What are the key themes from “The Future of Delegated Underwriting Authority in the London Market” workshop?

In the third of our “Shaping the Market of the Future” series of events, brokers and capacity providers from the London Market met to discuss one of the most challenging areas – Delegated Underwriting Authority (DUA).

The event was well-received, with both brokers and carriers sharing their pragmatic thoughts and ideas on the current and future ‘state of play’.


Key themes that came out during the discussion included:


1. Technology is hampering overall processes associated with administering DUA business

It became apparent that wherever you work within the DUA process as a broker or a capacity provider to Coverholders, the technology rather than streamlining the process is presenting new challenges around the delivery of an efficient model. Service levels are perceived as dropping, costs are increasing and business is leaving the market, as it is considered admin heavy with more efficient and attractive places to house business elsewhere.


2. Need for more proactive and direct engagement with the market at all levels

Engagement on various initiatives over recent years could have been more pragmatic. Systems now in ‘BAU’ state are not providing the benefits hoped for. Workarounds, poor service and knowledge of the DUA market cited as a real issue and a cause for concern. Communication and an understanding of some basic principles seem to have deteriorated to more fixed responses, but positively a recognition Associations are becoming more helpful.


3. Increasing costs question the commercials around writing DUA business on Lloyd’s paper

Market systems now available for use, and in some cases mandated, give a general feeling of ‘overload’ rather than increased efficiencies. Duplication of effort is seen at many different points along with the governance and operational delivery line. Asked whether this was seen as a ‘spike’ during the adoption and implementation phase, the feeling was that this is something that won’t change under the current system of directives and frameworks employed.


4. Market organisations ability to truly make change

DUA in the London Market needed reform and enhancement to reflect increasing governance and reporting requirements placed upon it. It appears that some fundamental issues and questions around market regulation remain and particularly the role played by processing companies. A more in-depth and fundamental examination of the role these organisations have in the market should have formed part of the modernisation work that has taken place in recent years and serious questions asked as to how governance, controls and reporting could have been streamlined. Lloyd’s role as a regulator or a market governance structure was also brought into question, and the hope is that within the ongoing Future at Lloyd’s work, this will be addressed as part of the discovery and remedial work required.


5. Ongoing relevance and market appetite of the DUA model

The relevance and commercial viability of the DUA model in London in the future was discussed, particularly agreements that utilise multiple capacity partners from Managing agents / Syndicates at Lloyd’s. Business appears to be leaving and going to different types of capacity where it is felt that doing business is more straight forward. It certainly isn’t an area of the market that is suited to a ‘one size fits all’ approach, just given the complexity of the distribution chain on some of the agreements written in London. Implementing technology as a turnkey solution just isn’t practical, with a much more holistic and pragmatic approach needed to facilitate good practice.


r10 continue to develop a forum for focused output on the way we adopt and adapt to market change. Do get in touch if you wish to take part in future events, with others who share this enthusiasm and are already delivering within their own organisations.


Author: Paul Rich