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.
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:
Individuals can go through the following points to understand how signing a BOR change form affects the existing broker:
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.
| BOR | Letter of Authorization |
|---|---|
| A BOR letter is much more detailed than a letter of authorization. | A letter of authorization is not as comprehensive as a BOR. Instead, it contains specific information, for example, the name of the insurer from whom the agent can obtain information. |
| A BOR letter gives an agent the right to negotiate with the insurance company on the policyholder’s behalf. | A letter of authorization does not give a broker the right to negotiate on the insured’s behalf. |
A broker of record in real estate refers to a type of broker whose responsibility is to ensure that the real estate organization adheres to the local codes and regulations. Thus, a BOR plays a crucial role in ensuring that the firm is not operating illegally.
They check if all the members of the real estate firm have the required license to prevent any legal trouble.
After signing a BOR letter, a policyholder has 5-10 days to cancel it by signing a rescinding BOR letter. This document will make the original BOR signed by the insured null and void.
How to write a broker of record letter?A BOR letter must have the following details:
Name of the selected agent
The effective date of agent appointment
Name of the group plan
Terms allowing termination of BOR appointment
If one is using a broker of record letter template, they must ensure that it has the necessary fields to enter the abovementioned details.
Who signs a broker of record letter?The policyholder or insured signs the BOR letter stating the name of the agent who will be responsible for representing them before an insurance provider.
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 –
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