AM Best: U.S. Premium Growth in Delegated Underwriting Authority Enterprise Market Continued Double-Digit Growth Rate in 2022

Direct premium flowing through the Delegated Underwriting Authority Enterprises (DUAE) market in the United States continued its significant growth rate in 2022, increasing by 13.8% to $67.6 billion, according to a new report from AM Best.

The Best’s Market Segment Report contains an in-depth analysis of the U.S. DUAE market and shows these premium sources varying significantly by insurer. Some are using managing general agents (MGAs) to source new business, but only around the margins, typically for less than 5% of an insurer’s overall premium. Other insurers, especially those focused on specialty commercial insurance, use a hybrid model, with some programs managed by in-house underwriters and others by MGAs with carriers relying on them for most, if not all, of the distribution and underwriting.

“Over the last few years, tightening in different segments of the commercial lines market drove higher premium growth, attributable to DUAEs, particularly with respect to general liability, professional liability, umbrella and excess liability, and commercial auto coverage,” AM Best Senior Director Greg Williams said.

An additional growth source includes MGAs working with recent start-up specialty commercial carriers Also, newer surplus lines insurers, including fronting and hybrid fronting companies formed over the past five or six years, have gained traction, with MGAs helping to fuel that momentum, according to the report. Other report highlights include:

• Seven insurance companies wrote more than $1.0 billion in 2022 DPW through affiliated or unaffiliated MGAs. The top 20 MGAs generated 32.5% of the $67.6 billion in 2022 direct premium written.
• Flexible business models, newer technology, and more nimble operating structures have made DUAEs more attractive to talent.
• Reinsurers seeking to align their interests with partners have helped intensify competition through the proliferation of hybrid fronting insurers, many of which partner with DUAEs for their expertise and for access to desired risk classes.

Williams will be joined by William Pitt, Conning’s director of research & consulting, during an analytical briefing on the U.S. DUAE Market today (April 27, 2023) at 2 p.m. (EST). For more information about the webinar, please visit the event and registration webpage. Williams oversees a team of analysts that is responsible for monitoring and evaluating companies that have been assigned a Best’s Performance Assessment (Best’s PA).

AM Best introduced its Best’s PA last year, providing a framework for differentiating among DUAEs. Best’s PA is an industry-first tool providing an objective, independent opinion of a DUAE’s ability to perform services on behalf of its insurance partners. AM Best uses DUAE as a blanket term to capture MGAs, managing general underwriters, coverholders, program administrators, program underwriters, underwriting agencies, direct authorizations and appointed representatives.

AM Best will issue a special report on Europe’s DUAE market on May 2, 2023, which will focus on the expansion of the market in recent years, underpinned by a combination of underwriting expertise, technology and a broader range of capacity providers.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=330949.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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