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A derogation is a formal approval request that retail brokers submit to wholesale brokers before certain policy operations can proceed. This system allows retail brokers to request authorization for specific actions while wholesale brokers maintain control and oversight over the approval process. When a policy operation requires wholesale broker approval—such as pricing adjustments, coverage modifications, or other actions requiring authorization—a derogation is created and submitted to the wholesale broker for review and decision.

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Policy Operations Requiring Derogations

Derogations can be requested for various policy operations throughout the policy lifecycle. These include creating a new policy (New Business), modifying an existing policy during its term (Mid-Term Adjustment), adjusting the premium (Repricing), renewing a policy, or cancelling a policy. Each operation may require wholesale broker approval when the requested action falls outside standard product rules or pricing parameters.

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Derogation States

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State Progression

Derogations move through a defined workflow with three possible states: Pending:
  • Initial state when derogation is created by retail broker
  • Awaiting review and decision by wholesale broker
  • Policy operation is on hold
  • Retail broker cannot proceed until decision is made
Approved:
  • Wholesale broker has granted the exception
  • Policy operation can proceed with the requested exception
  • Retail broker is notified and can complete the transaction
Rejected:
  • Wholesale broker has declined the exception
  • Policy operation cannot proceed as requested
  • Retail broker must inform customer and explore alternatives

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State Transitions

When a derogation is created, it enters the Pending state and awaits the wholesale broker’s decision. The wholesale broker can either approve or reject the request. Once a decision is made, the derogation reaches a final state and cannot be changed. State Finality:
  • Rejected derogations are final and cannot be changed
  • Approved derogations are final and enable the policy operation to proceed
  • If circumstances change, a new derogation request must be created