Have you ever been asked to sign an Agent or Broker of Record Letter (AOR or BOR)? Perhaps, you are seeking a competitive quote from an agent and they advise an Agent or Broker of Record Letter is required to generate a quote. The term may sound innocent enough, however the document, once signed, has the power to transfer all your insurance policies to another agent.
An AOR or BOR should only be used when the insured (you the policyholder) wants to ultimately move their business to another agent. This may happen for a variety of reasons like, the current agent is not timely servicing the account, the current agent is unresponsive, the current agent is unknowledgeable to your specific risks, or the current agent’s pricing is no longer competitive. Once a BOR is signed, the incumbent or current agent will receive a letter from your insurance carrier stating you have requested your business to be moved to another agent. Per various state law guidelines, the incumbent agent will have a certain number of days to work with you, the policyholder, to revoke the BOR. If the BOR is not rescinded by the end of the time allotted by law, the policies will be transferred to the new agent and the old agent will be removed from further servicing the account.
A BOR should never be used to generate a quote or to “see” if there is a cheaper price available. Unscrupulous insurance agents may mislead a policyholder into thinking a BOR is required for competitive insurance rate shopping, but nothing could be further from the truth. Since most insurance carriers will only generate a single quote for a policyholder’s account, insurance agents who have no real competitive markets may ask a policyholder to sign a BOR so they can get a better price. They then turn around and hand the BOR back to the policyholder’s current insurance carrier as a request to take over the existing insurance policy. This provides the policyholder no value, no competitive quote and further confuses the situation with the policyholder and their insurance carrier. The process merely just moved the policyholder’s current insurance policy to another agent and blocked your current agent from providing you your expected renewal quote.
AOR’s and BOR’s have an integral place in the insurance industry. When used properly, they help the policyholder move their business to a new agent who has shown they can bring overall added value to their account.