How do I change insurance brokers? Your guide to breaking up!
An insurance broker is an essential partner in any business. Their expertise can make or break a business. So it is critical to partner with an insurance broker that is right for you and your business.
If you are considering changing insurance brokers you may have a few questions. Why would I want to switch insurance brokers? Can I switch insurance brokers at any time? Are there any costs involved? Do I need to have a difficult conversation with my current insurance broker?
Here we answer those questions and more.
Why should I change insurance brokers?
There are a number of reasons that you may decide to switch insurance brokers. Perhaps you are no longer confident in their advice following an incident that exposed a lack of coverage. Perhaps you’ve experienced a failed claim where you believe your broker was unable to advocate adequately for you. Maybe your business has changed and the expertise of your existing broker doesn’t cover what you need from them anymore. Perhaps you haven’t been experiencing the level of service that you need. Or maybe you are looking for more proactive engagement.
Whatever it is, it is important to know the process and what is involved.
Can I only change my insurance broker at renewal time?
As a policy holder, you are entitled to change your insurance broker at any time, not just at renewal time. However, renewal time is a natural time to change to a new insurance broker. A good insurance broker should undertake an annual review as renewal approaches. In the same way, your new broker can undertake a review of your business and your existing coverage and make their recommendation. This may result in a new policy with a different insurer, or amendments to your existing policy.
What if I want to change insurance brokers mid way through my insurance term?
If you are unhappy with your insurance broker then you are free to approach an alternative insurance broker to look after your insurance needs. Your new broker is able to manage existing policies. However, as your new insurance broker now takes on responsibility for your insurance they will need to review your existing policies to see if they are adequate.
Your new insurance broker will now be the point of connection with your insurer. To formalise this change you will be required to draft a Letter of Appointment (LOA).
What is a Letter of Appointment?
A Letter of Appointment is a formal document that allows a policy holder to appoint a new broker to take over the management of their existing policies mid term. The letter is from you, as the policy holder, on your letterhead.
The Letter of Appointment needs to have policy details, the date of handover and written confirmation that you have formally appointed a new broker to manage these policies and are ceasing your arrangement with your previous broker. Your new broker should be able to provide you with a template.
Once you have completed the relevant details your new insurance broker will forward your LOA to the insurer.
Are there any costs or exit fees when changing brokers?
You generally shouldn’t expect to see any charges due to the process of changing insurance brokers. There are no charges associated with lodging LOA’s and since your premium is already paid to the old broker to cover your policy, there should be no extra charge regarding your policy.
While there are no fees directly involved in switching insurance brokers, you should be sure to ask your new broker up front about their fee structure before you choose to switch insurance brokers. Different brokers charge different fees for their services and you should be able to read about it in their Financial Services Guide (FSG).
Once you have elected to switch brokers, if your new broker requires a change to your existing policy then this may involve a change to the premium amount. If coverage is increased then you are likely to pay an additional premium amount which your new broker will discuss with you. If you elect to cancel your policy then there may be costs involved. Again, your new broker can advise you if this is the case.
Do I need to say goodbye to my old insurance broker or can my new insurance broker handle the transition for me?
No, you do not need to contact your current insurance broker to let them know of the change. Once the insurer has your LOA they will contact your previous broker to advise that your policies have been transferred to the management of a new broker. For privacy reasons the insurer is not allowed to tell your old broker who your new broker is. Your old broker will not be able to access your policies any more.
While you do not have to connect with your old insurance broker, you may find that they connect with you for feedback. If you feel comfortable you could give them honest feedback to help them improve their service levels.
What happens when I engage my new insurance broker?
When you engage a new insurance broker they should suggest a full review of your existing policies. Your insurance broker is assuming responsibility for the coverage of your business at this point and it is prudent for them to understand the current level of coverage that you have. Your new insurance broker will be looking to ensure that your previous broker hasn’t made an error, omitted anything or misled you or the insurer about your business and/or cover.
Following their review your new broker will provide advice and/or recommendations around any changes they think should be made to your cover.
How do I find a new insurance broker?
Advisr exists to help businesses like yours find the insurance broker right for them. Ask yourself what is most important to you. A locally based insurance broker? A broker who knows your industry back to front? A broker who is a specialist in a certain type of insurance?
You can search on Advisr for a broker that meets your criteria by using our find an insurance broker wizard. Once you have a few brokers to choose from, be sure to read their reviews and any articles they have written. Then we’d suggest connecting with 2 or 3 and interviewing them to see if they are a fit for your business.
There is no shortage of great insurance brokers out there. So as with any business decision make sure that you ask for the information you need and be up front with your new insurance broker about what you want from them. Your insurance broker should be your greatest business ally.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Annemarie Jamieson | ADVISR.