What Is a Broker of Record Letter and How Does a BOR Change Work?

A Broker Of Record (BOR) Letter is a brief, signed document that assigns a new insurance broker as your official representative for all dealings with your insurance carrier. Upon acceptance of this new BOR from the carrier, the assigned broker will be able to quote, service and negotiate renewals on behalf of you as the client on each of the policies listed within the letter. Commission payments are then made to the new broker and the former broker's authorization for representing you ceases. A BOR letter simply changes who can represent you in dealing with your carrier, and it does not by itself change your policy, your carrier, or your premium.

Companies are signing BOR Letters far more often than they realize they can. If your Broker quit calling you back, failed to meet a Renewal Deadline, or never remarketed your Account, you do not need to cancel your policies to leave. You simply appoint a replacement using one page. The remainder of this Guide will provide an overview of: What the Letter Does Legally, What Happens After Your Signature, & When it makes sense to Make a Change with a BOR.

What is a broker of record?

The Broker of Record (BOR) is the broker that the insurance company identifies as your designated representative in relation to a particular insurance policy. A BOR is simply industry shorthand for that designation, so signing a BOR means signing the letter that appoints a new broker of record. Insurance companies do not allow multiple brokers of record or their respective representatives to give service instruction on the same account therefore they maintain a single designation and send all communications via this single designation. Your policy documents, endorsements, and cancellation notifications will be sent to whoever is identified as the Broker of Record. This individual negotiates with the underwriter at each renewal period. They also earn the commissions embedded in your premiums. Each policy can have only one Broker of Record.

An agent of record letter works the same way. The only difference is who the producer legally represents. An agent and a broker sit on opposite sides of the transaction, so carriers call it an agent of record (AOR) letter when the producer is an appointed agent and a broker of record letter when the producer is a broker. From your side of the desk the paperwork and the confirmation process are identical.

What does a broker of record letter do?

Your written instructions to the insurance carrier in regard to substituting one broker for another are contained in a letter. The majority of carriers will have this type of requirement in writing from your company (letterhead), dated, and signed by either an owner or an officer, and specifically outlining which of the companies' lines/policies this letter pertains to. As soon as the carrier accepts this letter, there will be a simultaneous transfer of three items.

The new broker who has been appointed will now have the ability to ask that the policy be endorsed, issue certificates, and negotiate the renewal terms. The carrier's portal and underwriters will also begin working with the new broker while the former broker is unable to access these areas. In addition to access being granted to the new broker of record, commission payments will redirect to the new broker of record.

Who has the ability to sign matters. Generally speaking, carriers will be looking for the signature of someone that can legally bind the named insured. This would include an owner, officer, or typically the individual that signed the application. A letter signed by an office manager on plain paper often bounces back requiring a properly signed document, thus burning additional days you may not have prior to the expiration of the current policy. The letter however cannot make any changes such as cancellation, rewriting, or quoting any new policies because it is the carrier that has contracted with you (the insured) not your broker. Your coverage, limits, and premium hold until the new broker actually markets your renewal.

What happens after you sign a BOR letter?

The new broker delivers your request for a change in service to the carrier, who gives the incumbent broker advance notice prior to processing your request. The producer of record (standard) provision allows the incumbent broker an opportunity to confirm your intention typically within 10 business days following the carrier's notification of the requested change. Some carriers run shorter windows under their own agreements. During that window the incumbent can ask you to reconsider, and if you send the carrier signed revocation instructions before it closes, nothing changes. If the window passes quietly, the designation becomes binding on both brokers.

Not every letter will be processed. As carriers process BOR letters under the terms of their contracts with producers (through producer agreements), and if there are no contracts for the new brokerage company to send the designation through in order to receive payment from the carrier, the carrier will reject your letter. The NAIC Producer Licensing Model Act is used by the majority of states and has been adopted into most state licensing statutes. Therefore, appointing insurers have up to 15 days after the agency contract or first application to file a notice of appointment with the regulator.^[1] Direct writers do not accept BOR letters because they only hire producers to work directly for them. Prior to signing, verify that the new brokerage firm can handle your current carrier's account.

Expect the rescind call after you have signed the BOR. Almost all incumbents do this, and if they didn't before, then their call is often the first time that account has been called in years.

What looks like a regulatory requirement (the 10 business day window) is really just what carriers wrote into their producer agreements, which is why it varies from company to company. As the Independent Insurance Agents of Texas put it in their guide for insurance companies, there are "no regulations covering the use of AOR letters" at all.^[2]

Commission timing is the part practitioners argue about. Many producer contracts have language in them that states all commission paid to the previous brokerage for premiums earned remains with the previous brokerage (the broker) until such time as the policy terminates by cancellation, expiration or renewal anniversary, and only then does it flow to the new brokerage. The IIAT has very direct advice regarding this situation during a midterm scenario. The new agent will service the account without receiving a commission for servicing until the policy renews.^[2] Your new broker takes over the work either way, which is why brokerages weigh a mid-term BOR that carries months of unpaid servicing.

Here are what a Processed BOR Letter Changes and Leaves Intact:

Live open claims should be considered separately when determining the time frame that the new broker's representation begins. The adjuster works for the carrier, so a claim in progress continues uninterrupted, but the incumbent broker's advocacy ends the day the designation becomes final. Verify the new designated broker has assigned himself the responsibility to follow-up on all pending matters around a large open claim on day one.

When should you change your broker of record?

Change brokers when it costs more than changing them would. The re-occurring symptoms are renewal letters that arrive days before your coverage goes into effect with no marketing summary, certificates take a week to get instead of an hour, no annual review of how operations have changed and never leaving one carrier even as premium increases. Access matters just as much as effort. If your business has grown beyond standard markets, you need a broker who can reach both admitted and non-admitted carriers rather than a broker who quotes the same two companies every year.

Watch one wrinkle with surplus lines placements. E&S business runs through a wholesale broker, so the record sits at the wholesaler level and a retail BOR may not move the account if your incumbent controls that relationship. A second BOR at the wholesale level is often required. Timing matters too. Carriers process BOR letters mid-term, but most buyers sign 60 to 90 days before renewal so the new broker has time to market the account. When you are ready, the switch runs in a fixed order:

1. Interview the replacement before signing anything

   Identify what appointing carriers are represented by the new broker and how will he service your daily needs, also ask about his renewal cycle. A capable broker reviews your current policies and loss history before promising anything.

2. Sign the BOR letter the new broker prepares

   Letter should be placed on company letterhead. Include the name of the carrier and policy number(s) that will be moving. Identify the start date (effective date). And have the signature of an authorized officer or owner of the entity. You will need one letter per carrier being moved.

3. Wait out the carrier's confirmation window

   The carrier will contact your incumbent broker and hold the account "open" until the designated time has passed, as indicated by the standard Producer of Record Clause (typically 10 business days). Expect a retention call from the incumbent, and revoke in writing only if they genuinely change your mind.

4. Move the account file to the new broker

   After designation is finalized, new broker will pull all policies, endorsements, and loss runs directly from the carrier and build back your Certificate Holder List to ensure uninterrupted proof of coverage.

5. Renewal strategy, meet with your new broker

   Determine with your new broker what markets to pursue, what aspects of your programs need work, and set a date for when those submissions are due. That's why you changed brokers, make sure you have a plan.

A broker asking you to provide your most recent loss runs before offering any savings is a good sign, as true marketing begins with underwriting information rather than a guess. If done in this order, the first renewal should bring a marketing summary outlining the carriers contacted and the quotes received from those carriers, all provided weeks prior to the policy effective date instead of just days.

This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.

The Bottom Line

A Broker of Record Letter is a document that names a different Broker to represent you before a Carrier and does so in such a way that it does not affect your Policy, Premium, nor your Carrier. The signing of this document will cost you no money, but you have approximately a 10 business day window in which you can still rescind the designation. Once the designated time frame has ended, all other changes will happen at the same time. Therefore, prior to signing this document you should verify if the new Broker can actually take control of your account with the Carrier. And thereafter hold them accountable for a legitimate marketing summary at renewal.