what does a Broker of Record letter do?

What Does a Broker of Record Letter Do?

A broker of record letter, also known as a “BOR” letter, or agent of record letter, is a letter that tells an insurance carrier that you have chosen a particular insurance broker to manage your insurance policies and handle your business insurance situation.1 

A BOR letter is only needed for a business with existing insurance policies that wants to work with someone new on those policies and/or needs help to find new insurance coverage. 

However, as described below, not all insurance carriers treat broker of record letters the same way.

As such, if and when you decide you want to work with a new insurance broker, you should plan ahead and develop a strategy to make the transition process as simple as possible for you and your business. 

How Does A BOR Letter Help Me?

Ultimately you have control over which insurance broker you decide to work with…

Just because you started your business with a particular insurance broker, or even an agent, it doesn’t mean you need to continue down a path of mediocrity when it comes to your insurance.

Indeed, you may have many questions in the back of your mind about whether you are working with the best insurance broker at the moment… 

Unfortunately, not understanding your business insurance is a situation that gets worse over time

Each year, each price increase, each subtle miscommunication with your broker about what you do, each claim or renewal that is not handled properly, etc. is like a subtle elbow nudging you and your business in the wrong direction.

A broker of record letter is used to simply move your business insurance from one broker to another.

Why Do I Need A Broker Of Record Letter?

Most insurance brokers have access to the common, major insurance carriers like Chubb, The Hartford, Travelers, CNA, etc.2

However, an insurance carrier will only work on an account with one insurance broker at a time.

For example, if “Broker A” places a business owner’s policy (BOP) for you with Chubb, “Broker B” will not also be able to work with Chubb on your account.

The new broker will not even be able to talk to Chubb about your account.

They will be “blocked”.

As such, for your new insurance broker to get total visibility on your insurance situation, you will need to request a broker of record letter from the new broker you want to work with. 

How Does The BOR Letter Process Work?

The broker of record process begins once you have decided to work with a particular insurance broker. 

You’ve made this decision only after discussing your insurance situation with the new broker, and understanding the long-term benefits of making the change.

Your new broker will also have reviewed your insurance and confirmed ahead of time that the carrier, or carriers, you work with will accept a BOR.

The actual BOR process takes about 10 days and works like this: 

  1. Your new broker sends you a DRAFT BOR letter with the name of your company, your carrier name(s), the policy number(s) and the policy effective dates.
  2. You put this letter on your company letterhead, sign and date it and send it back to your new broker.
  3. Your new insurance broker sends the signed BOR letter to the insurance carrier(s). 
  4. The prior broker is notified of the change. 
  5. The policies will be moved in 5-10 days3 unless the carrier receives a “rescinding BOR” or “countermanding BOR” letter from the prior broker that is signed by the insured.

Once the broker of record letter has been accepted by the insurance carrier, or carriers, this formally starts the new brokerage relationship and ends the relationship with the prior broker.

Do All Insurance Carriers Accept BORs?

No… However, most do.

Some insurance carriers have rules around when a broker of record letter may be accepted. There may be a particular “window” of time in which a BOR will be accepted.

Some insurance carriers will not accept “mid-term” BOR, whereas some will.

And some insurance carriers will not accept broker of record letters at all…4

The best time to request a broker of record letter is 30-60-90 days prior to your insurance renewal.

Considering A BOR?

Your insurance broker’s understanding of your business as well as his or her insurance carrier relationships and knowledge of your industry can be extremely helpful to the success of your business.

As such, broker of record letter requests are business decisions and are very common in the commercial insurance world. 

If you are considering working with a new broker, and want to discuss whether it makes sense for your business to make a change, you can schedule an appointment with me.  

Footnotes

  1. A broker of record letter in insurance is different than a broker of record in real estate. The former is a document and the latter refers to the function of a real estate office, also known as a supervising broker.
  2. A specialty insurance broker will be able to offer specialty insurance options to you that a standard broker cannot. For instance, a solar and cleantech insurance broker will have access to more appropriate, niche insurance and risk management options than an "conventional" insurance broker or agent will.
  3. The brief waiting period allows the prior broker to work with the insured on the transition to the new broker and/or try to convince the client to stay with them.
  4. Unless you believe your insurance broker has done something unethical, and you do not wish to spend one more minute with them. In such a situation, the insurance carrier will likely make an exception and allow the BOR.
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