Broker of Record vs Agent of Record

Before you sign a Broker of Record (BOR) or an Agent of Record (AOR), here is what you need to know.  

A BOR is a broker of record notice and an AOR is an agent of record. A Broker of Record is an agent designated by the policy holder to represent and manage the policyholders insurance policy.  Now before I move forward let me ask a question.  Does anyone work for free? Does anyone complete a job for a customer, but then the funds go to a competitor or a different local business? No that doesn’t typically happen. Except in the insurance industry. Let me also follow that up by saying I enjoy the customer service that I give everyday. By no means, do I think that every person coming to me for insurance will decide to let me handle their insurance needs.

Marketing, Financial, Insurance, Broker

Here is another scenario that may give you a better understanding of the Broker of Record (BOR) process and what it exactly means.  Let’s say a business owner decides their renewal rates for workers compensation or general liability insurance just can’t be the best out there. So what does the business owner do?  They can start calling other agents? I am assuming they call other agents because they either assume their agent has already looked for a renewal and can’t do any better. They may assume their current agent simply does not have the access to other more competitive markets.  But do they call and ask them to shop for better rate’s?

The first thing a business owner should do is jump on their own computer and search workers comp insurance (let’s keep to work comp). So here they are talking to an agent that is going to get all of the company information. Then this agent will shop all of the markets they have for this businesses particular industry. On average submitting to 3-6 markets. Then presenting that business with new applications to sign and a shiny new quote with not just a better price but a better rate per 100 in payroll.  Most business owners are are so happy that they are saving money (hopefully a lot), but even if it’s only a little hey every penny counts right. At this point most business owners will call their current agent and telling them some similar to, I’m not renewing my policy with you. I found a better price.  At that point the business owner has the agents attention!  At this point the agent decides to start submitting to all of the insurance carriers they are appointed with.  The agent will do this in order to see if they can match or beat the pricing you got from the other agent (me). This may not be because they were not doing their best work for you in the first place. It may be you were not clear to them what your priority was to begin with.  Agents speak with many business owners with many different priorities. Some just want a quote, quickly so they can get back to their business. Others do not mind waiting to get the absolute best deal.

Here is how I imagine the next scenario goes. The current agent that most likely wants to keep your business will ask what carrier is offering better pricing?  The business owner may tell them who the carrier is and the current agent will say, oh I am appointed with that particular carrier.  I can get you those rates.  The current agent would then asks you to sign a BOR or AOR letter, letting them take away the work they did for the business.

I understand this is an imperfect situation, but this is the name of the insurance agent game.  So the next time you are shopping take into consideration the time, effort and work the agent you called for help put into saving you money before you sign a Broker of Record (BOR) letter.

My Insurance Question is a created by the experts at The Insurance Shop LLC. The Insurance Shop was formed in 2005 and over the course of more then a decade the agency has developed relationships with more then two dozen carriers. This vast amount of carriers allow their agents to acquire the best value when shopping for commercial insurance. If you are ready for a new look at your coverage, give us a call at 800-800-4864.