AM Best: DUAE gains traction

Delegated underwriting authority enterprises (DUAE) have become an increasingly relevant part of the property/casualty insurance market, punctuated by growth in annual direct premium written generated by managing general agents (MGA), according to an AM Best report.

In addition to MGAs, DUAEs include managing general underwriters, coverholders, program administrators, program underwriters, underwriting agencies, direct authorizations and appointed representatives; MGAs are the most common form in the U.S. market. The report notes that as insurers have developed partnerships with DUAEs, they have been able to diversify risks better, in line with their risk appetites.

“Not only have these new avenues allowed insurers to expand their product offerings and provide solutions for a wider range of risk classes, but they also have provided growth opportunities and added to bottom-line profitability for many carriers,” said Sridhar Manyem, director, industry research and analytics, AM Best.

According to the report, hardening insurance rates in different segments of the commercial lines market drove premium growth by MGAs from 2017-2020, including year-over-year growth of 5.5 percent to USD49.4 billion in 2020. The growing number of MGAs collaborating with insurers to write specialty business is helping to fuel the increase in U.S. property/casualty premium generated by MGAs.