AM Best is revising its market segment outlook for the delegated underwriting authority enterprise (DUAE) segment to stable from positive, citing moderating growth and emerging headwinds.

Optimism around the DUAE market among insurers and reinsurers remains with ongoing strategic partnerships between carriers and DUAEs, and the segment continues to increase its market share, supported by sustained premium growth globally. DUAEs comprise entities such as managing general agents, coverholders, program administrators and other similar entities. According to the Best’s Market Segment Report, “Market Segment Outlook: Delegated Underwriting Authority Enterprises,” the segment’s growth drivers—strong capacity, diverse capital sources, growing niche expertise and investment in talent and technology—will continue, but with a moderating impact amid selective capacity, tighter economics at renewals and heightened oversight.

The DUAE model allows carriers to reach niche markets without full exposure to market volatility, and the segment’s niche expertise is aligned with the insurance industry’s growing demand for specialty products. DUAEs increasingly have operated in non-traditional markets with partnerships with fronting and hybrid fronting companies, as well as with startup specialty commercial carriers. With growth in the excess and surplus (E&S) lines market moderating and capacity becoming more selective, conditions support continued participation by DUAEs; however, expansion is expected to be more measured.

“The segment’s strengthening ties to the E&S and fronting segments is a double-edged sword. As DUAEs become major players in these markets, which receive significant capacity support from reinsurers, they face a greater dependence on reinsurance,” said Edin Imsirovic, director, AM Best. “Reinsurance capacity constraints can negatively affect the DUAE market in the form of capacity tightening, compressed commission income and narrowing underwriting margins, as well as weakened bottom-line performance.”

Additionally, the report notes that capacity from the Lloyd’s market—the largest capacity provider for DUAE business, particularly in the United States—has fluctuated in recent years as the market puts more oversight on the quality and performance of its delegated providers.

Internal governance and controls as part of risk management are critical to keeping pace with the DUAE segment’s rapid growth. Private equity funding of DUAEs also calls for proper due diligence of DUAEs’ sources of capital. Moreover, there is less data transparency in the DUAE segment than in the traditional market. The need for prudence amid rapid growth can allow individual players to balance growth with stability of revenue, profitability, partnerships and talent retention. It will also help enhance efficiency in the insurance marketplace as DUAEs remain a vital part of the ecosystem.

“Carriers and DUAEs continue to add programs, but the current level of capacity is likely to push rates down and make performance a more important differentiator,” said Imsirovic. “Given the balance of opportunities and emerging headwinds, the stable outlook appropriately reflects current risk‑reward conditions in the DUAE market.”

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=360078.

A video discussion of this report is available at http://www.ambest.com/v.asp?v=ambduae1125&AltSrc=182.

AM Best analysts will present the credit rating agency’s 2026 outlook on the DUAE segment at a briefing scheduled for Tuesday, Nov. 18, 2025, from 2:30–6:00 p.m. EST at Convene 530 Fifth Avenue in New York. A networking reception will follow the event. For more information, click here.

To view all Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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