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📜 '''Letter of authority (LOA)''' is a formal document issued by an [[Definition:Insurer | insurer]] or [[Definition:Lloyd's syndicate | Lloyd's syndicate]] granting a [[Definition:Broker | broker]], [[Definition:Managing general agent (MGA) | MGA]], or other intermediary specific, defined powers to act on the insurer's behalf within agreed parameters. In the insurance and [[Definition:Reinsurance | reinsurance]] markets, an LOA typically authorizes the recipient to perform functions such as soliciting and [[Definition:Binding authority | binding]] [[Definition:Risk | risks]], issuing [[Definition:Certificate of insurance | certificates of insurance]], adjusting [[Definition:Claim | claims]] up to certain thresholds, or endorsing [[Definition:Insurance policy | policies]] — all within the limits, [[Definition:Class of business | classes of business]], and geographic territories stipulated in the letter. It is a lighter-weight instrument than a full [[Definition:Binding authority agreement | binding authority agreement]], often used for narrower or more temporary delegations.

🔧 The LOA spells out the scope and boundaries of the authority granted — including maximum [[Definition:Policy limit | policy limits]], approved [[Definition:Rating | rating]] parameters, eligible [[Definition:Line of business (LoB) | lines of business]], reporting obligations, and duration. Carriers use LOAs to maintain operational control while extending their distribution reach through trusted intermediaries. In the [[Definition:Lloyd's | Lloyd's]] market, LOAs complement formal [[Definition:Coverholder | coverholder]] agreements and may be used when an intermediary needs authority for a specific [[Definition:Programme | programme]] or a limited book of business that does not warrant a full coverholder appointment. Outside London, similar instruments exist under various names — in the U.S. market, the concept overlaps with limited [[Definition:Delegated underwriting authority (DUA) | delegated authority]] appointments, while in Asian markets such as Singapore and Hong Kong, local regulatory requirements dictate the form and filing obligations for such delegations.

⚠️ Proper governance of LOAs is a recurring focus for regulators and carriers alike, because any authority granted to a third party exposes the insurer to the conduct risk of that party. If an intermediary exceeds the terms of an LOA — binding a risk outside the permitted class or above the authorized limit — the insurer may still be contractually or legally bound to the policyholder, depending on the jurisdiction's rules on [[Definition:Apparent authority | apparent authority]]. Robust LOA management requires clear documentation, periodic audits, and integration with [[Definition:Bordereaux | bordereaux]] reporting so that the insurer can monitor what business is being written in its name. As [[Definition:Insurtech | insurtech]] platforms increasingly automate delegated authority workflows, digital LOA issuance and real-time compliance monitoring are becoming standard features of modern [[Definition:Delegated authority management | delegated authority management]] systems.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Binding authority agreement]]
* [[Definition:Delegated underwriting authority (DUA)]]
* [[Definition:Coverholder]]
* [[Definition:Managing general agent (MGA)]]
* [[Definition:Apparent authority]]
* [[Definition:Bordereaux]]
{{Div col end}}

Definition:Letter of authority (LOA) - Revision history

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