At an assumed markup of 40 basis points on each conversion, the double conversion on the remitted USD 15 million costs about USD 120,000 a year (15,000,000 × 80 ÷ 10,000) before any charges. The USD 5 million of commission still needs converting once, which costs USD 20,000 at the same assumed markup. Whether the dollars can be held in a dollar account instead is for your binder terms and your client money position to decide.
How do we switch FX provider without missing a remittance?
Plan the move around your binder calendar. Keep the existing accounts running through at least one full bordereau and remittance cycle, test the new provider on your own commission and expenses first and change collection details with producing brokers only through channels they already trust.
Put every date in one calendar
Bordereau deadlines and remittance dates for each binder, claims fund top-ups, quarter ends, payroll and your client money calculation dates.
Check what each binder requires
Whether the capacity provider must approve a new account, and whether premium must sit in a named trust or client account.
Agree the structure with compliance
Your compliance officer and CASS auditor review which flows would use which account before you sign with a provider.
Onboard and test on your own money
The provider runs its own checks on your MGA. Commission conversions and sterling expenses prove the pricing, cut-offs and reporting.
Move one flow at a time
Start in a quiet week rather than remittance week. Keep the old accounts open to catch late premiums paid to old details.
Tell producing brokers safely
New collection details go out through verified channels with a call-back on a number they already hold. Never by email alone.
Check the first cycle
Compare the first full bordereau and remittance cycle with the cost review baseline: markup, charges and timing.
InsuranceFX never sends, receives or changes payment details. If anyone claiming to be InsuranceFX asks you to change bank details, do not act on it and call us on 020 7566 0044. Our guide to switching FX provider without missing a settlement sets out the full staged plan with the insurance settlement calendar.
Who should an MGA use instead of its bank?
Whichever regulated provider gives the lowest all-in cost on your actual flows and fits your binder terms and client money position. The only way to tell is to put the same requirement to several providers at once.
We do not publish rankings, and we do not name providers on this site until agreements are signed and each provider has agreed how it is described. A blind quote puts your requirement to several providers on our panel at the same time. They see the currencies, amounts, timing, flow and your firm type. They do not see your MGA's name, your capacity providers or your producing brokers. Every indicative price comes back side by side with its markup to mid, charges, cut-offs and onboarding time, and quotes stay indicative until the provider has onboarded your MGA.
We are paid by providers, not by your MGA, and we explain how on our how we are paid page. If you would rather talk first, book a confidential call.
Request a blind quote Ask for a cost review
Sources
- Financial Conduct Authority, FCA Handbook CASS 5, client money for insurance distribution activity, checked 2 November 2026.
- Financial Conduct Authority, PS25/12 Changes to the safeguarding regime for payments and e-money firms, published 7 August 2025, checked 2 November 2026.
- Lloyd's, Foreign exchange: Currency Conversion Service and bespoke FX service, read 2 November 2026.
- Office of Financial Sanctions Implementation, guidance and contact details, linked 2 November 2026.