Delegated Authority Agreements

Question 1

Who does an insurer delegate underwriting authority to?

Answer 1

a third party such as a broker or MGA

Question 2

Coverholder

Answer 2

an entity to which an insurer can give delegated authority eg; a broker

Question 3

Binding authority

Answer 3

the contract under which delegated authority is given to a third party

Question 4

Bordereau

Answer 4

the report provided by the coverholder of the risks written and claims reported, normally provided monthly

Question 5

MGA

Answer 5

an organisation that underwrites insurance risks and which owes its primary duties to one or more insurance companies or providers of insurance capacity. MGAs are not insurance brokers or wholesalers of insurance products.

Question 6

How delegated authorities operate?

Answer 6

Insurer or coverholder sees a business opportunity and presents their case to the other party – coverholder and insurer draw up an agreement procedures – coverholder operates the delegated authority in accordance with the terms – coverholder interacts with the insurer as agreed, ensuring they do not exceed their authority and the correct information is provided on the bordereau – insurer conducts regular audit checks in line with the agreement to ensure coverholder is acting correctly

Question 7

Activities that can be delegated?

Answer 7

Underwriting – Credit Control – Document Issuance and Management – Claims – Recoveries

Question 8

Most common activity to be delegated?

Answer 8

Underwriting