https://www.insurerbrain.com/w/index.php?action=history&feed=atom&title=Definition%3ADue_diligenceDefinition:Due diligence - Revision history2026-05-01T05:25:50ZRevision history for this page on the wikiMediaWiki 1.43.8https://www.insurerbrain.com/w/index.php?title=Definition:Due_diligence&diff=6621&oldid=prevPlumBot: Bot: Creating new article from JSON2026-03-09T16:28:45Z<p>Bot: Creating new article from JSON</p>
<p><b>New page</b></p><div>🔎 '''Due diligence''' is the systematic investigation and analysis an organization undertakes before entering into a significant business transaction or relationship. In [[Definition:Insurance | insurance]] and [[Definition:Insurtech | insurtech]], this process arises in a range of contexts: an [[Definition:Insurance carrier | insurer]] evaluating a prospective [[Definition:Managing general agent (MGA) | MGA]] partner, a [[Definition:Private equity | private equity]] firm assessing an acquisition target, a [[Definition:Reinsurer | reinsurer]] reviewing a [[Definition:Cedent | cedent's]] portfolio, or a startup securing a [[Definition:Binding authority agreement | binding authority agreement]] from a capacity provider.<br />
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📑 The scope of the investigation is tailored to the transaction. In an MGA appointment, the [[Definition:Capacity provider | capacity provider]] will typically examine the MGA's [[Definition:Underwriting | underwriting]] guidelines, [[Definition:Claims handling | claims handling]] procedures, technology infrastructure, management team experience, [[Definition:Loss ratio (L/R) | loss history]], regulatory standing, and financial controls. In a merger or acquisition, the review extends deeper into [[Definition:Claim reserve | reserve adequacy]], [[Definition:Earned premium | premium]] quality, customer concentration, [[Definition:Reinsurance | reinsurance]] arrangements, litigation exposure, and compliance with [[Definition:Insurance regulation | regulatory requirements]]. The findings surface risks that may need to be priced into the deal, addressed through contractual protections, or flagged as deal-breakers.<br />
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🛡️ Cutting corners on this process is one of the fastest ways to inherit problems. A carrier that delegates [[Definition:Underwriting authority | underwriting authority]] without thoroughly vetting the recipient's controls may discover adverse [[Definition:Loss development factor | loss development]] years later, long after the [[Definition:Premium | premiums]] have been earned and spent. Similarly, investors who acquire [[Definition:Insurance carrier | insurance platforms]] without rigorous [[Definition:Actuarial analysis | actuarial]] and operational review risk overpaying for a business whose true liabilities are masked by optimistic [[Definition:Claim reserve | reserving]]. In a market where [[Definition:Delegated underwriting authority (DUA) | delegated authority]] models and technology-driven partnerships are proliferating, thorough due diligence has become both a risk management discipline and a competitive advantage.<br />
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'''Related concepts'''<br />
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* [[Definition:Binding authority agreement]]<br />
* [[Definition:Delegated underwriting authority (DUA)]]<br />
* [[Definition:Mergers and acquisitions (M&A)]]<br />
* [[Definition:Loss reserving]]<br />
* [[Definition:Audit]]<br />
* [[Definition:Regulatory compliance]]<br />
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