Fraud

Fraud is a very wide concept and includes elements such as claims fraud from policyholders through to fraud committed by coverholders or other intermediaries against third parties and the managing agent itself.

Under the UK’s Economic Crime and Corporate Transparency Act 2023 (ECCTA), in force from September 2025, a fraud committed by a delegated authority against a third party could lead to the managing agent being held corporately responsible for the delegated authority’s fraudulent actions. 

This would be triggered if the managing agent’s controls and procedures to manage fraud by associated parties were deemed inadequate and there was an intention that the managing agent or its clients would benefit from the fraud in some way, financial or non-financial. Consideration of the following guidance issued by the UK’s Home Office in November 2024 may assist in the process of determining how ECCTA may apply. 

View the guidance

Fraud typologies related to the above elements of fraud that may be present in delegated authority relationships include:

Action and offenceFraud exampleIntention to benefit
Claims reporting -  False accountingA delegated authority deliberately does not report on, or delays reporting, claims arising from a major market loss e.g. the California Wildfires.The delegated authority may be seeking to hide the extent of the losses in their portfolio to maintain underwriting capacity, and in doing so the managing agent benefits with its share price unimpacted at a time where market peers are reporting large-scale losses.
Investment of loss funds – Abuse of positionA delegated authority holds a loss fund in a fiduciary capacity for the managing agent. The delegated authority, without permission from the managing agent, invests those monies and takes a percentage of the returns.The delegated authority is seeking to benefit itself in the first instance, however the action also benefits the managing agent who receives returns on the invested monies from the loss fund.
Greenwashing – False representationA delegated authority deliberately misrepresents the green credentials of an insured to the managing agent.The delegated authority earns more commission from the sale of the policy, whilst the managing agent receives additional premium for deals which appear to meet its sustainability criteria.
Misselling – Failure to disclose informationA delegated authority deliberately sells policies to insureds knowing that they would be unlikely or unable to ever claim on the policy.The delegated authority earns more commission from the sale of the policies, and the managing agent receives more premium as well as lower loss ratios.


Other fraud typologies not within the profile of ECCTA but where the managing agent itself may be considered a victim include:

Policyholder Fraud

  • A policyholder submits a claim for damages that never occurred or adds unrelated damages and or exaggerates the value of items lost or damaged in a legitimate claim.
  • A policyholder submits multiple claims for the same loss to different insurers or under different policies.

Coverholder fraud

  • Diverting funds for personal use, such as premiums received from policyholders or claims payments payable to policyholders.
  • A coverholder issues insurance policies and collects premiums for policies providing coverage that is not permitted under the delegated authority.

Managing agents therefore should undertake a risk assessment of any fraud risk managed, or posed, by their coverholders, and ensure the implementation of appropriate controls.