Letters of Authority & Appointment

Key information for brokers and insurers regarding LOA's and LARQ's

Written on 15 March, 2021
Allyssa Hextell
Introduction of the Letters

NIBA has adopted a new industry standard to help stamp out confusion and misuse surrounding Letters of Authority and Letters of Appointment.

The templates are intended as the minimum standard for use when seeking quotations and/or becoming appointed broker/authorised representative to a new client.

Use of NIBA templates on every one of these occasions affects all NIBA members as it is intended to be regarded as the industry minimum standard.

 

Purpose of the Standard Letters

Standard Letters of Authority and Appointment are designed to ensure clients clearly understand the purpose of the document they are signing.

NIBA also expects the standard letters will be of assistance to insurers, to provide clarity around the intention of insured and broker when insurers are approached for policyholder information, or asked to submit quotations or transfer existing policies to a broker not currently appointed to that account.

To obtain a quotation for a prospective client: the broker will use the ‘Letter of Authority to Review & Quote’ (LARQ).

When appointed: the broker will have a ‘Letter of Appointment’ (LOA) completed.

Both documents must:

· be produced on client letterhead

· contain the relevant template wording

· be signed by an authorised person in the client’s business

· contain a valid date to assure currency

 

From Letter of Authority to Review & Quote (LARQ) to Letter of Appointment

The Letter of Authority is so named for the particular benefit of clients, who need to clearly understand the purpose and intention of the document they are signing.

The recommended process involves:

  1. Client requests broker to review insurance needs, broker – Provides FSG if required. Obtains signed Letter of Authority to Review & Quote (LARQ)
  2. Broker submits (LARQ) to holding or previous underwriter(s) to obtain information
  3. Quotation/submission accepted by client Client signs the Letter of Appointment (LOA) including the Terms of Engagement
  4. Broker submits Letter of Appointment (LOA) if requested by insurer
Protocols and Procedures
  • LARQs and LOAs must be signed by a director, financial controller, or owner of the business . Any letter not signed by one of the above is deemed insufficient for the purpose unless further enquiry satisfies the authority of the person signing to act on behalf of the business.
  • An LARQ/LOA must be printed on client letterhead. Any client who does not have a letterhead must acknowledge the fact as follows:                                                                                                                                                                         “Whilst this Letter of Authority to Review and Quote/Letter of Appointment is not on any letterhead, I attest to its authenticity and intent in my capacity as [insert position]”
  • An LARQ/LOA is not acceptable if written on a broker’s letterhead.
  • An LARQ will be signed and dated and should also include a validity period
  • In any event an LARQ is invalid if not presented to an insurer within 90 days of the date of issue.
  •  An LARQ or LOA must be produced in all circumstances other than:a. Domestic insurancesb. Where the NIBA member can produce other documented evidence that the client has approached the broker

    · requesting a review and quotation of specific insurances, or

    · confirming the appointment of the broker, and

    · the document is signed by a director, financial controller or owner of the business and contains clear evidence of the intended validity period.