Effective systems and controls are essential for the delivery of the managing agent's strategic and business plans. To facilitate this it is expected that the managing agent's board will nominate one director to be responsible for the managing agent's underwriting systems and controls and ensure that the nominated director and supporting staff have the requisite skills, experience and available time to manage and execute the controls effectively.
Reference to 'Effective systems and controls' should be interpreted as widely as necessary for the effective management of each syndicate. Controls are seen broadly to sit under two headings:
- Prevention controls - These include, for example, written authorisation and proactive management of each individual's underwriting authority and the proactive management of any variances to prescribe procedures/authorities.
- Detection controls - These include, for example, internal audit reviews, peer review processes and independent reviews.
Managing agents' controls would normally reflect the levels of value and the degree of risk within their underwriting activities.
It is expected that managing agents will have their systems and controls for the effective management of each syndicate set out in writing.
