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COVERHOLDER AUDITS 

MGA Overview

  • Coverholder organization and structure
  • Key staff, resumes.
  • Volumes, markets, lines of business written.
  • Licenses
  • Risk management
  • Systems
 Production Sources 
  • Key production sources
  • Producer agreements
  • Producer E & O.
  • Producer statistics
  • Marketing
 Underwriting Procedures 
  • Submissions, allocation of work
  • Underwriting process.
  • Biding requirements
  • Post – bind processes including policy issuance
  • Quote / bind ratios and other relevant statistics
 Binding Authority 
  • Management and dissemination of information
  • Philosophy
  • Loss experience
  • Internal controls / audits.
  • Training
  • Reporting
 File Review 
  • Files to be examined and key information extracted an put in a spreadsheet.
  • Discrepancies to be highlighted and brought to attention of coverholder.
  • File layout and administration.
 Claims 
  • Overall process
  • Use of adjusters
  • Referrals to London
  • Examination of files (if claims handled under authority).
 Accounting 
  • Premium and Claims bordereaux
  • Accounts receivable
  • Accounts payable
  • Bank Accounts
  • Surplus Lines Taxes
  • Check signatories
  • Financial statements.
 Recommendations 

 

DELEGATED AUTHORITY - PRE-AUDIT

This operation will look at all aspects of a proposed coverholder to determine the potential for them to underwrite profitably and effectively on behalf of the risk taking company or syndicate.

We will cover, as a minimum, the following areas:

  • Organization and operational responsibilities - the management, their experience and the areas for which they are responsible, especially underwriting, marketing and claims.
  • Financial stability and the financial goals of the organization.
  • Risk management of the company, including professional liability insurance and disaster planning.
  • Current markets utilized and review of any current binding authorities held (type of business, volume, underwriting parameters, claims handling, loss ratios).
  • Quality of management for proposed binding authority.
  • Quality of day to day underwriters for proposed binding authority.
  • Ability of in house systems to produce necessary quotes, binders, policies, bordereaux, risk reports and management reports.
  • Quality of claims handling procedures.
  • Review sources of business to be written and the management controls in place to monitor the effectiveness of the production.
  • Remuneration and incentives - to the coverholder, to the producers and to the underwriters and management.

With this information, it should be possible to evaluate the extent to which the coverholder will be able to manage their business effectively and maximize the profitability of all parties.

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