Tips for Brokers About the Broker of Record

What is a Broker of Record?

The following features all apply:

1. Broker owns the policy.
2. Broker may be paid commission.
3. Broker is entitled to servicing information.
4. Broker receives the renewal quote.
5. Broker is copied on communications sent to the policyholder.

What is a valid Broker of Record letter?

The features of a valid Broker of Record letter are as follows:

1. The Letter must be on the employer’s letterhead or on ACORD 36.
2. The Letter must express the employer’s intention to appoint the broker as their exclusive Broker of Record.
3. The Letter must be currently dated and State Fund must receive the Letter within 30 calendar days of the date of the Letter.
4. The Letter must be specifically addressed to State Fund.
5. The Letter must specify the employer’s name and/or policy number.
6. The Letter must specify the name of broker as listed on their State of California Department of Insurance Fire and Casualty Broker’s License. (Brokerage name as shown on Brokerage Profile and State Fund records.)
7. The Letter must include the printed name and title of signer.
8. The Letter must be signed and dated by the corporate officer, partner, sole proprietor, executive director (nonprofit entities only), or manager and/or managing members of Limited Liability Companies (LLCs). The signing individual must have the authority to enter the company into a contractual agreement and must be endorsed on State Fund policy records.

Note: If organization or corporation is nonprofit, provide Board Minutes. Often the policy is not updated with current members.

Can the 10-day period be waived?

No. A statement on an employer’s Broker of Record letter that the 10-day period is waived does not relieve State Fund of sending the 10-day letter to the original broker.

What determines the effective date of the Broker of Record letter?

The effective date of the Broker of Record letter will be determined on the basis of the date when State Fund receives the valid Broker of Record letter. Valid Broker of Record letters received on a weekend or State holiday or after 5:00 p.m., will be considered received on the next business day. State Fund’s business day ends at 5:00 p.m.

What is considered a midyear Broker of Record letter?

A midyear Broker of Record letter is defined as a Broker of Record letter received midyear during the policy term between inception and renewal date. Broker of Record letters received on inception/renewal date are considered midyear Broker of Record letters.

Who receives the commission on midyear Broker of Record changes?

For midyear Broker of Record changes, any commission due and payable or any reimbursement of commissions due State Fund remains between State Fund and the original Broker of Record at inception or renewal of policy.

Can State Fund contact the employer who has assigned a Broker of Record on his/her account?

State Fund reserves the right to contact the employer to ascertain the definitive Broker of Record designation.

How and where can Broker of Record letters be sent?

State Fund has established a Broker of Record and Submissions Contact List for Policy, which lists each State Fund Offices designated addresses for submissions and Broker of Record letters submitted by brokers. Please refer to Broker of Record and Submissions Contact List.

Broker of Record letters and Submissions sent by brokers to any of State Fund Offices’ designated addresses will be considered received by State Fund.

Note: A Broker of Record letter and/or submission not sent to a designated State Fund Office postal address, e-mail address or fax number for Broker of Record letter and/or submission is not considered received by State Fund. (Per Broker Agreement)

How does a broker release representation on an account?

If a broker no longer wishes to represent an account with State Fund, the broker must submit a written request. The request must state, “relinquish ownership” or “release representation of this policy,” and be sent to the State Fund Regional Office servicing the policy. The letter must be signed and dated by the producer or brokerage principal/officers listed in the State Fund Brokerage Profile.

Can a broker take over a direct account as the Broker of Record?

With respect to direct business, ownership of renewal will belong to State Fund. Direct business shall mean a policy of insurance that is written directly by State Fund and:

1. Is in effect; or
2. If cancelled for any reason, is reinstated or rewritten by State Fund within one year after the effective date of such cancellation.

Can a broker submit a Broker of Record letter on a cancelled/expired broker account?

Yes, as long as the effective date of the valid Broker of Record letter is within the original policy period.