Contracts With Insurance Brokers: Do's and Don'ts

This article was originally published in the Policyholder Advisor, Volume 24, Issue 4 (July/August 2015)

Insurance brokers are among the most impor­tant suppliers that any company deals with. Yet, often the arrangement between brokers and their clients consists of nothing more than a bro­ker of record letter, or even a verbal authorization to present insurance proposals. As a general rule, a written agreement that addresses the scope of services provided by the broker and its compen­sation is important for a number of reasons.

Advisor or Order Taker? Spell It Out

First, confusion or misunderstanding about what exactly is expected of a broker is a com­monplace occurrence, and is far more likely in the absence of a written contract. A clear state­ment of the scope of services to be provided will go a long way toward the client receiving the coverage and services they want. The con­tract should not only identify the lines of cover­age the broker is authorized to