Broker of Record

A broker of record (BOR) is a person an insured individual designates to oversee and represent their insurance policy. This agent receives all notices, communications, and quotes from the insurer on the insured’s behalf. Moreover, they may suggest making changes to an existing insurance policy.

Essentially, a BOR serves as a middleman between the insurance company and the insured. By designating a BOR, policy holders can reduce the expenses associated with an insurance policy. Moreover, individuals can save the time required to manage the policies. A BOR may work with an insurer or independently. They receive a commission from the insurance company for the services offered.

• A Broker of Record is an individual the insured selects to manage and oversee policies and represent them before the insurance provider. The agent also suggests making changes to an existing policy if necessary.
• A BOR evaluates the offerings of different insurance providers in the market and selects a company’s policy that is best suited to an individual’s needs. This way, the insured can save money and time.
• A BOR receives a commission from insurance providers in return for their services.
• Unlike a BOR letter, a letter of authorization does not give an agent the right to negotiate with an insurance provider on the policyholder’s behalf.

Broker of record meaning refers to an agent who is given the responsibility by the insured to manage and oversee their insurance policy. This agent represents the insured before the insurance company, negotiates with the latter, and receives notices, quotes, etc. In addition, a BOR can suggest changes that would benefit the insured and prevent them from making wrong decisions.

A BOR is a retail broker;they might work with insurance providers directly. Alternatively, they might work with wholesale brokers. In the latter case, a BOR has relationships with various insurance carriers and has extensive knowledge regarding the policies available. Accordingly, these agents can help individuals find an insurance policy best suited to their requirements.

Independent agents earn commissions or feesfrom multiple insurance providers. In contrast, affiliated agents earn from the affiliated company only.

A BOR letter or form is a document that legally establishes the relationship among the insurance provider, insured, and the agent.

Insurance companies need a BOR letter to know whom the insured has designated to represent and manage their policy. Hence, before a BOR deals with an insurer on the insured’s behalf, there must be a formal agreement among the three. This letter must include certain details, such as the name of the chosen agent, the name of the plan, and the terms concerning termination.

Individuals can look at the broker of record letter templates online to get a clear idea regarding this document.

A policyholder requires a BOR letter for the following reasons:

• To terminate their relationship with the current broker, suspending the agent’s ability to communicate with the insurance company on their behalf.
• To state the appointment of a new agent, giving the person the right to represent the insured before the insurance provider.

Individuals can go through the following points to understand how signing a BOR change form affects the existing broker:

• Once a policyholder decides to change BOR, the current agent receives a notice from the insurance provider. The notice states that the insured has decided to move their policies to another agent. The existing agent gets a certain period to win back the insured. That said, they may waive the waiting period. 
• The existing agent will get paid on the insured’s policy until it renews.

Let us look at this broker of record example to understand the concept better.

Suppose John Smith purchases a life insurance policy. He appoints an agent Phil Scott to assess the various options available in the market. The agent chooses an insurance provider named XYZ and handles the entire buying process on John’s behalf. John signs a BOR letter, stating that Phil is his insurance broker. Phil will represent John before XYZ; He will receive quotes, notices, and communications, serving as a representative of John.

Once individuals understand the broker of record meaning, they should know the differences between BOR and a letter of authorization.

This article has been a guide to what is Broker of Record and its definition. Here we discuss letter and example of broker of record along with its differences from letter of authorization. You can learn more about from the following articles –

• Reinsurance
• Coinsurance
• Fire Insurance