MGA Technical Glossary

Comprehensive definitions of insurance terms, MGA operations, and Lloyd's coverholder terminology

Insurance & MGA Terms

Bordereaux

A detailed report submitted by an MGA or coverholder to an insurer or reinsurer, typically on a monthly or quarterly basis. Contains policy-level data including premiums, claims, and exposure information. Must comply with specific formats (e.g., Lloyd's V5.2) and include fields such as policy number, inception date, premium amount, and claims details.

Data Type: Structured report (CSV, XML, or proprietary format)

Frequency: Monthly or quarterly

Key Fields: Policy Number, Inception Date, Premium, Claims, Exposure

Delegated Authority

The authority granted by an insurer (carrier) to an MGA or coverholder to underwrite, bind, and issue policies on their behalf. This includes the power to accept risks, set terms, and collect premiums within predefined limits and guidelines.

Types: Binding Authority, Open Market, Lineslip

Key Components: Underwriting limits, referral triggers, territorial scope, class of business

Binder

A formal agreement between an insurer and an MGA/coverholder that grants delegated authority. Specifies the terms, conditions, limits, and scope of authority. In Lloyd's, binders are registered with the Lloyd's Market Association (LMA) and must comply with regulatory requirements.

Components: Capacity provider, coverholder, class of business, territorial limits, premium limits, referral triggers

Format: Legal document, typically 20-50 pages

Referral Trigger

A predefined condition that requires an MGA to refer a risk to the insurer for manual review before binding. Common triggers include premium thresholds, high-risk classifications, unusual terms, or risks outside standard guidelines.

Examples: Premium > £100,000, Construction type = "High-risk", Deductible < £1,000

Logic Format: IF [condition] THEN refer_to_insurer ELSE auto_bind

Risk Level Data

Structured information about an insured risk used for underwriting, rating, and exposure management. Includes property characteristics, location data, business operations, claims history, and financial information.

Standard Fields: Address, Construction Type, Occupancy, Business Type, Revenue, Claims History, Risk Score

Data Types: String (address, description), Integer (revenue, claims count), Decimal (risk score), Date (inception, claims dates), Boolean (flags)

Policy Administration System (PAS)

Software platform that manages the complete policy lifecycle: quote, bind, issue, endorse, renew, and cancel. Core functions include rating, underwriting rules, document generation, bordereaux creation, and reporting.

Key Modules: Rating Engine, Underwriting Workflow, Document Management, Bordereaux Generation, Reporting

Integration Points: Rating engines, document systems, accounting systems, reinsurance platforms

Coverholder

An entity authorized by Lloyd's of London to underwrite business on behalf of Lloyd's syndicates. Coverholders operate under binding authority agreements and must comply with Lloyd's regulations, including bordereaux reporting requirements.

Requirements: Lloyd's registration, binding authority agreement, compliance with Lloyd's standards

Reporting: Monthly bordereaux to managing agents

Gross Written Premium (GWP)

The total premium income written by an MGA before deductions for commissions, reinsurance, or other expenses. Used as a key metric for measuring MGA performance and capacity utilization.

Calculation: Sum of all policy premiums issued

Reporting Period: Typically monthly or annual

Net Written Premium (NWP)

GWP minus reinsurance premiums ceded. Represents the net amount of premium retained by the insurer after purchasing reinsurance protection.

Formula: NWP = GWP - Reinsurance Premiums Ceded

Commission

The percentage of premium paid by an insurer to an MGA as compensation for underwriting, policy administration, and business development. Typically ranges from 10% to 30% depending on class of business and services provided.

Types: Flat commission, sliding scale, profit commission

Calculation: Commission = Premium × Commission Rate

Endorsement

A modification to an existing policy that changes terms, coverage, or conditions. Common endorsements include adding/removing coverage, changing limits, updating named insureds, or adjusting deductibles.

Types: Mid-term adjustment, renewal endorsement, cancellation

Data Impact: Updates policy record, may trigger premium adjustment, affects bordereaux reporting

Aggregate Limit

The maximum total amount an insurer will pay for all claims during a policy period. Used to cap exposure and manage reinsurance requirements.

Types: Per policy aggregate, per binder aggregate, per class aggregate

Monitoring: Real-time tracking required to prevent limit breaches

Xchanging

Lloyd's electronic trading platform (now part of DXC Technology) used for processing and settling insurance transactions. Handles premium payments, claims payments, and accounting between Lloyd's syndicates and coverholders.

API Integration: Required for automated bordereaux submission and settlement

Data Format: XML-based messaging standards

Lloyd's V5.2

The current standard format for Lloyd's bordereaux reporting. Specifies required fields, data types, validation rules, and submission procedures. All coverholders must comply with V5.2 requirements.

Key Requirements: Standard field names, data validation, XML format, monthly submission deadlines

Compliance: Mandatory for all Lloyd's coverholders

Rating Engine

Software component that calculates insurance premiums based on risk characteristics, rating factors, and underwriting rules. Takes inputs (risk data) and applies rating logic to produce premium quotes.

Inputs: Risk characteristics, location, business type, limits, deductibles

Outputs: Base premium, premium adjustments, final premium, rating factors applied

Logic Format: IF-THEN rules, mathematical formulas, lookup tables

Underwriting Workflow

The sequence of steps and decisions required to process an insurance application from submission to binding. Includes triage, risk assessment, referral handling, and approval/rejection.

Stages: Submission → Triage → Risk Assessment → Referral (if needed) → Approval/Rejection → Binding

Automation: Can be automated using rules engines and AI agents