Underwriting authority

Category: Underwriting practice · Reviewed by Matt Bartlett, Director · Founder · Last reviewed

Underwriting authority

An underwriting authority is the written grant of capacity, classes and conditions under which an individual underwriter, MGA or coverholder may bind insurance on behalf of an insurer or syndicate. It is the primary internal control over the deployment of capital.

Components

• Classes of business — permitted lines (e.g. property, motor, EL/PL).
• Geographies — territories permitted, often by domicile of insured and location of risk.
• Sums insured / limits — maximum per-risk limit, per-occurrence limit, aggregate limit.
• Programme structures — whether to write primary, excess or quota share.
• Conditions and warranties — minimum requirements (deductibles, surveys).
• Exclusions — perils, sectors, named individuals or entities outside appetite.
• Pricing — minimum rates, technical rate adherence, schedule rating bands.
• Reinsurance — required ceded reinsurance for risks above threshold.
• Referrals — risks that must be referred to senior underwriting (multi-million-pound limits, novel risks, sanctioned jurisdictions).

Delegated authority

When authority is delegated to a third party (MGA, coverholder, scheme administrator), the written agreement is typically called a binding authority. Lloyd’s binding authorities are governed by:

• The Coverholder Approval Process.
• Underwriting authority limits set by the managing agent.
• The Lloyd’s Delegated Authority team’s oversight regime.
• The PRA’s expectations on delegated authority (referenced in SS4/15 and successor statements).

Governance

A robust authority regime includes initial sign-off by the Chief Underwriting Officer, annual renewal, peer review of large risks, monthly authority usage reports and quarterly compliance audits.

References

• Lloyd’s Underwriting Standards and Delegated Authority Standards.
• PRA Insurance Rulebook.
• ABI / IUA market guidance.

Cross-references

• Underwriter
• Underwriting

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Maintained by Matt Bartlett, Director, Apex Insurance Brokers Limited. FCA FRN 724952. Companies House 07014570.