Binding authority (definition)
The power an agency holds from a carrier to put coverage in force on the spot, without waiting for the carrier to approve the risk first.
Binding authority is the power a carrier delegates to an agency or MGA to put coverage in force immediately, within agreed underwriting guidelines, without submitting the risk for prior carrier approval. “Can you bind it today” is the practical question behind the term.
The scope of binding authority is contractual: lines of business, risk classes, limits, and territories are all defined in the agency-carrier agreement. Writing outside that scope and calling it bound is how E&O claims start.
Binding authority is also a measure of carrier trust. Carriers expand it for agencies with clean loss ratios and disciplined submissions, and pull it back when results deteriorate.