Many Broker-of-Record Letters Based on Deceit

Sometimes it pays to be a skeptic

It’s always important to not just read, but understand anything you sign.  A Broker-of Record or Agent-of-Record letter is formal notification giving an agent or broker authority to access insurance carriers that have previously been accessed by other agents or brokers. It also revokes the formers’ authority to deal with the insurance carriers on your behalf.

Deciphering the insurancespeak

Simply put, a BOR or AOR letter allows an agent to take the quotes and work of another agent. The letter will say something such as “Please recognize ( XYZ agency or agent ) as my Broker of Record for all prior submissions. This authorization revokes any previous authorizations.”

I do not have a problem with BOR or AORs if properly represented. However, I see more and more insurance agents deceiving their prospects by asking them to sign BOR letters and telling them it is standard operating procedure. This is, in fact, shrewd play to take the work of others.

When a BOR/AOR may be necessary

Below are some legitimate reasons you may want to provide an agent or agency a BOR/AOR letter:

1. If you are not receiving good service from your agent or agency, it takes days or weeks to get your agent to return your phone calls or to get certificates of insurance to your clients.
2. If you lack confidence that your agent or agency fully understands your insurance needs.  Not all agents and agencies understand product recall or product liability insurance. As a result, they may struggle with providing the appropriate coverage and premiums. You must having confidence that your agent or agency specializes in your type of business.
3. If a family member is in the insurance business. Let’s not be naïve: it’s okay to support a family member and want them to do well in their profession.  However, it’s inappropriate to have other agents do all the work with the intention of moving it over when the work is complete.  If a family member tried to help but didn’t provide the best quote, I would expect you to move your business with a BOR or AOR letter.

The bottom line

The next time you are seeking multiple quotes from different agents or agencies and they send you a BOR or AOR , think twice. Make a decision based on knowing that trust and honesty are the most basic requirements for a relationship.