Delegated authorities - problem child or just misunderstood?

Throughout my insurance career, I’ve always had some kind of connection with “delegated” authority, whether that’s broking or underwriting, governance or control, it’s been a vast and varied journey. The last few years has seen an expediential increase in the level of scrutiny of this popular insurance distribution model whilst also being hit with wave after wave of regulatory, economic, and political change.

From Brexit and implementing new operating models to allow for consistency of trading and ultimately seamless service to our customers, Consumer Duty, and the additional responsibilities that it brings, to operational resilience and robust oversight of our outsourced arrangements, the past few years have not been without challenge. 

What this means for delegated authorities is a shift towards a deeper understanding of effective oversight for our broker partners and MGAs.

Whether that’s Business Resilience, Data Security, Legal, compliance, Underwriting, Sales & Distribution, right up to the board. It’s fair to say, everyone has really had to roll up their sleeves and get stuck in to land best practise, good customer outcomes whilst navigating the potential operational difficulties it may bring. 

One of the things that’s abundantly clear to me is that a large percentage of the ‘new’ requirements, a great company or organisation should be delivering already; whether that’s clearer policy documents, effective MI to detect early indicators of customer harm, resilience of our third parties, whom without we wouldn’t operate in this business model. Whatever it may be, the concept of effective oversight isn’t new but the guidance and the framework in which organisations choose to operate is open to interpretation which brings a different dynamic to the landscape.

The Delegated authority business model operates in tight margins, the operational efficiencies (or inefficiencies) can sometimes be its downfall. The ability to react to accurate MI in a timely fashion is at the core of what we do, from modelling, pricing, underwriting, claims, bordereaux and back-office management, critical decisions often hinge on the accuracy/ability to scrutinise our business more than ever before.

With all this extra scrutiny, there is a real drive on getting this right, not just in terms of the benefit that it will bring to any organisation transacting DA business, but ultimately the benefit it can bring our customers too who are at the heart of any customer centric organisation.

With talk of modernisation, digitisation, and automation, it’s exciting to see the leaps forward both in terms of capability and technology in the DA space but also the operational efficiencies they bring. Not just in terms of bordereaux and data held within, but also the governance and control landscape and what effective automation really means.

Can I see further change on the horizon? Yes, but it’s clear to me that walking into a revolution for this ‘naughty child’ of the insurance industry and this is only the start.