Delegated Authority Governance

Delegated authority programs are where a lot of the most interesting insurance work is happening, and where some of the most consequential mistakes are made.

Binding authority arrangements give MGAs the ability to write business on behalf of a carrier within defined parameters. When they work well, they create speed, distribution efficiency, and access to specialty risk expertise that a carrier could not easily replicate internally. When they go wrong, they create adverse selection problems, concentration risk, and reserve surprises that damage relationships and capital positions.

The governance question that separates well-run programs from problematic ones is how rigorously the authority boundaries are defined and monitored. Clear appetite articulation, exception tracking, regular bordereaux review, and genuine willingness to restrict or retract authority when data suggests it is warranted. Many programs define these processes adequately at inception and then let discipline erode as the relationship matures and volume grows.

Market hardening periods consistently reveal which programs were governed rigorously and which ones were not. The evidence usually appears in the loss development.