Category: Insurance market and distribution · Reviewed by the Apex broking team · Last reviewed 2026-08-21
Category: Insurance market and distribution Also known as: binder, binding authority, delegated underwriting authority, DUA Related concepts: managing general agent, claims handling agreement
Delegated authority describes any arrangement in which an insurer authorises a third party to exercise part of the insurer’s own function. The two main forms are delegated underwriting authority — the power to enter into contracts of insurance on the insurer’s behalf — and delegated claims authority, the power to determine and settle claims. The written contract granting underwriting authority is commonly called a binder or binding authority.
The firm receiving underwriting authority is usually a managing general agent. In the Lloyd’s market it is a coverholder, appointed by a managing agent to enter into contracts of insurance on behalf of the syndicate. Delegated authority is a substantial and growing part of how the Lloyd’s market writes business, because it gives syndicates access to specialist expertise and to distribution in territories where they have no local presence.
A binding authority is a commercial contract with an unusually detailed operational schedule. Typical contents include:
Lloyd’s operates a formal approval and oversight regime rather than leaving delegation entirely to individual managing agents. Coverholders are approved and recorded centrally, binding authority agreements are registered, and Lloyd’s publishes model binding authority wordings and reporting standards so that data arrives in a consistent shape across the market. Managing agents are expected to conduct due diligence before appointing a delegate and to maintain ongoing oversight of it thereafter.
Claims delegation at Lloyd’s is handled through the Delegated Claims Administrator regime. A managing agent may not appoint a third party to determine its claims unless that firm has been approved by Lloyd’s as a DCA, and the relationship must be registered before it incepts. There are defined carve-outs: law firms are registered rather than approved as DCAs, and a coverholder handling claims on business it has itself underwritten does not need separate DCA approval.
Delegation is an outsourcing arrangement and the FCA treats it as one. The insurer remains responsible for the delegated activity and for the outcomes it produces, and is expected to be able to demonstrate control over a delegate rather than reliance on it. Long distribution chains attract particular scrutiny, because each additional link adds cost and distance between the customer and the carrier.
For a broker three points recur. First, agency: a delegate exercising the insurer’s authority acts for the insurer, which affects whose knowledge is whose and where a disclosure is treated as having been made. Second, product governance and fair value: where a delegate designs or materially adapts a product it takes on manufacturer duties, and remuneration taken along the chain forms part of the value assessment. Third, conflicts: broker groups that also own an MGA are on both sides of the placement, and must be able to show the client’s interests came first.
A delegated arrangement is usually invisible on the certificate, but it shapes the experience. Decisions on ordinary risks come faster because nobody has to refer them. Decisions on unusual risks come slower, because they hit a referral trigger. Wordings are more likely to be bespoke to a trade. And renewal continuity depends on a contract you never see: if the binder is not renewed, the account moves.
On claims, the question worth asking early is who actually decides. A delegate with authority to settle up to a threshold can move quickly on routine losses, but a large or contentious loss will be referred, and the referral point is where delay often appears.
None of substance. Both describe the contract by which an insurer delegates underwriting authority to another firm. “Binder” is the everyday shorthand; “binding authority” is the formal term used in the London market.
No. The insurer can delegate the task but not the accountability. It remains liable under the policy and answerable to the regulator for how the delegated function is performed, which is why oversight, audit rights and bordereaux reporting are built into every binder.
Lloyd’s does. A managing agent cannot appoint a third party to determine claims unless that firm has been approved as a Delegated Claims Administrator, and the new relationship must be registered before it begins.
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-21. Next review: 2027-02-21.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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