Working with brokers
Know who works for whom, and how to run a renewal that gets your association a real quote.
An insurance broker works for your association and owes it a fiduciary duty; an agent primarily represents the insurance company. Whichever one you use, start shopping the renewal months ahead, hand over several years of loss history and building data, and work through one broker rather than sending the same request to several, since duplicate submissions to the same carriers can hurt your pricing.
Agent or broker: the difference is legal, not the job title
These words get used interchangeably around the boardroom table, but they describe two different legal relationships. An agent is generally there to sell and service a policy on behalf of the insurance company. A broker is hired by your association and answers to your association first.
"An 'agent'... is primarily an agent of the insurance company they represent." "Brokers, however, owe their allegiance to the client... they are an agent of the insured and owe fiduciary duty to that client."
Source: Are you an agent or a broker? It matters in a fiduciary duty lawsuit, Insurance Business Magazine
The label on a business card does not settle it. A long, close working relationship can shift what looks like an ordinary agent relationship toward a broker's fiduciary standard, and whether that has happened for your association is a fact-specific question your attorney can answer.
Agents generally are not required to audit your risk for you
Boards sometimes assume that whoever sold them the policy was also responsible for spotting every gap in it. That is usually not how the law treats an agent relationship.
"Insurance agents have a surprisingly low level of duty in terms of what they have to do" and "do not have a legal duty to inquire all about your business."
Source: Are you an agent or a broker? It matters in a fiduciary duty lawsuit, Insurance Business Magazine
That is the practical reason it matters which relationship your association has. If a coverage gap surfaces after a loss, a broker's fiduciary duty gives you more to stand on than an agent's sales relationship does.
Running a renewal that gets you a real quote
Underwriters price what they can see. A thin submission, put together the week before the policy expires, produces a worse quote than a full one submitted early.
"Don't wait until the policy's expiration date to start shopping around."
Source: The art of insurance bidding: Practical strategies help navigate a hard market, Community Associations Institute
Two habits do most of the work. First, give your broker a complete underwriting file: valuation, recent capital improvements, occupancy, amenities, and loss history, ideally covering several years, not just the most recent one. Second, run the renewal through one broker instead of sending the same RFP to several. Sending several brokers after the same carriers with the same account can saturate the market and work against your pricing rather than improving it.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your association's longtime contact has always negotiated hard on your behalf and pushed the carrier for better terms. A board member argues that alone makes him a broker with a fiduciary duty. What actually decides the question?
The board is upset that its agent never flagged a coverage gap that later caused a denied claim. Based on how agents' legal duties typically work, what should the board expect?
Six months before renewal, the treasurer sends the same request for proposals to four different brokers to get more competition. What is the likely result, per CAI guidance?
Sources
- Are you an agent or a broker? It matters in a fiduciary duty lawsuit, Insurance Business Magazine
- The art of insurance bidding: Practical strategies help navigate a hard market, Community Associations Institute
Related elsewhere in the Academy
Insurance
Ready to prepare for your own renewal? Read Insurance renewals next.
Whether a specific agent relationship has become a fiduciary broker relationship, and how state insurance licensing law treats that distinction, varies by state and by the facts of the relationship. Ask your attorney or your state insurance department how your state draws this line.