Common use of Letters of Authority Clause in Contracts

Letters of Authority. Letters of Authority (“LOA”) outline the formal boundaries by which underwriters are authorized to underwrite risks for the lines of business and coverages within their respective agreements. Matters that exceed underwriter authority require prior written approval from a holder of higher authority prior to quoting or indicating terms. It is the underwriter’s responsibility to obtain and document such approval to offer terms that exceed the authority granted in his or her respective LOA. While LOAs address numerous situations, they do not anticipate every circumstance that may arise during the Underwriting process. When in doubt, underwriters should seek authority from an appropriate manager or CUO. Any matter that involves any ancillary agreements in connection with a policy must be referred to the CUO, General Counsel or Chief Financial Officer. This includes, for example, collateral arrangements, claims handling, a request to use specific counsel, a request to handle/pay claims in a unique manner, etc.