Global credit rating agency AM Best has said the delegated underwriting authority enterprises (DUAE) market remains on a strong growth trajectory, although insurers are becoming increasingly selective about the capacity they provide, placing greater emphasis on underwriting performance and long-term profitability.
In its latest Best’s Market Segment Report, Managing General Agents Adapt to Changing Demands and Added Scrutiny, AM Best said 2025 represented the fifth successive year of direct premium growth across the DUAE sector, which includes managing general agents (MGAs).
Figures from the National Association of Insurance Commissioners showed direct premiums written rose to $108.7 billion in 2025, up from $92.3 billion the previous year.
Despite the continued expansion, AM Best said market conditions are becoming more demanding. While DUAEs have helped insurers develop specialist products and respond to emerging risks, the agency believes the market is entering a period where underwriting discipline is taking priority over premium growth. It said capacity providers are scrutinising performance more closely, with greater attention being paid to sustainable loss ratios and long-term underwriting quality.
“It’s not limited to capacity producers being more selective,” commented David Blades, Associate Director, AM Best. “There is also a sense of heightened oversight that is becoming a more intentional focus of insurers seeking long-term success over short-term market share expansion. Additionally, tighter economics in renewal negotiations are presenting difficult challenges.”
AM Best has retained its stable outlook for the DUAE sector, reflecting its view that delegated authority businesses continue to play an important role for insurers and reinsurers. According to the agency, the market has benefited from strong activity in excess and surplus (E&S) lines, although growth in that segment has eased over the past 12 to 18 months.
The ratings agency expects surplus lines insurers to pursue more measured expansion as competitive pressures increase. Even so, AM Best believes the sector’s longer-term growth prospects remain supported by a broad range of capital providers, together with continued investment in technology and skilled personnel.
“The maturing MGA market will need greater discipline in building portfolios along with successfully adopting newer technologies to enhance workflow efficiency and improve responsiveness to emerging risks,” added Helen Andersen, Industry Research Analyst, AM Best.
AM Best also said its Performance Assessment (PA) continues to support its stable outlook for the sector. The assessment provides an independent, forward-looking evaluation of a DUAE’s ability to deliver services for its insurance partners. According to the agency, recent assessments reflect continued demand across the market while also highlighting the impact of slower growth in the surplus lines market and changing conditions within the reinsurance sector.
The report found that a slightly larger proportion of MGAs were granted authority to underwrite risks and manage claims on behalf of carrier partners in 2025 than in the previous year. AM Best said more organisations now hold underwriting authority across more than three-quarters of their delegated authority agreements.
AM Best also noted that investor interest in the DUAE market remains strong, although transaction activity has evolved. The agency said strategic partnerships are now more common than full acquisitions, with outright takeovers accounting for only a minority of deals.
