Insurance glossary

Agentic AI

Agentic AI refers to AI systems composed of autonomous agents that can plan, use tools, call external APIs, and work in orchestrated parallel toward a complex goal — going beyond single-prompt question answering to execute multi-step workflows where each agent specialises in a discrete task and the outputs are synthesised into a structured result requiring minimal human intervention.

Binding Authority

Binding authority is the contractual power granted by a carrier to an MGA, coverholder, or broker to commit the carrier to coverage on specific risks within agreed parameters — without requiring per-risk approval — representing the operational core of the delegated underwriting market and the primary mechanism through which specialty insurance is distributed at scale.

Bordereaux

A bordereaux is a detailed cession or premium report submitted by an MGA or coverholder to its capacity carrier or reinsurer, listing every policy bound during the reporting period with key data fields — insured, premium, coverage limits, expiry date, and loss activity — enabling delegated authority oversight and reinsurance accounting.

CAT Modeling

Catastrophe (CAT) modeling is the probabilistic simulation of financial losses from natural and man-made catastrophe events — including hurricanes, earthquakes, floods, and wildfires — using stochastic event sets, vulnerability functions, and financial module calculations to estimate expected annual loss (EAL) and probable maximum loss (PML) for insurance portfolios and individual risks.

Delegated Underwriting Authority

Delegated underwriting authority (DUA) is the formal written agreement by which an insurance carrier grants an MGA, coverholder, or program administrator the power to bind coverage, set rates, and issue policies on the carrier's behalf within defined parameters — including eligible classes, limits, territories, and mandatory exclusions.

Excess & Surplus (E&S) Insurance

Excess and Surplus (E&S) insurance is the non-admitted market that covers risks that admitted carriers cannot or will not write under standard policy forms and rates — including catastrophe-exposed property, emerging technology risks, and distressed accounts — governed by a separate regulatory framework that allows greater pricing and form flexibility.

FEMA Flood Zones

FEMA flood zones are federal flood risk classifications applied to all land parcels in the United States through Flood Insurance Rate Maps (FIRMs), designating areas by their estimated annual flood probability — with Zone A and Zone V indicating high-risk Special Flood Hazard Areas (SFHAs) where federal flood insurance may be mandatory for properties with federally-backed mortgages.

Lloyd's Coverholder

A Lloyd's coverholder is a company or individual approved by Lloyd's of London to enter into insurance contracts on behalf of Lloyd's syndicates under a binding authority agreement — operating as a global distribution network for Lloyd's capacity in markets where Lloyd's syndicates do not have a direct physical presence.

Loss Ratio

The loss ratio is the percentage of earned premium consumed by claims — calculated as incurred losses divided by earned premium — and is the primary measure of underwriting profitability for carriers, MGAs, and reinsurers, with a combined ratio (adding expense ratio) below 100% indicating an underwriting profit.

Managing General Agent (MGA)

A Managing General Agent (MGA) is an insurance intermediary that holds delegated underwriting authority from one or more carriers, allowing it to bind coverage, set rates, and issue policies on the carrier's behalf without case-by-case approval — functioning as a specialist underwriting business within the broader insurance market.

National Flood Insurance Program (NFIP)

The National Flood Insurance Program (NFIP) is a federal program administered by FEMA that provides flood insurance to property owners, renters, and businesses in participating communities — offering standardised coverage up to $250,000 for buildings and $100,000 for contents at federally regulated rates — as the primary source of flood insurance for most US residential properties.

Submission Triage

Submission triage is the process of evaluating incoming broker submissions to prioritise, qualify, and route them before detailed underwriting begins — determining which submissions are within appetite, which require immediate attention due to expiry or SLA deadlines, and which can be declined early — reducing wasted underwriter time and improving response SLA performance.

Treaty Reinsurance

Treaty reinsurance is an automatic reinsurance arrangement under which a reinsurer agrees in advance to accept all risks of a defined class written by a ceding insurer during the treaty period — as opposed to facultative reinsurance, which requires the reinsurer to individually assess each risk — providing the cedant with automatic capacity and predictable aggregate protection.

Underwriting Memo

An underwriting memo (or underwriting memorandum) is a structured written document produced by an underwriter that summarises the risk analysis for a submission — covering risk description, key hazard factors, pricing rationale, coverage terms recommended, compliance checks, and the underwriter's bind / refer / decline recommendation with supporting justification.

Underwriting SLA

An underwriting service level agreement (SLA) is a commitment — formal or informal — defining the maximum turnaround time from receipt of a broker submission to delivery of a quote, indication, or declination. SLA compliance is a key metric for MGA competitiveness, with consistently fast response times improving broker relationships and bind rates.