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Survey Shows Strong Growth Potential for DUAE Segment

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February 10, 2025 |

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Nearly three out of four respondents in a recent AM Best survey believe the delegated underwriting authority enterprise (DUAE) sector is positioned for sustained growth. This optimism reflects insurers' increasing reliance on DUAEs to access niche markets, the expansion of business lines managed by these entities, and rising trust in the model's effectiveness.

AM Best conducted the survey last August among its rated insurers to evaluate the strengths, challenges, and evolving role of DUAEs. A "DUAE" is defined as a third-party entity contractually appointed by an insurer or reinsurer to handle underwriting, claims processing, or other administrative functions.

"Our survey results paint a picture of a segment that is highly valued for its specialization, agility, and adoption of technology," Dawn Walker, associate director at AM Best, said.

The report also highlights challenges, particularly around regulatory compliance, financial stability, and accountability. Survey findings indicate that most insurers prioritize maintaining existing DUAE relationships over forming new ones as part of their growth strategy.

Key survey findings include the following.

  • Nearly half of insurers value the specialization and flexibility of nonaffiliated DUAEs over direct relationships or hybrid models.
  • About 75 percent of respondents cite access to niche markets as a primary reason for utilizing DUAEs.
  • The property-casualty sector leads DUAE adoption, with personal property being a focal point.

Technology plays a central role in DUAE operations, with many originating as tech-driven providers. Their ability to quickly deploy capacity and adapt to market shifts gives them an edge over insurers constrained by legacy systems. "The growing adoption of data-driven underwriting and predictive analytics gives DUAEs a competitive advantage," David Blades, associate director at AM Best, said.

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February 10, 2025