A guide to good practice for delegated authority arrangements in the London company market has been published by the International Underwriting Association, the group that represents non-Lloyd’s international and wholesale insurance and reinsurance companies in the London Market.
The guide urges firms to keep customer impacts uppermost in mind when outsourcing particular functions. It highlights the need for detailed risk assessments when selecting new coverholders and stresses the importance for comprehensive ongoing oversight of any partners.
The IUA’s recent London Company Market Statistics Report identified nearly £3 billion (US$4 billion) of delegated authority premium written by London market companies in 2016.
Produced by the association’s Delegated Authority Underwriting Group, the new good practice guide covers arrangements for outsourcing throughout the insurance process, from underwriting and distribution through to claims and complaint handling.
“Delegated authorities are an increasingly popular business model for many companies,” said IUA Chief Executive Dave Matcham.
“They can offer significant benefits for both parties to a contract and help establish more competitive markets. Companies can provide services locally without expensive new infrastructures and clients are offered greater access to capital and expertise,” he added.
“In order for such set-ups to work successfully, however, it is important that firms carefully consider which functions are appropriate to be outsourced, choose the right partners with which to operate and exercise appropriate supervision,” Matcham explained.
“The IUA’s new guide aims to help our members comply with relevant regulations and understand the responsibilities they continue to have to clients,” he said.
Rules for delegated authorities have been issued under several pieces of regulation by both UK and European authorities. The IUA’s good practice guide summarizes expectations of company behavior from regulators Financial Conduct Authority, Prudential Regulation Authority and The European Insurance and Occupational Pensions Authority (EIOPA).
Source: International Underwriting Association (IUA)
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