Best’s performance assessment for delegated underwriting authority enterprises- A.M Best

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By Favour Nnabugwu

AM Best has released a new methodology, “Best’s Performance Assessment for Delegated Underwriting Authority Enterprises.” The methodology is effective immediately.

In this methodology, AM Best introduces the Best’s Performance Assessment (Best’s PA), which provides a framework for differentiating among delegated underwriting authority enterprises (DUAEs) in the insurance industry. The Best’s PA is a forward-looking, independent and objective non-credit opinion indicative of a DUAE’s relative ability to perform services on behalf of its insurance partners.

AM Best defines DUAEs as a blanket term to capture managing general agents (MGAs), managing general underwriters, coverholders, program administrators, program underwriters, underwriting agencies, direct authorizations and appointed representatives.

AM Best believes that there are key assessment factors that are indicative of a DUAE’s relative ability to perform services on behalf of its insurance partners. The PA, as outlined in the methodology, includes an in-depth assessment of the following key components: Underwriting Capabilities, Governance and Internal Controls, Financial Condition, Organizational Talent, and Depth and Breadth of Relationships.

The PA is an aggregation of the sub-assessment assigned to each component. The methodology details the information that will be necessary for AM Best to evaluate the aforementioned key assessment components.

“AM Best believes that DUAEs are an increasingly important part of the insurance ecosystem, with a higher proportion of insurance revenue being generated through DUAEs in many global regions,” said Matthew Mosher, president and CEO of AM Best Rating Services.

“The presence and significance of DUAEs continue to rise, and their decisions could financially impact their insurance partners. Assessing DUAEs will provide transparency to the market and will inform the industry of a DUAE’s ability to perform services on behalf of its insurance partners.”

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