Understanding the Implications of a Broker of Record Letter

The broker of record (BOR) letter is one of the most powerful and abused documents in the insurance industry. Unfortunately, many less-than-scrupulous brokers convince lay insurance buyers to sign this document without explaining exactly what it accomplishes.

Your insurance policy is due for renewal and you have decided to seek a competitive offer from another insurance broker. You provide this broker with all the pertinent underwriting information and then sit back and wait to receive your quote at a later date. instead, the competing broker calls you back and complains that you can’t get any quotes because your current broker has already contacted all available insurance markets and is therefore “locked out” from getting quotes . this seems unfair, even anti-competitive.

Reading: What does bor mean in insurance

The competitor’s runner then suggests a way to “fix” it. simply sign a bor letter naming you as a broker, which will allow them to access the insurance market to obtain a quote. Please be careful and make a careful evaluation before signing! this is a very powerful document. As soon as you sign this letter, the competing broker will send it to the insurance companies that were “blocked,” informing them that you have fired your current broker and hired the competing broker to represent you in the marketplace. . The insurance company will then notify your current broker by sending them a copy of the signed bor letter confirming it. the insurer will give your current broker five days to obtain a bor rescission letter. your current broker will now contact you and ask why you were fired. This can be an awkward call to receive if you don’t know it’s coming. A good broker looking for a bor letter will have carefully explained exactly what will happen if he signs the letter so there are no surprises.

what exactly is a registration letter broker and why is it necessary?

Insurance companies rely on insurance brokers to keep their accounts for their appraisal. there are a small number of aviation insurance companies, each with limited staff, and they do not want to bind their insurers by quoting the same risk to many different brokers. therefore, each will recognize only one runner at any given risk on a first-come, first-served basis. The first broker to present a risk to an aviation insurance underwriter is the “official broker (or agent) of record” and the insurance company will assume that this person was the customer’s first choice. the choice of broker belongs entirely to you, the client, so the broker can be changed later if that is the client’s wish. enter the broker from the registration letter. is a serious document that accomplishes the following:

terminates the relationship between you and the current broker and suspends the current broker’s ability to negotiate on your behalf with the insurance company.
affirms the appointment of a new broker, giving that broker the exclusive ability to negotiate with the insurance company for you, and granting access to any underwriting information or proposals that are currently “on the table.” (Without a significant change in basic underwriting information, if the insurance company has already made a firm commitment to the first broker to decline or provide a quote, the new broker “inherits” that decision, either a decline or a quote specific). premium proposal.)
provides a relief mechanism or transition period from one broker to another, expressed in number of days, to allow full disclosure of the letter to all parties involved, thus giving the previous broker the opportunity to review the implications of the letter with you and to confirm your desire to change brokers.

Reasons you might decide to sign a broker registration letter include:

You are simply not satisfied with the service or performance of your current agent/broker.
the competing broker convinces you that they bring more benefits to the table, including potential expertise in areas such as expertise in your class of business, claims, or loss control unique to your risk.

make sure you understand the ramifications of this document. have your broker (either your current broker or the prospective broker) explain your intent before you sign it. It is generally best to select, in advance, a competent aviation insurance broker who has access to all markets and who consults you on the resulting proposals. For more information, contact an AssuredPartners aerospace insurance specialist.