Legality Of Switching Insurance Brokers

Changing insurance brokers is a common occurrence, and it is legal to do so. There are many reasons why someone may want to change their insurance broker, such as dissatisfaction with the service, a lack of communication, or a lack of understanding of their client's needs. The process of changing insurance brokers is simple and can be done at any time. It usually involves signing a letter of transfer or a broker of record letter, which is used to legally establish the relationship between the broker, policyholder, and insurance company. This letter is then sent to the insurance company, who will notify the previous broker of the change.

Reasons for changing insurance brokers

Changing insurance brokers is a common occurrence, and there are many reasons why someone would want to do so. Here are some of the most common reasons:

Dissatisfaction with Current Broker

Insurance buyers can easily become dissatisfied with their current broker, and this is often what prompts a change. Dissatisfaction can manifest in several ways, including a lack of tangible value, a lack of industry knowledge, slow response times, infrequent communication, an inability to understand the client's specific needs, and an unwillingness to adopt technological innovations. Over 40% of businesses are not satisfied with their current insurance broker, and 21% have changed brokers within a three-year period.

Changing Insurance Needs

As life circumstances change, so do insurance requirements. For example, if someone is buying a home and already has car insurance, they will now need both home and auto insurance. The policies that worked in the previous year may no longer be suitable. A new insurance broker can shop around and get quotes from multiple insurance companies to meet these new requirements and help compare these quotes to find the best policy.

Better Pricing

The cost of insurance policies can increase year over year, and this can become a problem for those on a budget. A new insurance broker may be able to find a similar policy for a lower price or one that better suits the client's budget.

Better Service

In some cases, the issue may not be with the policy or pricing but with the service provided by the broker. Clients may experience difficulties in getting in touch with their insurance agent or filing claims. A new broker may be able to provide improved service by being more accessible, responsive, and committed to helping throughout the life of the policy.

Poor Claims Handling

Poor claims handling by the insurance company can also prompt someone to change their insurance broker. The broker may be able to find a new insurance company that handles claims more efficiently and effectively.

No or Poor Claims Advocacy

If the insurance broker does not adequately advocate for their client during the claims process, this can be a reason to switch to a new broker who will better represent their client's interests.

Fear of Compliance Issues

When switching to a new broker, there may be concerns about potential compliance issues that the previous broker did not address. While this can be a scary prospect, it is better to be aware of these issues and address them rather than remain unaware and risk facing fines for non-compliance.

How to change your insurance broker

Yes, you can change your insurance broker. Here is a step-by-step guide on how to do it:

Step 1: Find a new broker

First, you need to find a new insurance broker. You can do this by asking your current broker for recommendations or by searching for a new broker through your insurance carrier's website. Make sure to ask the prospective broker questions to ensure they will address any issues you had with your previous broker. It is also important to research your options and choose a reputable broker to avoid pitfalls such as paying penalty charges.

Step 2: Contact the new broker

Once you have found a new broker, contact them and ask for several quotes and professional advice.

Step 3: Compare quotes

The new broker will provide you with quotes from different insurance companies. Compare these quotes to find the right coverage for your needs and budget.

Step 4: Select a policy

After comparing the quotes, select the policy that best meets your insurance needs.

Step 5: Notify your insurance company

If you are keeping the same insurance company, you need to notify them of your new broker. This is typically done by sending a broker of record letter to your insurance company. This letter should be written on your company's letterhead and indicate your desire to have the new broker represent you. You will need a letter for each insurance company you have a policy with.

Step 6: Cancel your old policy

Your new broker will guide you through the process of cancelling your old policy.

Step 7: Notify your old broker (optional)

It is not necessary to notify your old broker, as the insurance company will do this once they receive the broker of record letter. However, you may choose to do so out of courtesy.

Important things to consider:

• You can change your insurance broker at any time, but if you change before your current policy expires, you may be charged a cancellation fee.
• You can keep your insurance policy in place while changing your broker, as long as your new broker has access to the same insurance companies.
• The process of changing your broker usually takes around 7-10 business days.
• You do not need to put off changing your broker until the policy renewal date if you are unhappy with your current broker.

Keeping your insurance but changing brokers

Changing your insurance broker is legal and a straightforward process. You can change your insurance broker at any time, and it is a common occurrence. Dissatisfaction with the current broker is a significant reason for switching, and this can take many forms, including poor customer service, slow response times, a lack of understanding of your specific insurance needs, or a lack of tangible value.

If you want to keep your insurance but change brokers, you can do so by appointing a new broker as your broker of record (BOR). This is done by sending what is known as a "broker of record letter" to your insurance company. This letter is usually drafted by the new broker on your behalf and establishes the new broker as your representative. It should be written on your company letterhead and sent to each insurance company you have a policy with.

For example, if you have six policies with two different insurance companies (Company A and Company B), you will need two letters, each listing the policies you have with that company. The new broker will then send these letters to the respective insurance companies, and the change will usually be recognised within 7-10 business days. During this time, the insurance company will notify your previous broker. While it is not required, it is considered good practice to also notify your previous broker of your intentions.

It is recommended to wait until your policy renewal date to change brokers to avoid paying mid-term cancellation penalties. However, if you are unhappy with your current broker, you do not need to put off the change, as it is a relatively simple process.

When choosing a new broker, it is important to select one that works with your existing insurance company and meets your changing insurance needs. You can consider factors such as customer reviews, the brokerage's website, and the level of customer service provided.

Finding a new insurance broker

Yes, you can change your insurance broker. You might want to switch brokers if you're looking for more competitive prices, better service, or different coverages for home insurance, car insurance, or other types of insurance.

• Word-of-mouth: Ask your friends, family, neighbours, and co-workers about their experiences with insurance brokers. Ask for referrals from people you trust, but make sure they recommend brokers for the right reasons. For example, you want a broker who is knowledgeable and a good fit for your needs, not just someone who sends birthday cards to their clients.
• Interview several brokers: Take the time to meet with and ask detailed questions of several brokers. Ask about their experience, qualifications, and communication policy. Find out how they help clients with claims and how they assist with risk management. Ask them to explain their claims process and how they would help you understand insurance requirements, legal terms, policy conditions, and exclusions.
• Look for expertise and accreditation: Choose a broker with advanced designations such as Chartered Property Casualty Underwriter (CPCU), Certified Insurance Counselor (CIC), Chartered Life Underwriter (CLU), or Accredited Adviser in Insurance (AAI). Also, check their licensing status and whether they've faced any disciplinary action or consumer complaints.
• Check customer reviews: Read reviews to get a sense of whether most customers are saying positive things and if they are pleased with the service and prices. Look for a broker with a substantial number of reviews, as this indicates you're getting authentic feedback.
• Review the broker's website: Check out the broker's website to learn more about the company. Is it family-owned or big and corporate? Do they offer all types of insurance and represent a variety of insurance companies? Are there helpful articles on the site? Do they provide convenient service options, such as personal service, digital service, or in-office service?
• Select a full-service broker: Choose a broker who can meet your changing insurance needs over time and help you save money through discounts.
• Choose a broker with excellent customer service: Look for a broker with dedicated customer care who will help you from the moment a loss occurs until your claim is resolved.
• Ask tough questions: Select a broker as you would hire an employee, as not all brokers are the same. Ask prospective brokers what makes them better or different from your existing broker.

Communicating with your old insurance broker

• Be prepared: Before reaching out, gather all the necessary information, such as your policy number, personal details, and a list of questions or concerns.
• Choose the right medium: While phone calls are often the most effective way to communicate, you can also send an email or a letter.
• Be clear and concise: Clearly state the reason for your communication, whether it's to provide feedback or discuss specific issues.
• Provide feedback: If you are switching brokers due to dissatisfaction, let your old broker know about any specific issues you had, such as lack of communication, poor customer service, or lack of understanding of your needs.
• Be respectful: Maintain a respectful and professional tone, even if you have had a negative experience with the broker.
• Ask questions: If you have any pending matters or concerns about the transition, don't hesitate to ask your old broker for clarification.
• Follow up: If necessary, follow up with your old broker to ensure that all matters have been resolved and that the transition to the new broker is proceeding smoothly.

Remember that effective communication is key to ensuring a smooth transition and maintaining a positive relationship, even if you are switching to a new insurance broker.

Frequently asked questions