The Binding Authority Agreement is a crucial document in the German insurance market that establishes a delegation of underwriting authority from an insurance company to a coverholder. This agreement is essential when an insurer wishes to expand its distribution channels or leverage specialized expertise while maintaining regulatory compliance under German law. The document must comply with the German Insurance Supervision Act (VAG), Insurance Contract Act (VVG), and other relevant regulations, including EU directives. It details the scope of authority, underwriting limitations, claims handling procedures, reporting requirements, and compliance obligations. The agreement is particularly important in the context of the German regulatory framework, which requires strict oversight of delegated authority arrangements and clear accountability structures.
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1. Parties: Identification of the insurer/underwriter and the coverholder, including their regulatory status and authorizations
2. Background: Context of the agreement, relationship background, and general purpose
3. Definitions: Definitions of key terms used throughout the agreement
4. Appointment and Scope: Terms of appointment, territory, and classes of business covered
5. Authority and Limitations: Specific powers granted and their limitations, including maximum limits and excluded risks
6. Duties and Responsibilities: Key obligations of both parties, including reporting, record-keeping, and compliance requirements
7. Premium and Commission: Premium handling, commission structures, and payment terms
8. Claims Handling: Claims procedures, authority levels, and reporting requirements
9. Compliance and Regulatory: Regulatory compliance obligations, including German insurance law requirements
10. Data Protection: GDPR compliance and data handling requirements
11. Records and Reporting: Record keeping obligations and reporting requirements
12. Audit and Inspection: Rights of audit and inspection by the insurer
13. Confidentiality: Confidentiality obligations and permitted disclosures
14. Term and Termination: Duration, renewal, and termination provisions
15. Post-Termination Obligations: Obligations surviving termination
16. General Provisions: Standard legal provisions including governing law, jurisdiction, and notices
1. Sub-Delegation: Required if the coverholder is permitted to delegate authority to third parties
2. IT Systems and Security: Required if specific IT systems or security protocols are mandated
3. Service Levels: Include when specific performance metrics are required
4. Business Continuity: Required for critical business relationships
5. Anti-Money Laundering: Required if the coverholder handles client money
6. Marketing and Branding: Include when the coverholder will use the insurer's branding
7. Training Requirements: Required when specific staff training or qualifications are mandatory
1. Schedule A - Classes of Business: Detailed list of authorized insurance classes and products
2. Schedule B - Authority Limits: Detailed financial and risk acceptance limits
3. Schedule C - Commission Schedule: Detailed commission rates and payment terms
4. Schedule D - Reporting Requirements: Templates and timeframes for required reports
5. Schedule E - Claims Handling Procedures: Detailed claims handling procedures and authority levels
6. Schedule F - Service Levels: Specific performance metrics and targets
7. Appendix 1 - Policy Wording Templates: Approved policy wordings and endorsements
8. Appendix 2 - Document Templates: Standard forms and documents to be used
9. Appendix 3 - Contact Details: Key contacts and escalation procedures
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