Understanding the different types of transfer letters

In the complex world of fleet insurance, effective communication and documentation are crucial for managing risks and ensuring compliance. One important aspect of this process is the use of transfer letters. These letters serve as formal documents that facilitate the transfer of insurance responsibilities, coverage, or ownership of the insurance of your fleet. This article will explore the different types of transfer letters commonly used in fleet insurance, their purposes, and best practices for their use.

What are transfer letters? 

Transfer letters in fleet insurance are official documents that communicate changes related to the provision of insurance coverage for your business. These changes may involve the transfer of ownership to a new broker, the authorisation for a different broker to access your documentation for quotation purposes, or the desire to use a select broker for one insurer only. Properly executed transfer letters help ensure that all parties are aware of their obligations and that the insurance policy remains valid and effective.

Types of transfer letters

1. Letter of Authority

A Letter of Authority (LOA) is used when a business would like another broker to have access to their information (such as a Claims Listing, Confirmed Claims Experience document etc) to enable them to receive a quotation. This letter serves as a formal notification to the insurance provider giving your approval for your data to be shared. It typically includes details such as:

• Your business name
• Your policy number
• Company letterhead and a signature by the registered contact
• The parameters surrounding the data to be shared

This letter is essential for ensuring that a broker will be able to access the information needed to obtain a quotation for your fleet if you are not able to procure the documentation required.

The Letter of Authority DOES NOT transfer ownership of your policy to another broker.

2. Letter of Appointment/Transfer of Agency

A Letter of Appointment (LOA) or a Transfer of Agency (TOA) – sometimes also called a Broker of Record Letter (BOR) is used when you wish to transfer the ownership of your insurance arrangements to an alternative broker. This letter informs the insurer about your desire to work with another party and requests that they release all details to that party within a given time period. Key information typically included in this letter includes:

• Your business name
• Your policy number
• Company letterhead and a signature by the registered contact

Submitting this letter will terminate your relationship with your previous broker for that insurer so careful consideration is necessary before signing to ensure this is the action you would like to take.

The Letter of Appointment DOES transfer ownership of your policy to another broker.

3. Letter of Exclusivity

A Letter of Exclusivity (LOE) is used when you would like to limit a particular insurer to one broker. This letter informs your insurer of your desire to close your options to a single broker and therefore reduces your options in the event of obtaining multiple quotations.

A simple signature on a prewritten document is all it takes to initiate this process and if done too close to renewal, could be irreversible meaning you may not be able to access a portion of the insurance market.

At Marsh we do not advocate the use of LOE’s, however if we are able to secure you a deal not available elsewhere in the market, we may discuss this method with you.

Best practices for using transfer letters

• Timeliness: Always submit transfer letters promptly and in good time to not prejudice your results and/or cause misunderstandings with the insurer
• Documentation: Keep copies of all transfer letters for your records, as they may be needed for future reference
• Clear communication: Ensure that all relevant parties are informed about the changes and that the transfer letters are clear and concise
• Consultation: When in doubt, consult with Marsh or your business coach to ensure that the transfer letters are being used in the right circumstances

Transfer letters play a key role in fleet insurance by facilitating clear communication regarding changes in broker and your wishes to receive another parties service. Understanding the different types of transfer letters and their purposes can help fleet operators maintain compliance, reduce administration and are the formal way of conducting a change of service provider. By following best practices and keeping open lines of communication, businesses can navigate the complexities of fleet insurance with confidence.

If you are in any doubt do not hesitate to reach out to your dedicated Marsh adviser so we can go over the implications of what you are about to sign, or contact us for more information.