What Is a Broker of Record (BOR) in Insurance?
Gain clarity on the Broker of Record (BOR) in insurance. Understand how policyholders formalize and manage their designated insurance agent relationships.
A Broker of Record (BOR) in the insurance industry represents a designated mechanism for policyholders to manage their insurance relationships effectively. This designation provides clarity and control over existing insurance policies. It empowers policyholders to make informed decisions regarding who manages their insurance affairs.
Understanding the Broker of Record
A Broker of Record is the insurance agent or broker officially appointed by a policyholder to represent them with a specific insurance carrier for one or more policies. The BOR’s responsibilities typically include handling policy inquiries, facilitating renewals, assisting with claims processing, and providing ongoing risk management advice.
The appointment grants the broker explicit authority to act on behalf of the policyholder concerning the designated insurance policies. This means the broker can access policy details, negotiate terms, and receive communications directly from the insurance carrier. The relationship ensures that a single point of contact exists for all policy-related matters. This arrangement aims to streamline communication and service for the policyholder.
Situations Requiring a Broker of Record Letter
A policyholder often needs to issue a Broker of Record (BOR) letter to formalize a change in their designated insurance representative. This written communication is sent directly from the policyholder to the insurance carrier. One common reason for initiating a BOR letter is dissatisfaction with the current broker’s service, which might include unresponsiveness or a perceived lack of expertise. Policyholders may also find a new broker who offers more competitive terms, specialized industry knowledge, or enhanced service capabilities.
Another scenario involves consolidating multiple insurance policies under a single broker for simplified management and potentially better overall terms. By designating one new BOR, they can streamline their insurance portfolio. A BOR letter is also necessary when a business undergoes an ownership change and the new owners wish to retain existing policies but work with a new insurance broker of their choosing.
The Broker of Record Letter Process
The process of changing a Broker of Record begins with the policyholder drafting a letter addressed to the insurance carrier. This letter typically includes specific details such as the policyholder’s full legal name, the relevant policy numbers, and the name of the insurance carrier. It must also clearly state the name and contact information of the new broker being designated, along with the effective date of this change. The letter usually requires the policyholder’s authorized signature to confirm their intent.
The BOR letter is submitted to the insurance carrier, often directly by the policyholder or through the newly appointed broker. The carrier then processes the request to verify the policyholder’s authorization. The timeframe for the change to become effective can vary, usually ranging from a few days to a couple of weeks. Upon successful processing, the commission associated with the policy will be transferred from the previous broker to the new Broker of Record.
Impacts of a Broker of Record Designation
A Broker of Record designation brings about several important consequences for all parties involved in the insurance relationship. For the policyholder, the most immediate impact is gaining a new primary point of contact for all policy-related matters. Policy coverage remains continuous and unaffected, ensuring no lapse in protection during the transition. The new broker becomes responsible for servicing the policy, addressing inquiries, and assisting with claims from the effective date.
The newly designated broker gains access to the policyholder’s confidential insurance information and becomes the official representative for future renewals and servicing. This includes the entitlement to receive commissions for the policies they now manage. Conversely, the previous broker loses their authority to service the specific policies identified in the BOR letter. Consequently, they will no longer receive commissions for those policies from the effective date of the change. The overarching goal of this process is to ensure a smooth transfer of service responsibilities without any interruption to the policyholder’s coverage.