The shift from grey area to regulated discipline
For years, delegated underwriting in India sat in an uncomfortable space. Specialist intermediaries originated, priced and bound business under authority handed to them by insurers, but there was no dedicated regulatory category for what they did. The arrangement worked on contract and trust rather than a defined rulebook.
That is changing. Managing general agents are specialised underwriters and distribution partners that operate under delegated authority from insurers, and the Insurance Amendment Bill has expanded the definition of insurance intermediaries to include managing general agents and insurance repositories. Bringing MGAs inside the intermediary definition signals that delegated authority is to be supervised as an intermediated activity rather than treated as an informal extension of an insurer's desk.
The IRDAI framework has not yet codified a dedicated MGA regulation. Delegated authority therefore currently operates through the contractual binder and insurer governance rather than a standalone IRDAI MGA rulebook, with draft MGA regulations under discussion. For an insurer, a broker advising an MGA, or an MGA itself, the practical control today is the binder agreement and the reporting and audit discipline around it. This post walks through that control: the binder, the guidelines and limits inside it, bordereaux reporting, audit rights, and the governance an insurer owes a board for a book it does not directly write.
What a binder actually delegates
A binder agreement (also called a delegated authority agreement or coverholder agreement) is the contract through which an insurer hands an MGA the right to underwrite and bind risks on the insurer's behalf. Internationally, delegated authority is controlled through exactly this instrument: the binder fixes the scope, limits and classes an agent may write, and Indian insurers reference that model when structuring MGA arrangements in the absence of a domestic rulebook.
A binder is not a blank cheque. It delegates a defined authority, and the discipline lies in how tightly that authority is drawn. The core elements a binder should fix include:
- The classes of business the MGA may write, named specifically rather than left open.
- The maximum line or sum insured the MGA may bind on any one risk, and the aggregate it may write across the binder.
- The territories and types of insured the authority covers, and those it excludes.
- The pricing basis, whether rates are fixed by the insurer, set within a rating guide, or referred above a threshold.
- The referral triggers that pull a risk back to the insurer for individual decision, such as unusual hazards, large limits or declined-elsewhere business.
The authority an insurer is comfortable delegating depends on how well it can monitor the result, which is why the binder and the reporting around it are designed together rather than separately.
Underwriting guidelines and limits: the substance inside the authority
A binder names the authority; the underwriting guidelines give it substance. These guidelines are the rulebook the MGA underwrites to, and they are the insurer's real control over the character of the book.
What the guidelines must pin down
Good guidelines specify the risk appetite in operational terms, not aspirations. They set out acceptable and unacceptable occupations or activities, minimum risk-quality standards, mandatory and prohibited policy wordings and clauses, deductible structures, and the documentation required before a risk can be bound. They translate appetite into decisions an underwriter at the MGA can make consistently and an insurer can later test against the bordereaux.
Limits work alongside the guidelines as hard boundaries. A per-risk limit caps the line on any one risk; an aggregate limit caps total exposure under the binder; event or catastrophe sub-limits cap accumulation in a single zone or peril. Where the MGA's binder sits on the insurer's net account or feeds into its treaty programme, these limits also keep the delegated book inside the capacity the insurer has arranged upstream.
Bordereaux: how the insurer sees a book it did not write
An insurer that delegates underwriting still owns the result on its balance sheet, so it needs a clear, regular view of what was written in its name. That view comes from the bordereaux, periodic schedules the MGA submits to the insurer.
There are two principal types. A premium bordereaux (often called a risk bordereaux) lists every risk bound in the period with its key underwriting data: insured, class, sum insured, premium, inception, deductible and the rating basis. A claims bordereaux lists every claim notified or paid, with reserves, payments and status. Together they let the insurer reconstruct the book without having touched any individual risk.
Reading the bordereaux as a control, not a formality
The value of a bordereaux is in the analysis, not the filing. Compared against the binder and guidelines, the schedules reveal whether the MGA is writing inside appetite: limits within authority, pricing within the rating guide, no excluded classes creeping in, and aggregation staying within event limits. Tracked over time, the claims bordereaux shows whether the book's loss experience matches the assumptions the binder was priced on. A delegated book that drifts in occupation mix, average line size or loss ratio is visible in the bordereaux long before it shows up in the annual result, provided the insurer actually reads it.
For this to work the data must be complete and timely. Late or thin bordereaux are not an administrative nuisance; they are a governance failure, because they leave the insurer carrying exposure it cannot see.
Audit, board oversight and keeping control of the book
Bordereaux tell the insurer what the MGA reports. Audit rights let the insurer test whether the reports are true and the process behind them is sound. A binder should reserve the insurer's right to audit the MGA's underwriting files, claims handling and controls, on notice and periodically, and the insurer should use it rather than hold it in reserve.
An audit goes where the bordereaux cannot. It checks that bound risks have the documentation the guidelines require, that referral triggers were actually referred, that claims were handled within delegated claims authority, and that the MGA's own controls and record-keeping would withstand scrutiny. Where the binder includes delegated claims authority, the audit should confirm reserves and settlements are within the limits and standards set.
Why the board cannot delegate its way out
IRDAI's corporate governance and outsourcing expectations for insurers require board-level oversight of functions delegated to third parties. That framing is decisive for delegated underwriting: an insurer can delegate the writing of business to an MGA, but it cannot delegate responsibility for that business away from its own board. The board remains accountable for a book bound in the insurer's name by a third party, so it must see that the binder, guidelines, limits, bordereaux and audit together form a chain of control it can stand behind.
As MGA regulation moves from draft toward a defined framework, the insurers and brokers who already run delegated authority this tightly will adapt with the least disruption. Doing that well depends on knowing exactly which wordings and clauses a binder permits and how they differ across the market. Sarvada gives commercial insurance brokers structured, searchable access to insurer policy wordings and the intelligence around them, so delegated underwriting is governed against real wording detail rather than assumption. Request Access to bring that rigour to your coverholder arrangements.
