Winning in Delegated Authority: Get ready before the tide goes out
October 16, 2024
Today we launch our report entitled ‘Winning in Delegated Authority: Get ready before the tide goes out’. In the report we consider recent trends in DA, what it takes to succeed in the space, and how insurers can be successful through the next market cycle.
Standing outside the Lamb in Leadenhall Market on any given afternoon, you might assume that all underwriters focus solely on lead, open-market business. But the reality is that a large part of the market – over 40% – is now delegated authority (DA) business produced by coverholders (the Lloyd’s term for MGAs) from around the world.
In DA business, the underwriter ‘gives the pen’ to trusted business partners who are authorised to write business within certain parameters. DA business therefore drives a different set of capabilities as underwriters set their capital against portfolios of risk originated by third parties, rather than individually selected and priced risks.
In recent hard market years, many underwriters have prioritised value creation in their single risk books through, for example, better technology-enabled underwriting processes. Reasonably profitable DA books have been allowed to carry on despite poor legacy technology and operational infrastructure.
As the market environment becomes more challenging and the profitability of these DA books is no longer guaranteed, insurers need to address the strategic and operational debt in their DA businesses.
About the author
George Hanks is a principal at Oxbow Partners and leads our work in Delegated Authority. George has worked with many of the world’s largest corporate and specialty insurers on their delegated authority strategies and operating models.