Delegated authority audits, answered from the record
For MGAs and coverholders: binder limits enforced at the point of decision, bordereaux that reconcile to the policy, and a delegated authority audit pack exported for any period. The audit becomes a demonstration, not a scramble.
The best audit preparation is evidence you never have to assemble
Capacity providers, managing agents and Lloyd's audit how an MGA uses the authority it has been delegated. In most operations the preparation is a project: weeks of pulling policy files, rebuilding the trail behind each bind from emails and spreadsheets, reconciling bordereaux that were reshaped by hand, and hoping the sample the auditor picks is a clean one.
That work exists because the evidence was never created at the time. The binder sat in a PDF, the authority check happened in an underwriter's head, the referral was approved by reply-all, and the bordereau was rebuilt in Excel from an export. Software that only reports on authority afterwards documents a breach; it does not prevent one.
Regure creates the evidence as the work happens. The binding authority terms are configured once and checked at quote, bind, endorsement, renewal and claims decisions. Referrals and approvals are recorded on the policy. Bordereaux are generated from the same records. When the audit request arrives, the delegated authority audit pack is a report you run for the period, not a project you staff.
What a delegated authority audit examines, and what Regure produces for it
The areas below are what a systems review of an MGA or coverholder typically works through. For the auditor's side in detail, see what managing agents look for in a coverholder audit.
| Area | What the auditor tests | What Regure produces |
|---|---|---|
| Audit trail | A timestamped record of every action on sampled policies and claims, naming the user, that cannot be altered after the fact | Every action written to an immutable, Merkle-verified audit trail with the actor, timestamp and what changed |
| Data integrity | Whether the policy record, the bordereau and the endorsements agree for a sample of five to ten policies | Bordereaux generated from the operating record, so every figure traces to the policy, endorsement or claim it came from |
| Underwriting authority | That every bound risk was inside the binder’s limits, classes and territories | Binder terms enforced before bind, with the authority check stored on the policy |
| Referrals and overrides | That out-of-authority risks were referred and approved before they were bound | Referral, response, approver and reason recorded on the record, never in an email thread |
| Claims authority | Reserves and payments within claims authority, with the coverage decision and rationale documented | Reserve and payment limits enforced per handler and per binder, with referrals above authority recorded on the claim |
| Evidence retention | Retrieval of documents from expired policies, with metadata intact | Submissions, binders, endorsements and claim documents held on the record in an evidence-grade document store |
| Binding controls | That required checks ran at the right point in the workflow, not afterwards | Required pre-bind steps, such as sanctions screening, configured into the bind workflow with the result recorded |
| Change management | How changes to rating, templates and rules are controlled and approved | Products, rate tables and rules held as versioned configuration with effective dates |
What goes in the delegated authority audit pack
The pack is exported for any period, per binder or capacity provider. It is not a summary written for the auditor; it is the operating record, filtered to what the audit covers, with the trail behind every line.
- Every bind in the period with the underwriter, timestamp, premium, limits, effective date and the authority check that allowed it
- Every referral and override with the reason, the approval, who gave it and when
- Every claim decision, reserve and payment with the claims authority it was made under
- The premium, claims and endorsement bordereaux submitted, each figure traceable to its record
- Documents on file for sampled policies and claims, including expired policies
- The audit trail for any record the auditor wants to follow from submission to close
Because the pack comes from the same records the bordereaux were generated from, the reconciliation test, where the auditor compares the policy, the bordereau and the endorsements, passes by construction. There is one version of the truth to compare against.
Audit season stops being a season
When the evidence is created by the work, the weeks before an audit go back to the business. The compliance lead runs a report, checks the sample, and spends the review answering questions instead of chasing files.
Before, during and after a delegated authority audit
Before: nothing to assemble
Run the audit pack for the period and review it yourself first. Out-of-authority referrals, overrides and late bordereaux are already visible, so any finding is one you know about before the auditor does.
During: follow any thread
When the auditor picks a policy or a claim, open the record and follow it from submission through underwriting notes, bind decision, endorsements, bordereau lines and claims, with the trail behind each step.
After: fix it in the rules
An observation about a control becomes a configuration change, such as a new referral trigger or a tighter limit, versioned with an effective date, so the next audit period is checked against it automatically.
Bring one binder. Leave with its audit pack.
We'll configure your binder terms, run sample business against them and export the delegated authority audit pack a capacity provider would see.
Audit evidence for Lloyd's coverholders and US MGAs
Lloyd's coverholders
The managing agent is accountable to Lloyd's for how a coverholder uses its binding authority, so the coverholder needs bordereaux in the format the market expects and evidence that binding and claims handling stayed within the contract. Regure maps risk, premium and claims bordereaux to each managing agent's requirements and exports the audit pack for any period. See Lloyd's delegated authority audit requirements and coverholder bordereaux.
US MGAs
Carrier audits of a US MGA test the same things: binds within authority, claims within claims authority and bordereaux that reconcile. US programmes add surplus lines premium tax, stamping fees and filing deadlines per state, which sit on the same record and feed the same reporting. See US MGA software and surplus lines compliance by state.
Ten questions to test your audit readiness today
Answer these honestly about your current operation. Every “no” is a finding waiting for an auditor to sample it. The full list is in our delegated authority compliance checklist.
Authority and decisions
- Can an underwriter bind a risk above the binder limit without the system stopping them?
- Is every referral approval recorded on the policy, not in an email?
- Are reserves and payments checked against claims authority before they are made?
- Do required pre-bind checks run inside the bind workflow, not after it?
- Can you show the authority check behind any bind from last year?
Records and reporting
- Does your last bordereau reconcile to the policy records without a spreadsheet in between?
- Can every bordereau figure be traced to a specific policy, endorsement or claim?
- Can you retrieve the documents for an expired policy in minutes?
- Does your audit trail name the user for every action, and could anyone edit it?
- Is there a record of who changed a rate table or template, and when?
If you oversee MGAs rather than run one, the same questions apply from the other side of the table. See delegated authority oversight for carriers and managing agents.
Delegated authority audit questions
What software do MGAs use to prepare for delegated authority audits?
The software that makes audits easiest is the operating system itself, not a separate compliance tool. When binder terms are enforced at quote, bind, endorsement and claims decisions, and bordereaux are generated from the same records, the evidence an auditor asks for is created by the work. Regure is built that way: the delegated authority audit pack is a report exported for any period rather than a project assembled before the auditor arrives.
What does a delegated authority audit examine?
Auditors from the capacity provider, managing agent or Lloyd’s typically test the audit trail on a sample of policies and claims, reconcile policy records against submitted bordereaux, check every bound risk against the authority in the binder, review referrals and overrides, test claims decisions against claims authority, retrieve documents from expired policies, and ask how system changes are controlled.
What is in a Regure delegated authority audit pack?
Every bind for the period with the authority check that allowed it; every referral and override with its approval and the person who acted; every claim decision with the authority it was made under; the bordereaux submitted with each figure traceable to its policy, endorsement or claim; and the audit trail behind each record.
Can Regure stop us binding outside our authority?
Yes. Binder terms such as premium and limit caps, classes, territories, referral triggers and claims authority are configured once and checked before the commitment is made. A risk outside authority is referred to the capacity provider with the reason attached, rather than bound and explained later.
Does this work for US MGAs as well as Lloyd’s coverholders?
Yes. Lloyd’s coverholders get managing agent audit packages and coverholder bordereaux. US MGAs get carrier audit evidence alongside surplus lines tax and stamping data per state. Both models can run in the same instance for MGAs writing on both sides of the Atlantic.
We have an audit in a few months. Is that enough time?
For the binders that move onto Regure before the audit period starts, the evidence builds itself from that point. A focused first scope can be operational in as little as 14 days. What Regure cannot do is retrospectively create evidence for decisions taken before it was in place, so the earlier the binder moves, the more of the next audit period it covers.
See your next audit pack before your auditor does
Bring one binder and one redacted bordereau. We'll configure the authority terms, run sample business through them and export the audit pack.