The relationship between an insurance policyholder and their agent or broker is formalized through the Broker of Record (BOR) designation. This designation grants a specific agent the formal authority to manage the client’s insurance affairs. The BOR status allows the chosen agent to interact directly with the insurance carrier on the client’s behalf. Understanding this designation is fundamental for managing insurance representation effectively.
Defining the Broker of Record
Being officially “on record” means the insurance carrier recognizes the designated agent as the sole representative for the policyholder. This status grants the broker the authority necessary for servicing the account efficiently. The representative gains access to sensitive policy details, including coverage limits, premium schedules, and claims history.
This recognition allows the broker to negotiate policy renewals, request coverage endorsements, and bind coverage. The carrier directs all correspondence and commission payments related to that policy to the designated BOR. This establishes a singular point of contact and ensures clarity for the carrier regarding account management.
The Purpose of the Broker of Record Letter
The formal BOR relationship is initiated and validated by the Broker of Record letter. This written authorization is signed by the policyholder or an authorized representative. The letter serves as proof of the client’s intent to switch or appoint a representative.
The letter is submitted directly to the insurance carrier. It protects the carrier from liability or disputes between competing agents by confirming the client is willingly making the change. The specific policy number ensures the authorization applies only to the intended contracts.
The letter contains specific information, including the policyholder’s name, affected policy number(s), and the desired effective date. It must also identify the name and license number of the newly appointed broker or agency. This documentation allows the carrier to update systems and transfer account management responsibility.
How the BOR Process Works When Switching Brokers
The BOR letter is the mechanism used when a policyholder transitions account management to a new broker. The process begins with the client signing the letter, instructing the carrier to transfer authority. The new broker then submits the formal letter to the carrier’s processing department.
Upon receipt, the carrier validates the instruction and establishes a waiting period, known as the “challenge period.” This mandatory delay ensures the previous broker has an opportunity to confirm the client’s decision and prevents unauthorized transfers.
The waiting period is typically ten days, though the length varies based on state regulations or carrier guidelines. During this window, the former broker may contact the client regarding the change. This mechanism protects the policyholder and ensures the decision is final.
The transfer of authority becomes effective immediately following the expiration of the challenge period, assuming the request was not rescinded. The carrier updates its records with the new BOR’s information. The carrier then notifies the previous broker, confirming the loss of BOR status and transferring all servicing rights to the new agent.
Implications of Appointing a Broker of Record
Appointing a new Broker of Record establishes exclusivity, altering the service structure for the policyholder. The designated agent is the sole party authorized to receive commission payments from the carrier for that policy. This underscores the binding nature of the BOR designation, as the carrier pays only one broker.
Exclusivity means the appointed broker is the only party authorized to negotiate policy changes or access confidential account information. The carrier directs all policy documents, renewal notices, and correspondence only to the BOR. This consolidation ensures efficient communication and prevents conflicting instructions.
The designation immediately affects the previous agent, who loses all access and authority concerning the policy. Once the transfer is finalized, the former broker is no longer permitted to access policy details or discuss the account. The carrier’s system automatically blocks the previous agent’s access to ensure compliance with privacy regulations.
Revoking or Rescinding the BOR
Policyholders retain the right to terminate the relationship with their current Broker of Record. Ending the BOR status is known as revocation or rescission, requiring formal administrative action. The simplest method to revoke authority is by executing a new BOR letter, which simultaneously appoints a different agency while terminating the previous one.
An alternative is submitting a formal letter of revocation directly to the carrier, explicitly stating the intent to remove the current agent without appointing a replacement. This leaves the account unrepresented until a new BOR letter is submitted or the policy is renewed directly with the carrier.
Carriers sometimes impose constraints to prevent the rapid cycling of agents. These constraints involve mandatory waiting periods before a client can submit a subsequent BOR request following a recent change. Such restrictions stabilize representation and encourage brokers to invest time in servicing the account.
These waiting periods can range from three to twelve months depending on the jurisdiction and carrier. The policyholder should review state regulations and carrier rules to understand limitations on how frequently they can change their authorized representative.