Broker Service Agreements – Part 2

Engagement of Broker Claims Advocacy teams

Are you aware of the claims support service you may receive from your broker?

The outcome of any claim settlements reflects not just the quality of the policy incepted but also your broker’s expertise. Your Broker Service Agreement (BSA) also referred to as a Service Level Agreement (SLA) – should specify how much support you may expect to receive in the settlement of your claim. This is usually articulated as a number of hours per claim.

RAS recently assisted a client progress a contentious claim. Their insurer had initially agreed to pay a small proportion of the claim, arguing most of the loss fell outside policy coverage. RAS colleagues reviewed the policy terms and conditions and believed the insurer’s position was incorrect. Full indemnity was available under the policy and the broker should be advocating on their client’s behalf.

The client did not have a formal BSA in place that clearly stated their entitlement to a certain amount of claims management services. When the broker was pressed to provide claims assistance, they advised claims advocacy was subject to an additional fee and presented two options as follows:

1) An upfront retainer with a flat hourly rate, or
2) A success fee based as a percentage (%) of the claims settlement.

It was only after the client agreed to an additional fee that the broker’s claims team provided assistance. The broking team was able to obtain full indemnity from the insurer, a fantastic outcome for the client. The client had selected Option 1 and paid the broker approximately $20k for this service. Had the client elected Option 2 – the success fee would have been closer to $90k.

Whilst the value the broker added to the claim negotiation process was clear, most Broker Service Agreements would have included claims assistance as part of the standard services. The lesson for the client is to ensure future Broker Service Agreements clearly articulate the claims assistance expected from their broker. Clients cannot assume this will always be included as part of the standard service.

Author: Fiona Eccles
April 2025