So, you think you would like to change insurance brokers? We will walk you through the process of changing your insurance broker. Change can be hard on people and businesses alike but changing your commercial insurance broker does not have to be a difficult process. Each business has its own needs, and its insurance program may be unique to it, but generally speaking, changing your insurance broker can be as easy as a couple of signatures indicating your intent to change.
Can I keep my insurance policy in place?
Good insurance brokers are either appointed with or have access to most of the major insurance companies, companies like AIG, Chubb, The Hartford, Travelers, etc. What this means is that it is possible to keep your existing insurance policies in place while changing your broker. To make the change, insurance companies will need a letter signed by a leader of your company. It needs to be written on your company’s letterhead, indicating your desire to have your new broker represent you. This indication is what insurance professionals refer to as your Broker of Record (BOR).
Broker of Record
Your new broker should be able to assist with the drafting of a Broker of Record letter. According to Investopedia, a broker of record letter is used to legally establish the relationship between broker, policyholder, and insurance company. A broker of record letter can be used to designate a broker of record for the first time or to replace an existing broker of record with a new one.
You will need a letter for each insurance company you have a policy with. Each letter will be specifically addressed to the insurance company and will list each policy you have with that company. For example, if your insurance program includes a General Liability policy, a Property policy and a Workers Compensation policy with Company A, and Cyber policy, a Directors and Officers policy, and Employment Practice Liability policy with Company B; you have 6 policies but would only need letters addressed to companies A and B.
By the way of best practice, we would also recommend that you sign an omnibus letter. This letter would not be addressed to a specific insurance company, but rather would broadly indicate that you have chosen your new broker to represent you. Omnibus letters can be helpful if there are any disputes or confusion in the marketplace.
How long does it take?
After you have signed the Broker of Record letters your new broker will send them to your insurance companies. It usually takes 7-10 business days before insurance companies will recognize the new broker as your broker of record. During that time, the insurance company will notify your previous broker. Although it is not required, out of courtesy we recommend that you also notify your previous broker of your intentions to change. Once your new broker is officially recognized by your insurance company, your new broker will notify you and be able to service your policies under your guidance. They will actually be servicing your policies for free, with your previous broker receiving commissions until it is time for renewal.
When can I make an insurance broker change?
If you are unhappy with your current broker, you do not need to put off making a change because of the perceived headache. Instead, you can feel confident knowing that making a change can be easy. You do not need to put it off until the policy renewal date.
Changing your insurance broker
In conclusion, the Broker of Record process is usually an easy solution to changing your broker, however, we strongly recommend that you communicate openly with your new broker to come up with a transition strategy that will be best for you. If you’re looking to make a change and would like more information about Diversified Insurance Group, go here.