Insurers should prepare intermediaries for a delegated authority audit by explaining the scope, timetable and expected evidence well in advance, confirming which contractual obligations will be tested, and giving intermediaries time to find and fix gaps before auditors arrive. Early, clear communication turns the audit from a surprise into a routine control.

The aim is not to coach intermediaries toward a perfect score. It is to make sure the audit tests how the business really operates. The sections below cover the briefing, the documents, self-assessment, common pitfalls and the follow-up.

What should insurers brief intermediaries on before an audit?

Insurers should brief intermediaries on the audit scope, dates, format, sample selection approach, key contacts and the contractual and regulatory standards being tested. This lets the intermediary assign the right people, make time available and understand what the auditor will assess.

A good briefing goes beyond a date in the diary. For a delegated underwriting audit, the intermediary should know whether the review covers underwriting authority, rating and referral rules, bordereaux, premium handling, claims delegation or complaints. It should also know whether the audit will be on site or remote, and which staff the auditor expects to interview.

Insurers should also explain the standard being applied. For a Lloyd's coverholder audit, that means the binding authority agreement and the relevant Lloyd's requirements. For other arrangements, it means the terms of the delegated authority contract and the insurer's own underwriting guidelines.

Brief the intermediary on the following points:

• The audit type, scope and agreed dates
• The auditor's identity and the people they will need to speak to
• The contractual and regulatory standards being tested
• How files and transactions will be sampled
• When the report will be issued and how findings will be discussed

Tone matters here. Intermediaries who see the audit as a collaborative oversight activity tend to engage more openly than those who see it as a threat.

Which documents should intermediaries have ready for auditors?

Intermediaries should have ready the delegated authority agreement, underwriting guidelines, policy and claims files, bordereaux, premium and claims account records, complaints logs, compliance policies, training records and evidence of previous audit actions. Having these accessible before the audit avoids delays and shows that controls operate in practice.

The exact audit documentation requirements depend on the scope, so insurers should send a tailored list rather than a generic one. Auditors want evidence that processes work, not only that a policy exists. A written complaints procedure is useful, but a complaints log showing how recent complaints were handled is far more persuasive.

A practical preparation sequence looks like this:

1. Confirm the audit scope and request the document list from the insurer.
2. Collect the current authority agreement, guidelines and referral rules.
3. Pull the sample files requested and check they are complete.
4. Gather bordereaux, reconciliations and premium and claims account records for the audit period.
5. Prepare complaints, conduct risk and Consumer Duty records where relevant.
6. Assemble staff training, competence and delegated authority records.
7. Evidence the closure of actions from previous audits.

Files should be complete and in good order, with every decision traceable to a date, a person and a rationale. Missing documents slow the audit and often become findings in their own right.

How can insurers help intermediaries self-assess beforehand?

Insurers can help intermediaries self-assess by sharing a coverholder audit checklist or pre-audit questionnaire that mirrors the real audit scope. The intermediary reviews its own controls, files and records against it, flags gaps early and corrects what it can before the auditor arrives.

A well-built self-assessment covers authority limits, referral compliance, file quality, bordereaux accuracy, premium settlement, claims handling, complaints and conduct risk. Intermediaries benefit from testing a handful of their own files against the same criteria an auditor would use. If a manager finds three files with missing referral evidence, that is a problem worth fixing before the audit rather than during it.

Insurers should be clear about the purpose. A self-assessment is a diagnostic tool, not a pass mark. It works best when the intermediary is encouraged to report weaknesses honestly, because a gap disclosed with a remediation plan reflects a healthy control environment, while a gap discovered by the auditor suggests the oversight is weak.

For smaller firms, a short call with the insurer's delegated authority manager before the audit can clarify expectations and reduce anxiety without compromising independence.

What common mistakes make delegated authority audits harder?

The most common mistakes are late or vague briefings, incomplete files, outdated guidelines, poor bordereaux quality, unprepared staff and a defensive attitude toward findings. Each one slows the audit, obscures the true picture and often generates avoidable findings that distract from the real risks.

Several patterns appear repeatedly in practice:

Preparation failures

Intermediaries sometimes learn the scope too late, leaving key staff on leave or files scattered across systems. Insurers can avoid this by issuing the briefing well ahead of time and confirming attendance.

Oversight failures by the insurer

Insurers sometimes hand intermediaries an authority agreement that no longer reflects how the business operates, or fail to share updated guidelines. If the contract and the practice have drifted apart, the audit will expose the mismatch, and responsibility is shared.

Other frequent problems include changing the scope shortly before the audit, treating the exercise as a box-ticking requirement, and failing to follow up on earlier actions. Repeat findings from a previous audit are particularly damaging because they suggest that oversight has not led to improvement.

What should insurers do after the audit is completed?

After the audit, insurers should review the report promptly, agree findings and priorities with the intermediary, set clear remediation actions with owners and deadlines, track progress to closure and decide whether the authority, terms or monitoring level should change. Post-audit remediation is where the audit delivers its value.

A strong follow-up process usually includes a findings discussion that explains the significance of each issue, not just its existence. Intermediaries are more likely to fix problems they understand. Actions should be specific and proportionate, with realistic dates, and high-risk findings should be tracked more closely than minor ones.

Insurers should also feed the results into wider delegated authority oversight. A pattern of weak bordereaux across several partners, for example, may point to unclear reporting requirements rather than individual failings. Recognising good performance also matters, because it reinforces the behaviours the insurer wants to see.

Finally, insurers should confirm closure with evidence rather than assurances, either through documentation or a targeted follow-up review.

How Otter Audit helps with delegated authority audit preparation

Otter Audit is a London-based specialist in delegated authority auditing, with ACII-qualified Chartered Insurers who have visited over 500 insurance firms across 50 countries. That experience shapes how audits are prepared, run and reported. Otter Audit helps insurers and intermediaries by:

• Agreeing a clear scope and timetable so intermediaries know what to expect
• Providing practical guidance on the evidence and files auditors will review
• Auditing delegated underwriting, claims, complaints, run-off and pre-bind arrangements
• Delivering clear, well-reasoned reports on time, so findings can be acted on quickly
• Supporting remediation through the Audit Shield programme, which strengthens control environments

To discuss how to prepare your intermediaries, explore our delegated authority audit services or contact the team directly.

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