Coverholders represent an important distribution channel to the Lloyd’s market (https://www.lloyds.com/), with over 33% of Lloyd’s premium income sourced through delegated underwriting. The DA model is also utilised in the UK General Insurer market where the International Underwriting Association (“IUA”) is the representative body for approximately 98% of insurers writing £4billion of DA business.
Ongoing monitoring of the BAA or DCA is essential to ensure that those with delegated authority operate under the terms of the underlying agreement. The key controls are:
- Audit Inspection,
- insurers validation of the coverholders risks written and paid reporting (bordereaux) through an automated validation program which scans against a number of agreed variables such as risk location, premium, sum insured, coverholders commission,
- submission of Management Information (MI) to insurers.
The International Underwriting Association has published comprehensive DA guidance at IUA DA Good Practice Guidance