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📋 '''Terms of business agreement (TOBA)''' is a formal contract between an [[Definition:Insurance broker | insurance broker]] or [[Definition:Intermediary | intermediary]] and an [[Definition:Insurance carrier | insurer]] that sets out the commercial and operational terms governing their working relationship. Unlike a [[Definition:Binding authority agreement | binding authority agreement]], which grants specific [[Definition:Underwriting authority | underwriting authority]], a TOBA typically addresses the broader framework — covering matters such as [[Definition:Commission | commission]] structures, data-handling obligations, [[Definition:Regulatory compliance | regulatory compliance]] responsibilities, [[Definition:Claims handling | claims handling]] procedures, and the duties each party owes to the [[Definition:Policyholder | policyholder]]. In the [[Definition:Lloyd's | Lloyd's]] market, TOBAs are a well-established governance mechanism, and their use is actively encouraged by regulators to promote transparency and accountability across the distribution chain.

⚙️ When a broker and an insurer enter into a TOBA, they negotiate the specific provisions that will apply to all business placed between them. The agreement typically spells out how [[Definition:Premium | premiums]] are collected and remitted, the timeline for [[Definition:Bordereaux | bordereaux]] reporting, the scope of authority the broker may exercise when presenting risks, and the process for resolving [[Definition:Dispute resolution | disputes]]. Many TOBAs also include provisions on [[Definition:Data protection | data protection]], [[Definition:Anti-money laundering (AML) | anti-money laundering]] obligations, and [[Definition:Professional indemnity insurance | professional indemnity]] requirements. In practice, large brokers may maintain hundreds of TOBAs across multiple markets, making centralized management of these agreements an operational challenge — and an area where [[Definition:Insurtech | insurtech]] solutions focused on contract lifecycle management have begun to add value.

💡 Without a clearly articulated TOBA, the relationship between an intermediary and an insurer rests on ambiguity — a risky foundation in a heavily regulated industry. Regulators such as the [[Definition:Financial Conduct Authority (FCA) | Financial Conduct Authority (FCA)]] in the UK expect firms to document intermediary relationships in writing, and the absence of a robust TOBA can lead to enforcement action, especially where consumer harm results from unclear responsibilities. For insurers, a well-drafted TOBA also provides contractual recourse if a broker fails to meet agreed service standards, mishandles [[Definition:Client money | client money]], or breaches [[Definition:Conduct risk | conduct risk]] expectations. As distribution networks grow more complex — spanning [[Definition:Managing general agent (MGA) | MGAs]], [[Definition:Coverholders | coverholders]], and digital platforms — the TOBA remains a foundational document that anchors accountability throughout the value chain.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Binding authority agreement]]
* [[Definition:Delegated underwriting authority (DUA)]]
* [[Definition:Insurance broker]]
* [[Definition:Commission]]
* [[Definition:Coverholder]]
* [[Definition:Client money]]
{{Div col end}}

Definition:Terms of business agreement (TOBA) - Revision history

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