What is a Broker of Record (BOR) Letter?

May 16, 2016
The BOR letter suspends your current broker’s ability to negotiate on your behalf with the insurance company and terminates the business relationship between you and your current agent/broker.

Insurance companies rely on insurance brokers to supply applications/clients for evaluation and quoting. Since there are a relatively small number of aviation insurance companies, each with limited staff, there is no time to quote the same account to numerous brokers. To maximize efficiency, each company will recognize only one broker per account – this is done on a first-come, first-serve basis.

The first broker to submit an application to the underwriter will become the broker of record. The underwriter will assume that the first broker to submit the application was the client’s first choice. Any brokers who submit an application after that will not be able to obtain a quote. A client can select whichever broker they would like to work with the underwriters on their behalf. If one chooses to change brokers, they must execute a broker of record letter.

The broker of record letter is a serious document that accomplishes the following:

• Suspends the current broker’s ability to negotiate on your behalf with the insurance company.

• Terminates the business relationship between you and your current agent/broker.

• Confirms the appointment of a new broker, giving that broker the sole ability to negotiate with the insurance underwriters for you.

• Provides access to any underwriting information, proposals, policy information, or other information related to your insurance account.

When should I sign a broker of record letter?

• You are simply unhappy with the quality of service or performance of your current agent/broker.

• The new broker has more experience in your class of business, aviation knowledge and expertise, or a higher degree of technical insurance knowledge specific to your business.

• You would like to assign brokers specific underwriters to work with and obtain quotes.

What happens when I sign a broker of record letter?

• The “new” broker will send the signed BOR to the insurance companies.

• The insurance company will then notify your current broker by sending a copy of the signed BOR letter confirming the change.

• The insurance company will allow your current broker five days to obtain a reversing BOR letter. This is known as a “rescinding period.”

• Your current broker may call you to discuss why you are making a broker change.

Many times the “fired” broker tells underwriters not to release any information, and will force the customer to wait the entire five days. They have no intention or ability to obtain a reversing BOR, but want to delay the process as long as they can. This “sour grapes” attitude is unprofessional, and only serves to punish the customer. A simple explanation to your previous broker clearly explaining the reasons for the change usually ensures a smooth and seamless change.

Buyer beware!

Be certain you clearly understand the full effects of signing a broker of record letter. It is very important that you select a knowledgeable, competent aviation insurance broker who is contracted with 100 percent of the aviation insurance underwriters available, and provides you with a complete summary of all the quotes received. This level of service is what you should expect from any broker you select. Your CFO will thank you.