Brokerage Compliance: Where Do We Start?

Managing a brokerage keeps you busy—between ensuring your team is engaged, growing your top line and providing good service to clients, all while being actively engaged in your community. So how do you deal with the increased burden of compliance? And how do you start being more purposeful with compliance responsibilities to make sure things are taken care of?

If you don’t have the resources for a dedicated compliance individual, it’s perfectly fine to have several people handling tasks at your brokerage—it comes down to identifying and prioritizing, and making sure everyone understands who owns what task and who to contact in the event of a compliance issue or question.

Key Compliance Duties

Licensing: You need business licenses, corporate registrations and individual insurance licensing that align to the products and geographies where you’re selling. If you have gaps, referral partnerships may make sense in the short term to meet your clients’ needs. Employee licensing needs to be done quickly in terms of additions and deletions so people are up and running as quickly as possible and to meet regulatory requirements—this is often handled by your HR or Finance experts.

Principal Broker: You need a Principal Broker who is available to the team and sets out the guidelines, policies and procedures to follow. Principal Brokers need to be very familiar with all the regulations so they can act as reference for the team. They’ll work with the leadership team to establish an ethical culture in your brokerage.

E&O: Someone needs to ensure your brokerage’s E&O policies meet regulatory requirements, and that incidents that may give rise to E&O are being properly addressed, tracked, and if necessary, reported according to the terms of the policy wording. Mistakes happen and need to be managed to keep clients satisfied and protect the long-term health of your business. You may want to combine this accountability with customer complaint management and staff training, as these items often go hand in hand.

Privacy: Are you getting proper client consent? Is your data management program up to speed? It may make sense for a team member to work closely with IT to oversee data privacy at your brokerage.

Contract Management: Are you reviewing carrier contracts and vendor agreements to make sure you understand the implications? Are you negotiating the addition of clauses to protect your business? Do staff understand what they can and can’t do as per the contracts you’ve signed? Someone familiar with commercial contracts should review things from a business perspective, along with legal counsel.

Compliance is playing a larger role in our businesses and having a bigger impact on all of us. Brokerage leadership teams need to stay on top of developments and key areas of your compliance program so they can be operationalized and form part of your overall strategy moving forward. Perhaps not the sexiest of topics, but an important one for your brokerage, clients and partners.