A person handing a man in a suit some documentsJenny from Cornerstone Management asked the following question: “What is the purpose of the broker of record change? Can an insurance broker have one signed, to obtain “blocked” quotes; is that legal?”

Great question, Jenny! The Broker of Record change (sometimes called a BOR) is to, literally, switch from one broker to another. It would be used to obtain blocked quotes, or take over an account from another broker. Here are some examples:

Example #1
A manager requests insurance proposals for a condo community and provides requested information to agents and brokers. An agent gathers the information, does additional research, and works with underwriting to get the best possible pricing for the community. Another agent for the same carrier talks to the manager and convinces them to sign a broker of record letter. Now this new agent, who has done no work on the account, can bind the account and get the commission and renewals going forward.

Example #2
A manager is having difficulty reaching their agent for a condo community. The agent is not responding to emails and does not return calls. This goes on for several months. The manager signs a broker of record form so that another, more responsive, agent for the same carrier can take over the account. Generally, the new agent will make contact with the old agent to see what is going on and if the situation can be rectified before they take over the account. In this situation, the change makes perfect sense. The manager wants the best service possible for their community.

Example #3
A manager asks multiple brokers to provide quotes for earthquake insurance on a condominium community. One broker explains that, in order to quote the account they will need a broker of record letter. They do not explain that the letter removes all other brokers from the market. The letter doesn’t open up new opportunities, it limits them all to one broker.

As you can see, while it is legal, there are good reasons, and not so good reasons for Broker of Record changes. If you have questions about insurance forms, please ask!

Terri Guest, CIRMS, CMCA is the Northern California Sales & Marketing Representative for Berg Insurance Agency and can be reached at Terri@berginsurance.com. Have an insurance question? Ask Terri and your question may be the subject of next month’s edition of Coverage Corner! If your question is picked, you will win a gift card!