Viewpoint: Mapping Evolving Regulatory Terrain for MGAs, MGUs and Other DUAEs

As the regulatory landscape around the delegated underwriting authority enterprise (DUAE) market evolves, global authorities have introduced stricter compliance measures, risk management expectations and governance frameworks. The increasing alignment with international regulatory standards highlights the trend toward enhanced oversight of DUAEs—although application to DUAEs often remains indirect through carrier obligations.

The DUAE market, which includes managing general agents (MGAs), managing general underwriters, program managers and similar entities, plays a crucial role in the global insurance and reinsurance markets by enabling insurers to extend their market reach, increase underwriting flexibility and deliver niche expertise across geographies. As DUAEs continue to expand their influence in global insurance markets, alignment with international standards is not only a regulatory necessity but also a competitive advantage.

Despite regional differences, there are some common regulatory themes that have emerged:

Insurer responsibility: Delegation of underwriting authority does not diminish insurer obligations to regulators or policyholders.
Licensing and registration: The mature markets require DUAEs to be licensed, registered or otherwise formally recognized by their respective regulatory authorities in order to conduct underwriting activities.
Solvency and risk management: Regulatory regimes are increasingly requiring solvency and operational risk management deliverables to DUAEs either directly or through carrier oversight.
Consumer protections: The various authorities are mandating stronger controls to ensure fair treatment of policyholders by DUAEs, with complaint handling, disclosure and marketing standards, as well as protection of the client’s personal information.
Auditability and reporting: Active regulatory frameworks frequently require insurers to audit DUAEs regularly, maintain transparent records and report material outsourcing arrangements to authorities.
Alignment with international standards: Even where DUAE-specific regulations do not exist, supervisory frameworks often align with the IAIS-developed Insurance Core Principles, as well as Solvency II and Basel III to reinforce international comparability.

As DUAEs continue to expand their presence in the global insurance ecosystem, their role in enabling product innovation, geographic reach and operational efficiency has become increasingly vital. At the same time, some insurance company CEOs have begun to express concern over the rapid growth, noting that many new participants are less experienced in the market. Understanding the nuances of DUAE oversight remains critical for insurers, regulators and market participants alike.

From a perspective different from that of regulators, AM Best’s Performance Assessment for DUAEs is designed to complement and serve as an independent, objective, non-credit opinion geared toward greater transparency in the DUAE sector. The Performance Assessment is globally applicable, and the assessment evaluates underwriting capabilities, governance and internal controls, financial condition, organizational talent and the span of the DUAE’s depth and breadth of relationships in the market.

Regulators are making use of assessment reports on these entities as they provide hard-to-find information and high-level premium statistics. The Performance Assessment supports transparency in a growing sector alongside advancing regulatory efforts.

New DUAE Hubs Emerging

Emerging DUAE hubs are competing to become centers of excellence in delegated underwriting for their adjacent markets. For example, Singapore has emerged as a leading hub in Asia. Its revised Insurance Act (Cap. 142) (2003) places substantial emphasis on insurer accountability for DUAEs, coupled with strong requirements for financial and capital adequacy, consumer protection and risk management. Singapore’s regulatory approach promotes innovation in insurtech while safeguarding market conduct, positioning the city-state as a model for balancing regulatory discipline with entrepreneurial growth.

Miami continues to gain traction as a hub for MGAs as well – particular with a view to writing Latin American business. Many of the main reinsurance broking firms that operate in Latin America – whether local or international – have Miami offices, usually handling Latin American (Central America mainly) and Caribbean placements. Many of the MGAs based in Miami act as reinsurance intermediaries.

The United States remains the most mature DUAE market, and it has among the most developed frameworks for the oversight of DUAEs with a state-based approach to regulation. The role of Lloyd’s in the global insurance market and use of coverholders also has been cited as a driver of MGA growth in several global markets, including Australia and Belgium. Outside the U.S. and Lloyd’s, Europe represents a significant presence in the MGA space; however, insurance passporting rights do not automatically apply to DUAEs. Instead, access rights depend on the rules in force in the country issuing the license. This regulatory fragmentation between countries also applies in Latin America and limits the opportunity for seamless cross-border DUAE operations domiciled in the region.

Other regions are at various stages of regulatory development, but those jurisdictions in which regulation has been crafted to address the unique operation of DUAEs are generally among the largest and most sophisticated users of DUAEs and show the greatest potential for sustainable growth.

Demands on Carriers, DUAEs Growing

The DUAE market has seen capacity accelerate as it has attracted interest from providers such as the capital markets, the insurance-linked securities (ILS) market, fronting/collateral markets and private equity. As a result, managers now can harness a number of ways to access capacity. The sheer amount of available capacity in the market demands a correlated amount of due diligence in accessing and monitoring this capital.

Looking forward, several trends are starting to shape the evolution of DUAE regulation:

Digital transformation: Regulators will have to grapple with how to apply traditional supervision models to digital DUAEs, insurtechs and embedded insurance providers. Cybersecurity, data protection and operational resilience will be a focal point.
Cross-border consistency: There may be efforts to harmonize international supervision through IAIS, EIOPA and NAIC models. These efforts could reduce regulatory arbitrage opportunities and facilitate global scalability for DUAEs. Regulatory arbitrage is when financial institutions capitalize on differences between regulatory systems or jurisdictions for financial or operational gain.
Increased scrutiny of delegated entities: This could lead to tougher audit, due diligence and contingency planning.
Innovation sandboxes: Some jurisdictions are offering regulatory sandboxes that allow digital-first DUAEs to innovate under a controlled environment, balancing supervision with market development.
Use of AI in underwriting and claims: DUAEs may increasingly be required to implement ethical governance frameworks to ensure transparency and regulatory compliance.
Disaster recovery and wind-up provisions: Regulators may require DUAEs to implement contingency planning, similar to insurer requirements.

As the regulatory environment evolves, the ability to assess DUAEs consistently and transparently will be essential to maintaining trust, mitigating risk and supporting sustainable growth in the delegated model.

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