’With a more challenging market environment on the horizon, the time is ripe for carriers to turn their attention to DA,’ says report
Carriers have been told they will need to make key strategic decisions in their digital operations as delegated authority (DA) business becomes more popular.
Called Winning in Delegated Authority, the report by Oxbow Partners stated that the ”London market was undergoing a significant shift where DA was becoming an increasingly critical component of overall business”.
It also said there were a range of technological initiatives laying the groundwork for a digital DA marketplace.
However, the report added: “The dominant approach in the market today remains bordereau-based and coverholders continue to send often poor-quality data in numerous different formats to underwriters for processing at considerable operational effort and therefore expense.
“Significant barriers to mass adoption remain and carriers have limited control over many of them.”
Strategies
The report showed that DA business more than doubled from £10.4bn in 2018 to £22.1bn in 2023, increasing its share of the Lloyd’s market from 30% to over 40%.
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It added: “Historically, DA strategies and operating models have not received the same focus as open market books. However, with a more challenging market environment on the horizon, the time is ripe for carriers to turn their attention to DA.
”Carriers should ensure that they have a DA specific strategy and strategic framework in place guiding all their activities in these areas. This strategy should outline the level of ambition in DA and the capabilities required to deliver that ambition.
“The target operating model, including technology, should then be designed to deliver this. Some carriers are not yet taking deliberate action on DA but could suffer when the tide goes out. Competitors will be able to manage their DA portfolios more effectively, creating the risk of anti-selection for laggards.”
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