☰An agency captive is a captive owned by an insurance agency, brokerage, or MGA rather than by the insured business. The owner uses it to take a share of the underwriting risk on the business it places or underwrites, usually through a reinsurance arrangement behind the issuing carrier. Instead of earning commission alone, the agency earns commission plus underwriting profit on the risks it selects.
The structure is a statement of confidence: an agency willing to hold its own book's risk is betting on the quality of its underwriting, and carriers tend to treat that alignment as a reason for better terms and durable capacity. Agency captives are one of several ways distribution businesses and MGAs use captive structures; the MGA entry in the Coverage section covers that broader pattern.