Authority an insurer grants another party to quote, bind, or administer business within set limits.
Delegated authority is the authority an insurer grants another party to quote, bind, issue, or administer insurance business within defined limits.
This concept explains why a broker or client may appear to be dealing with an intermediary even though the insurer still carries the risk. It also explains why some submissions move quickly through specialty markets while others have to go back to the insurer for approval.
In Canadian specialty and commercial insurance, delegated authority often appears in relationships involving managing general agents and other specialized intermediaries. The insurer may delegate certain operational or underwriting functions while keeping the underlying risk-bearing role.
| Role or concept | What it explains |
|---|---|
| Delegated authority | What the intermediary is actually allowed to do on the insurer’s behalf |
| Managing general agent | The kind of intermediary that may hold that authority in specialty markets |
| Insurance broker | Client-facing market access that does not automatically include insurer binding authority |
| Function | What it means |
|---|---|
| Quote authority | The intermediary can produce terms within agreed rules |
| Binding authority | The intermediary can commit coverage within limits |
| Document issuance | The intermediary can issue policy documents or endorsements |
| Administration | The intermediary can service certain transactions on the insurer’s behalf |
The exact scope depends on the agreement. Delegated authority is never just “general permission to do insurance work.”
A broker submits a specialized liability risk to an MGA. The MGA has delegated authority from the insurer to quote and bind that class of business up to a stated threshold. If the file stays inside those limits, the MGA can move the placement forward without separate case-by-case insurer approval.
If the same file exceeds the authority threshold or falls outside the approved class, the MGA may still help present it, but it can no longer act as though it already has insurer approval to bind.
Delegated authority does not mean the intermediary becomes the insurer. The insurer still provides the capacity unless the structure says otherwise.
It is also wrong to assume that delegated authority is unlimited. The agreement may restrict class, premium size, geography, wording changes, or transaction type.
Readers also sometimes confuse delegated authority with ordinary brokerage access. A broker may access a market without holding authority to bind business on the insurer’s behalf.
They may also assume delegated authority means the insurer is no longer involved. In practice, the insurer still sets the framework and still carries the risk unless the structure says otherwise.
Delegated-authority scope varies sharply by agreement, province, and line of business. The practical answer is always authority-specific, not title-specific.