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📝 '''Due diligence questionnaire (DDQ)''' is a standardized set of written questions directed at a target company, counterparty, or service provider to elicit detailed information about its operations, financial condition, risk profile, and compliance posture. In the insurance industry, DDQs serve multiple purposes: they are central to M&A transactions involving [[Definition:Insurance carrier | carriers]] or [[Definition:Managing general agent (MGA) | MGAs]], but they are also routinely used by [[Definition:Reinsurance | reinsurers]] evaluating cedents, by carriers assessing prospective [[Definition:Delegated underwriting authority (DUA) | delegated authority]] partners, and by [[Definition:Institutional investor | institutional investors]] considering allocations to [[Definition:Insurance-linked securities (ILS) | insurance-linked securities]] funds. Unlike a [[Definition:Due diligence checklist | due diligence checklist]], which requests documents, the DDQ demands narrative answers that reveal how a business actually operates.

⚙️ The questionnaire is typically organized into thematic sections that map to the key risk areas of the target or counterparty. For an insurance-focused DDQ, these sections commonly cover corporate governance and ownership structure, [[Definition:Underwriting | underwriting]] strategy and appetite, [[Definition:Claims | claims]] management processes, [[Definition:Loss reserves | reserving]] methodology and [[Definition:Actuarial | actuarial]] oversight, [[Definition:Reinsurance | reinsurance]] program design, [[Definition:Regulatory compliance | regulatory compliance]] across operating jurisdictions, [[Definition:Cybersecurity | cybersecurity]] and data protection controls, and financial performance trends. In the context of [[Definition:Lloyd's of London | Lloyd's]] market oversight, for example, managing agents must respond to detailed DDQs as part of the annual business planning and syndicate approval process. Responses are reviewed by analysts, underwriters, or deal teams who compare the answers against independently gathered data, flagging inconsistencies that warrant deeper investigation.

💡 The DDQ's value lies in forcing the respondent to articulate — in its own words — how it manages risk, which often reveals more about organizational capability than raw data alone. A carrier's explanation of how it sets [[Definition:Case reserves | case reserves]] for complex liability claims, or an MGA's description of its authority governance framework, provides qualitative insight that financial statements and document reviews cannot. In competitive M&A processes, sellers may distribute a pre-populated DDQ to all bidders as part of a management presentation package, reducing the burden of repetitive information requests. For ongoing relationships — such as a reinsurer monitoring its [[Definition:Treaty reinsurance | treaty]] cedents — DDQs may be refreshed annually, creating a longitudinal record that highlights changes in strategy or risk profile over time.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Due diligence]]
* [[Definition:Due diligence checklist]]
* [[Definition:Due diligence report]]
* [[Definition:Delegated underwriting authority (DUA)]]
* [[Definition:Reinsurance]]
* [[Definition:Regulatory compliance]]
{{Div col end}}

Definition:Due diligence questionnaire (DDQ) - Revision history

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