Broker Agreement
BROKER AGREEMENT
This Broker Agreement (the “Agreement”) is made as of January 22nd 2025 (“Effective Date”) by and between Novella Insurance Agency LLC, a Delaware limited liability company located at 417 Grand St D603 New York NY 10002 (“Novella”), and [legal entity name of Broker], an insurance Broker located at [insert address] (the “Broker”).
WHEREAS, the Broker is a retail insurance broker that seeks to present insurance business from its insurance clients for Novella’s consideration;
WHEREAS, Novella will consider insurance business properly submitted by the Broker; and
WHEREAS, Novella may present such insurance business submitted by the Broker to certain insurers with whom Novella has business relationships (each an “Insurer” and collectively, the “Insurers”) via Novella’s proprietary online quote-and-bind platform (the “Platform”);
NOW, THEREFORE, Novella and the Broker, in consideration of the obligations set forth herein, hereby agree as follows:
1. THE BROKER’S AUTHORITY
1. The Broker, pursuant to the terms of this Agreement, will submit insurance risks identified in Exhibit A attached hereto (the “Insurance Business”) to Novella for its review and consideration during the term of this Agreement. Novella will either present, or not present at Novella’s sole discretion, through the Platform to one or more of the Insurers the Insurance Business submitted by the Broker based on the underwriting guidelines of the Insurers.
2. The Broker will have authority to collect premium as set forth in this Agreement with respect to the Insurance Business placed through Novella.
3. The Broker is not an agent of Novella or the Insurers. The Broker shall act in its capacity as a broker for and representative of its clients. Nothing in this Agreement shall be construed as granting the Broker any express or implied authority to act as a direct agent of Novella or any Insurer, negotiate on behalf of or bind Novella or any Insurer, modify the terms of any insurance issued by or agreed to by any Insurer, handle coverage determination, or incur any liability on behalf of Novella or any Insurer.
4. The Broker may not delegate its duties under this Agreement to any affiliated or unaffiliated person, firm or corporation, without Novella’s express written consent.
2. THE BROKER’S RESPONSIBILITIES AND OBLIGATIONS
1. The Broker represents and warrants that: (1) it is a company duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with all necessary corporate power, authority and capacity to own its property and assets and to carry on its business as presently conducted; (2) it is properly licensed to conduct business in those jurisdictions in which the risks to be submitted for Novella’s consideration are located, as required, and shall maintain such licenses in accordance with law; (3) it understands and shall comply with the requirements of the insurance laws and regulations of the states in which it operates, particularly, the relevant states’ insurance laws and regulations applicable to the operations of brokers, producers, intermediaries and agents (“Other Brokers”) (including compliance with applicable compensation disclosure requirements), excess and surplus lines laws, privacy laws, data protection and security requirements, OFAC restrictions and requirements, anti-money laundering laws and any other applicable federal or state laws and regulations; (4) it has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder have been duly authorized by all necessary corporate action; (5) it shall be responsible for and shall cause all third parties placing business through the Broker, including, but not limited to, Other Brokers, to comply with all laws and regulations affecting their operations, including, but not limited to, maintaining valid insurance licenses, both resident and nonresident, as applicable, and complying with any compensation disclosure requirements and privacy and data protection and security requirements; and (6) it shall supervise all Other Brokers involved in the placement of the Insurance Business and be responsible for and liable to Novella for the acts and omissions of brokers under its supervision, including, but not limited to, any premium or other monies due Novella from Other Brokers.
3. The Broker shall maintain accurate records with respect to any Insurance Business submitted to Novella pursuant to this Agreement, whether or not Novella presented the Insurance Business to any Insurer. The Broker shall maintain such records for the period required by law, and shall make such records available to Novella, the Insurers and any regulatory agency to review, inspect, audit and copy upon reasonable advance notice or as otherwise required by law or a regulatory agency. This provision shall survive the termination of the Agreement.
4. The Broker will be responsible for the collection and accounting of all premium on Insurance Business as set forth in Section IV below.
5. The Broker shall maintain (1) an errors and omissions policy issued by an insurer rated “A-” or better by A.M. Best Company or other nationally recognized statistical rating organization (“NRSRO”), providing coverage for not less than one million dollars ($1,000,000) insuring the Broker, its partners, sub-brokers, consultants, agents, members, officers and employees, and (2) a fidelity bond covering all officers and employees of the Broker, issued by an insurer rated “A-” or better by A.M. Best Company or other NRSRO in an amount not less than one million dollars ($1,000,000).
6. The Broker will promptly, but in no less than five (5) business days, notify Novella in writing should it become aware of any actual or threatened claims, suits or losses with respect to the Insurance Business and provide relevant loss and claim information. The Broker shall cooperate with Novella and/or the applicable Insurer in the investigation, adjustment, settlement and payment of claims. The Broker will also assist Novella in the collection of any deductibles.
7. The Broker will promptly, but in no less than five (5) business days, forward any policyholder, consumer and/or insurance department complaints it receives involving the Insurance Business to Novella. Novella together with the applicable Insurer, if any, will prepare the appropriate response. The Broker will provide assistance as requested by Novella.
8. The Broker will fully cooperate with Novella and the applicable Insurer in any investigation or proceeding of any regulatory or governmental body, or court of competent jurisdiction, including making the Broker’s records available to such entities for inspection, if it is determined by Novella that the investigation or proceeding affects matters covered by, related to or arising out of this Agreement.
9. The Broker shall not make use of Novella’s branding in publications, advertisements, or marketing collateral without the express written consent of Novella. The Broker shall comply with all statutes and regulations pertaining to advertising, and establish and maintain records of any such advertising as required by the applicable laws of the states in which it is doing business.
10. The Broker shall obtain or cause to be obtained any consents required by Novella from potential policyholders for their information to be processed by Novella, the Insurers, and through the Platform.
3. NOVELLA’S RESPONSIBILITIES AND OBLIGATIONS
1. Novella represents and warrants that: (1) it is a company duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with all necessary corporate power, authority and capacity to own its property and assets and to operate the business as presently conducted; (2) it is properly licensed to conduct business in those jurisdictions in which the risks to be submitted for Novella’s consideration are located, as required, and shall maintain such licenses in accordance with law; and (3) it has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder and the execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder have been duly authorized by all necessary corporate action. Novella may appoint the Broker as Novella’s or the Insurer’s Broker if and where required by applicable state laws.
2. With respect to all excess or surplus lines Insurance Business, Novella will collect and pay surplus lines premium taxes as part of the premium collection requirements set forth in Section IV below.
4. Novella shall authorize the Broker to access the Platform, subject to the Broker’s consent to the Platform’s terms and conditions.
4. THE BROKER’S DUTIES REGARDING PREMIUM RECEIPT AND REMITTANCE
1. Except in the case of direct billing, the Broker shall collect and hold all premium and return premium in connection with the Insurance Business (the “Funds”) in a separate bank account at a financial institution which is a member of the Federal Reserve System. The Broker shall hold the Funds in trust for, and as a fiduciary of, Novella. The Funds shall include all amounts received from policyholders or Other Brokers, less the Commission permitted pursuant to Section V below. The omission from the Funds of any premiums that would otherwise be due Novella, whether collected or not by the Broker, shall in no way modify or otherwise affect the responsibility of the Broker to account for and pay Novella any and all Funds (whether collected or not).
2. In the case of direct billed accounts, (i) Novella shall bill all new and renewal premiums direct to the insured, and all such premium shall be payable in gross direct to Novella. Any and all new and renewal, additional or other premiums on business written, which may come into Broker’s hands or control, shall be remitted in gross immediately to Novella, (ii) Novella shall compute and remit to Broker no later than sixty (60) days after the close of the month, commissions due on such initial, renewal or additional premiums but only if collected by Novella, and (iii) Broker agrees that undistributed commissions in Novella’s hands at any time may be applied to and constitute an offset against any of Broker’s undisputed obligations to Novella.
3. The Broker shall under no circumstances make any personal or corporate use of the Funds and shall at all times maintain the Funds segregated and apart from its operating funds and other assets. The Broker may maintain the Funds in a bank account that also contains funds due other carriers, provided the Broker maintains separately identifiable books and records for the Funds.
4. Except in the case of direct billing, the Broker shall accept Novella’s monthly billing statement. Each such statement will include the following information about the Insurance Business placed for the applicable time period: policy numbers, names of policyholders/insureds, premium, return premium, commission allowance and the net balance due. The Broker shall pay the net balance of all premiums due to Novella, whether collected or not, within ten (10) days from the date of the statement, or if separately invoiced, upon ten (10) days from the date of the invoice. Failure to pay the net balance when due shall constitute a material breach of this Agreement and will result in the imposition of a late fee not to exceed one percent (1%) per month on the outstanding balance.
5. Novella shall have the right to offset any Commission due the Broker against any premium balance due Novella from the Broker. The Broker is responsible for payment of earned premiums on policies regardless of whether the Broker has collected such premiums from the policyholder.
5. BROKER COMPENSATION
1. Novella will pay the Broker a commission for Insurance Business, and a related insurance policy, bound through the Platform on premiums collected from the policyholder at the rates set forth in Exhibit A (as may be amended by Novella from time to time) as compensation for producing Insurance Business under this Agreement (“Commissions”). Novella will not pay, and the Broker shall be solely responsible for, any and all expenses incurred by the Broker under this Agreement.
2. The Broker shall refund premium to the policyholder, including unearned Commission (the “Return Commission”), whenever a policy is cancelled or amended, if such amendment entitles the policyholder to such refund. The Broker shall calculate the Return Commission at the same rate at which the Commission was originally calculated. Novella will return to the Broker, for return to the policyholder, the unearned premium received by Novella net of the Broker’s Commission, less any penalties charged by carriers, where applicable. If the Broker fails to refund the Return Commission, Novella may, in addition to any other remedies, offset the Return Commission against any Commission or credit due to the Broker. This provision shall survive the termination of this Agreement.
3. The Broker shall forfeit the right to Commissions on premiums collected by Novella or premiums collected through audit that are uncollectable, referred to an attorney or other person for collection or referred to Novella for direct collection. The Broker shall make a diligent effort to collect such premiums and must notify Novella in writing of a failure to collect within twenty-one (21) days.
6. TERM AND TERMINATION
1. This Agreement shall be effective indefinitely. Either party to this Agreement may terminate the Agreement upon ten (10) days’ written notice. Notice is given if sent via electronic mail (“email”), on the next business day after being sent, unless the sender receives an automated message that the email has not been delivered.
2. Novella may terminate this Agreement for cause with immediate effect by providing written notice to the Broker if (1) any public authority cancels or declines to renew any of the Broker’s licenses, (2) the Broker fails to comply with any term or obligation under this Agreement, (3) the Broker is or has engaged in any act of fraud, willful misconduct or gross negligence, (4) in the event of the Broker’s bankruptcy, insolvency, liquidation or assignment for the benefit of creditors of either party, (5) the Broker takes any action which materially and adversely affects the interest of Novella, or (6) in the event of any change in control or change in ownership of the Broker.
3. In the event of termination of this Agreement, if the Broker has promptly and timely rendered all Funds on accounts and payments of all undisputed premium amounts due to Novella, the records, use and control of expirations and renewals of the Insurance Business placed under this Agreement are and shall remain the sole and exclusive property of the Broker.
7. PRIVACY AND SECURITY
1. The Broker hereby acknowledges that Novella and the Insurers are subject to the Gramm-Leach-Bliley Act (P.L. 106-102) (15 U.S.C. Section 6809) and implementing regulations thereof (the “GLB Act”), pursuant to which Novella or the Insurer(s) are required to obtain certain undertakings from its service providers such as the Broker with regard to the privacy, use, and protection of nonpublic personal information (“NPI”). Therefore, the Broker agrees that: (1) it shall not disclose or use any NPI except to the extent authorized by, or necessary to carry out its obligations under, this Agreement; (2) it shall not disclose NPI to any third-party processor of the Broker without an agreement in writing from the third party to use or disclose NPI only to the extent necessary to carry out its obligations under such agreement and only in accordance with the requirements of this Agreement; (3) it shall require all third parties used by the Broker to maintain, a written information security program in accordance with the requirements set forth in this Article to protect NPI; and (4) upon reasonable request, the Broker shall provide Novella with a description and other information regarding the Broker’s information security program and compliance with this Article VII and provide Novella in confidence with a copy of the Broker’s independent audit of its information security program. The Broker also will maintain a data security incident response program and an information disposal program for NPI during the term of the Agreement and provide information to Novella in confidence regarding such programs. Further, the Broker shall comply with all requirements imposed on the Broker or Novella related to either party’s compliance obligations under the California Consumer Privacy Act or any other similar state laws regarding privacy and data protection (“Data Privacy Acts”), including the limitations on sharing, or requirements related to deletion, of personal information of a Data Privacy Acts-state resident, consumer or household (as such terms are defined in the Data Privacy Acts). Any personal information (as defined by the Data Privacy Acts) provided by a party to the other party under this Agreement is not based on receipt of consideration from a party, and the use of such personal information shall be solely as necessary to carry out each party’s obligations under this Agreement.
2. The Broker will implement and maintain industry-standard technical and organizational measures to secure personal information in accordance with applicable data protection laws. The Broker will reasonably cooperate with Novella’s or the Insurer’s security personnel in conducting any audit or investigation initiated by Novella’s or the Insurer’s security personnel.
3. The Broker shall store personal information solely within the country from which the personal information is entered or otherwise received by the Broker. The Broker may not transfer personal information across national borders without Novella’s prior written consent (or, if applicable, a mutually-agreed data transfer agreement).
8. CONFIDENTIALITY
1. During the term of this Agreement, each party (a “Disclosing Party”) may provide the other party (a “Receiving Party”) with confidential and/or proprietary materials and information (“Confidential Information”). All materials and information provided by Disclosing Party to Receiving Party and identified at the time of disclosure as “Confidential” or bearing a similar legend, and all other information that the Receiving Party reasonably should have known was the Confidential Information of the Disclosing Party, shall be considered Confidential Information. Receiving Party shall maintain the confidentiality of the Confidential Information and will not disclose such information to any third party without the prior written consent of Disclosing Party. Receiving Party shall use the Confidential Information only for the purposes contemplated hereunder. The Receiving Party must use the same care to protect the Disclosing Party’s Confidential Information, as it provides to protect its own Confidential Information of like-kind; and, in no event will the Receiving Party fail to use reasonable care to avoid unauthorized use, including disclosure, loss or alteration, of the Disclosing Party’s Confidential Information. The Receiving Party may disclose Confidential Information to its agents, contractors and representatives, if they have a need to know and an obligation to protect the Confidential Information that is at least as restrictive as required under this Agreement. The Receiving Party may disclose Confidential Information to its affiliates if such affiliates have an obligation not to disclose the Confidential Information that is at least as restrictive as required under this Agreement. Confidential Information shall not include any information that: (1) is made generally available to the public without breach of this Agreement, (2) is developed by the Receiving Party independently from, and without use of, the Disclosing Party’s Confidential Information, (3) is disclosed to Receiving Party on a non-confidential basis by a third party who is authorized to make such disclosure without restriction, or (4) was in the Receiving Party’s lawful possession on a non-confidential basis prior to disclosure to the Receiving Party and was not obtained by the Receiving Party either directly or indirectly from the Disclosing Party. Receiving Party may disclose Confidential Information as required by law or court order; provided that, Receiving Party provides Disclosing Party prompt advance written notice thereof (to the extent legally permissible) to enable the Disclosing Party to seek a protective order or otherwise prevent such disclosure at Disclosing Party’s sole cost and expense. At any time, upon Disclosing Party’s request, Receiving Party shall return to Disclosing Party all Disclosing Party’s Confidential Information in its possession, including, without limitation, all copies and extracts thereof. Notwithstanding the foregoing, Receiving Party may disclose Confidential Information to any third party to the limited extent necessary to exercise its rights or perform its obligations under this Agreement; provided that, all such third parties are bound in writing by obligations of confidentiality and non-use at least as protective of the Disclosing Party’s Confidential Information as this Agreement.
2. If either party reasonably suspects or has knowledge of an actual data breach or compromise of its security program or network which has resulted in the loss or unauthorized access to, or the disclosure, use, or acquisition of, Confidential Information (a “Data Incident”), then the party suffering such Data Incident shall notify the other party as soon as reasonably possible following discovery such event, but no later than forty eight (48) hours of any reasonably suspected or actual Data Incident. The notice will summarize in reasonable detail the nature and scope of the Data Incident and the corrective action already taken or to be taken by the party suffering such Data Incident. To the extent possible, the notice shall be timely supplemented to the level of detail reasonably requested by the other party, inclusive of relevant forensic reports. The party suffering such Data Incident shall, as soon as practicable, take all necessary and advisable corrective actions, and shall fully cooperate, consistent with the other party’s obligations to protect Confidential Information, in all efforts to investigate the Data Incident, to mitigate the adverse effects, and to prevent a future occurrence. Such cooperation will include responding to the other party’s inquiries about the Data Incident in a timely fashion. If any Data Incident suffered by one party triggers the other party’s legal obligations to provide notice to its individuals, then the party suffering the Data Incident shall pay for the other party’s reasonable expenses related to addressing its legal obligations for the Data Incident, including legal fees to determine if the Data Incident is a data security breach requiring notice under applicable law, the cost of such notice and reasonable credit monitoring, and any other directly related costs and expenses.
2. Each party agrees that a breach, or threatened breach, of the requirements set forth in this Article 3. may cause irreparable harm that is inadequately compensable in monetary damages. Accordingly, either party may seek injunctive relief in any court of competent jurisdiction for the breach or threatened breach of this Article without the requirement to post bond or prove monetary damages in addition to any other remedies in law or equity. The obligations under this Article 8 shall survive termination of this Agreement.
9. INDEMNIFICATION
Each party will indemnify the other party and hold the other party harmless from and against any liability, loss, damage, expense, or attorney’s fees arising out of or incurred in connection with third-party claims or demands brought against the indemnified party relating to, or arising out of, a material breach of the indemnifying party’s obligations under this Agreement, except to the extent such act or omission is caused by the negligence, intentional or willful misconduct of the other party. This provision shall survive the termination of the Agreement.
10. GENERAL PROVISIONS
1. The Broker and Novella will deal with one another in good faith and in accordance with the terms of this Agreement.
2. The Broker is an independent contractor and not considered an employee, representative or agent of Novella for any purpose. Nothing herein shall be construed to create any agency, joint venture, partnership or other similar relationship or a relationship of employer and employee between Novella and the Broker, or between Novella and any of the Broker’s employees or officers.
3. Novella shall not be responsible for expenses, fees, taxes or any other charges incurred by the Broker or on the Broker’s behalf, except as authorized by Novella in advance and in writing.
4. This Agreement shall be governed by the laws of the State of New York, without regard to conflict of law principles.
5. This Agreement sets forth the entire understanding of the parties and supersedes any prior agreements or understanding relating to the subject matter hereof.
6. All notices, requests, consents and other communications by either party, arising out of this agreement must be in writing and addressed as follows:
To the Broker:
___________________________________
Attention: __________________________
To Novella:
___________________________________
___________________________________
___________________________________
Attention: __________________________
- Novella may modify the Commission rates set forth in Exhibit A at any time upon written notice to the Broker. Further, Novella may modify the terms of this Agreement as required by law or an Insurer. Except as otherwise permitted herein, this Agreement may be revised and/or modified only in a writing executed by both Novella and the Broker.
- If any portion of this Agreement shall be declared void or unenforceable by any court or administrative body of competent jurisdiction, such portion shall be deemed severable from the remainder of this Agreement, which shall continue in all respects valid and enforceable.
- This Agreement may be executed in counterparts. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be considered original executed counterparts for purposes of this section.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement by a duly authorized representative. By executing below, each signatory represents and warrants that he or she is fully authorized and empowered to do so on behalf of his or her representative party.
FOR THE BROKER:
Signed: _________________________________ Date: ______________
Name: _________________________________
Title: _________________________________
FOR NOVELLA:
Signed: _________________________________ Date: ______________
Name: _________________________________
Title: _________________________________
Exhibit A
Commission and Line of Business Exhibit
Commissions:
Commission will vary by account. Novella will notify the retail producer of the commission amount due to them at the time of binding.
Authorized Lines of Business:
The broker is authorized to sell all lines of business that Novella supports.