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Broker Of Record Definition

What Is a Dealer of File?

In insurance coverage, a broker of document is an agent designated by the policyholder to signify and handle a policyholder’s insurance coverage. A dealer of document might obtain copies of all communications to the policyholder and will obtain all quotes, insurance policies, and notices on behalf of the policyholder.

Key Takeaways

  • A dealer of document is an agent who’s answerable for managing and representing a policyholder’s insurance coverage coverage, usually receiving a month-to-month fee from an insurance coverage firm for working as such.
  • Communication and performing as a liaison for the policyholder are two facets of this job.
  • A dealer of document letter is a authorized doc used to set the connection between then dealer, policyholder, and the insurance coverage firm.

How a Dealer of File Works

A dealer of document will help a person or firm with, for instance, dealing with the health insurance insurance policies of its workers. In return, the dealer of document might earn a month-to-month fee from the medical health insurance firm.

Dealer of File Letter

A dealer of document letter is used to legally set up the connection between dealer, policyholder, and insurance coverage firm. A dealer of document letter can be utilized to designate a dealer of document for the primary time or to switch an current dealer of document with a brand new one. If somebody modifications their dealer of document, for instance, a letter might be despatched to establish the brand new dealer of document.

A dealer of document can also receive and consider insurance coverage quotes, insurance policies, and suggest modifications to current insurance policies.

Insurance companies require dealer of document letters to establish whom the policyholder has chosen to behave on their behalf to speak with the insurance coverage provider for negotiating charges, plan choices, declare help, and many others. In return, the dealer of document usually receives commissions from the insurance coverage firm.

A dealer of document letter ought to embrace particular info, together with the title of the group plan and the chosen dealer, the efficient date of the dealer designation, and phrases through which the dealer of document designation could be terminated. Policyholders also can embrace particular directives concerning communication with the plan and different businesses/brokers.

Dealer of File Letter vs. Letter of Authorization

A letter of authorization is neither as complete nor as highly effective as a dealer of document letter. It provides the dealer the authority to acquire info on insurance coverage contracts, charges, ranking schedules surveys, reserves, retentions, insurance policies, certificates, and different monetary knowledge. Such a letter could also be written to be very particular, akin to naming the insurance coverage firm from which the dealer might receive info. Nonetheless, a letter of authorization often will not embrace the authority to barter on behalf of a policyholder.

The Backside Line

In abstract, a dealer of document letter can accomplish the next:

  • Terminates the connection between policyholder and dealer.
  • Suspends the present dealer’s potential to barter on the policyholder’s behalf with the insurance coverage firm.
  • Makes official the appointment of a brand new dealer, giving that dealer the only real authority to barter with an insurance coverage firm.
  • Grants entry to underwriting info or proposals presently into consideration.
  • Permits for a transition interval from one dealer to a different, expressed in quite a lot of days, to permit full disclosure of the letter to all related events. This ought to permit the previous dealer an opportunity to assessment the implications of the letter with the employer and its want to alter brokers.

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