Snap Poll on Binding Authority for Wholesalers

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30 April 2021
Karlyn Carnahan

Available Only for Members of the NA Celent Insurance Research Panel

Abstract

Snap polls reflect questions posed by members of the Celent Executive Research Panel, a group of C level executives in the insurance industry. This question came about from a member who is beginning a project to explore options to support wholesalers and brokers who have binding authority for specific classes. Twelve insurers responded to this survey over the course of two days, April 29 – April 30, 2021

The question that was posed was:

Background:

This insurer is beginning a project to explore options to support wholesalers and brokers who have binding authority for specific classes. They’re trying to decide how to best balance overseeing and managing the underwriting process while trying to accommodate agent ease of doing business. They want the wholesalers to be able to bind business - but also want to be able to automate underwriting rules so that they are sure the business being bound meets the agreed upon underwriting guidelines. They see a couple of potential alternatives:

  • Allow agents to operate in their own system and send bordereaux reports to the insurer. This would require the insurer to work with the wholesalers to assure they’ve built the appropriate rules in their own system. Or, if they’re unable to build underwriting rules in the wholesaler’s system, it would mean more manual effort to oversee the underwriting process.
  • Develop an online binding system, e.g., a portal, that is integrated to the insurers back-end systems to allow the wholesalers/brokers to quote, bind and issue policies – subject to underwriting, pricing parameters, and referral guidelines. Agents would go to the online system to do their work and business rules would be built here.
  • Build an API layer to enable wholesalers/brokers to use their own AMS systems to send the required data to the insurers internal policy admin system where it would be rated and underwritten with the results sent back real time to the wholesaler/brokers.
  • Leverage a third-party solution to provide the API layer to provide rates and the automation of underwriting rules, e.g., Dais, Tarmika, Bold Penguin.

Questions:

Have you given binding authority to wholesalers/brokers?
Do wholesalers/brokers work in your policy admin system to support their binding authority, or do they use their own systems?
If they work in their own systems, have you integrated their system to your system?
If they work in their own systems, do you oversee the business rules they’ve built into their own systems in order to provide underwriting controls in those systems?
If the wholesalers/brokers work in their own system and send bordereaux reports, have you been able to utilize any technologies to oversee the underwriting controls?
Do you have a portal to support binding authority? If so, what capabilities do you offer?
New business
Endorsements
Renewals
Cancellations
Reinstatements
Other
Do you offer an API for binding authority?
If yes, did you build it or leverage a third-party?
If third-party, who?
If a third-party, how is that working?
What kind of quality / underwriting controls have you put in place (i.e., approved classes, financial thresholds, specific risk characteristics etc.)?

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Insight details

Industry
Property & Casualty Insurance
Subscription(s) required to access this Insight:
Insurance
Insight Format
Reports
Geographic Focus
North America