Broker of Record Letter
A written authorization from the insured directing a carrier to transfer the servicing of their policy to a new broker or agent.
What It Is
A broker of record (BOR) letter is a formal written document signed by the insured directing an insurance carrier to recognize a new agent or broker as the agent of record for their policy. The BOR letter transfers the servicing rights and commission on the policy from the current agent to the new agent, typically without requiring the policy to be rewritten or cancelled.
BOR letters can be submitted at any time during the policy term, though some carriers have restrictions on timing. Many carriers will not process a BOR letter within 90 days of the policy's renewal date, requiring the new agent to wait until after the renewal. Others process BOR letters at any time but only pay commission to the new agent from the date the letter is processed forward.
The BOR process is a competitive dynamic in the insurance industry. Agents who provide superior service, better coverage options, or lower pricing can use BOR letters to move accounts from competitors without waiting for renewal. Conversely, agencies must protect their book of business from BOR attempts by maintaining strong client relationships and demonstrating ongoing value.
Why It Matters for Brokers
BOR letters are one of the most contentious aspects of agency competition. Losing a major account via BOR during the policy term means immediate loss of commission revenue and the investment made in servicing the account. Brokers must understand both how to use BOR letters to win new business and how to protect their existing accounts from BOR attempts.
Real-World Example
A commercial client with a $120,000 annual premium package ($18,000 commission at 15%) is approached by a competing agency offering better coverage terms. The competing agency presents a BOR letter, which the client signs on May 15, halfway through the policy term. The carrier processes the BOR, transferring commission to the new agency effective June 1. The original agency loses $9,000 in remaining commission for the current term. If the original agency had conducted a mid-term coverage review and proactively improved the program, the client might not have been receptive to the competitor's approach.
Common Mistakes
- 1Not having a proactive client engagement program to protect the book of business, making accounts vulnerable to BOR attempts by competitors.
- 2Submitting BOR letters to carriers during restricted periods (typically within 90 days of renewal), resulting in the BOR being rejected or delayed.
How brokerageaudit.com Handles This
brokerageaudit.com tracks all broker of record changes across the agency's book, alerting management when accounts are transferred in or out. The system also supports proactive client retention by scheduling mid-term coverage reviews, tracking service touch points, and identifying at-risk accounts based on service activity metrics.