Understanding an Insurance Broker of Record Letter
An Insurance Broker of Record (BOR) letter is a formal document used in the insurance industry to designate a licensed agent or broker as the authorized representative of an insurance policyholder. This letter serves as an official communication between the policyholder, the current broker (if applicable), and the insurance company to document a change in representation.
The BOR letter is a simple process to ensure that the policyholder can be confident with the relationship and services provided by their insurance broker. This article shows the purpose and steps involved for a policyholder to switch their insurance services to a new broker.
Purpose of a Broker of Record Letter
Clarification of Representation: The primary purpose of a BOR letter is to clearly define who has the authority to act on behalf of the policyholder. This includes negotiating terms, managing policy renewals, and providing advisory services.
Enhanced Service and Expertise: The BOR letter allows the policyholder to switch to a broker who offers more specialized knowledge, better service, or improved rates. This can be particularly important for businesses with complex insurance needs.
Conflict Resolution: In some cases, a policyholder might be dissatisfied with their current broker’s service or expertise. A BOR letter is a formal way to resolve such conflicts and transition to a new broker.
Process of Issuing a BOR Letter
Issuing a BOR Letter: The new agent/broker provides a brief BOR letter for the policyholder to sign. This letter includes key details such as the policyholder’s name, the current insurance policies, the effective date of the new representation, and the names of the current and new brokers.
Submission to the Insurance Company: The new agent/broker submits the signed BOR letter to the insurance company. This notifies the insurer of the change in broker representation. There is typically a waiting period of about 3 to 5 business days for the transition to take place, and the notice can also be rescinded during this time.
Considerations Before Issuing a BOR Letter
Evaluate the New Broker: It’s essential to thoroughly vet the new broker’s licensing, qualifications, reputation, and service offerings. This ensures that the transition leads to an improvement in service quality.
Understand the Transition Process: Be aware of any potential disruptions during the transition period and work with both brokers to minimize these.
Get Assurance: Have written confirmation from the new broker that there are no obligations or penalties associated with making this change. Policies can differ with the time required for making this transition. If the new broker is unsatisfactory, then a switch to another broker can be made at any time.
In summary, a Broker of Record letter is a powerful tool in the insurance industry, enabling policyholders to select the most suitable broker to represent their interests. By understanding the purpose, process, and implications of a BOR letter, policyholders can make informed decisions to enhance their insurance management and service experience.
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Dan Reale, Independent Agent/Owner – Telephone: (407) 808-6149
E-Mail: [email protected]