Information Sheet
Broker of Record Letters
By Thomas P. Cox, ARM
Vice President
PhillipsCox Insurance Services
Available As an MS Word Document

A Broker of Record (BOR) letter, sometimes called an Agent of Record letter, is used to direct an insurance company as to the agent a customer would like to be represented by. There are two situations where it is appropriate and in your best interest to use a BOR letter, and one situation where it is to your distinct disadvantage to use a BOR letter.

The first appropriate use of a BOR letter is when you believe that the agent or agency currently representing you is not doing a good job, yet you wish to remain insured with the same company. By executing a BOR letter you advise the company that you are leaving your coverage in place, but direct the company that a different agent or agency will now be representing you.

The second appropriate use for a BOR letter is when you are seeking new coverage and multiple agents are representing the same company. If you decide to use this company, you will have to decide which agent or agency will represent you and you will advise the company of this decision with a BOR letter.

However, there are agencies operating in Virginia today who demand that you sign a BOR letter before they provide you with any service, which gives them the sole right to represent you. These agencies will state that they cannot represent you unless you sign a BOR letter. This is the decision of the agency, not any insurance company, and it is done to decrease or eliminate competition. Decreasing or eliminating competition is not in your best interests, and any agent or agency that demands you sign a BOR letter before any service has been provided should be viewed with skepticism.

How does this decrease or eliminate competition? When I was on the company side of the insurance business I saw agencies obtain BOR letters from prospective customers, thereby blocking any other agent from accessing those companies. Then, information was controlled in such a way that the customer was moved towards the company the agent wanted the business placed with, rather than the agent doing what was best for the customer.

For example, in one case an agent demanded and obtained a BOR letter and the group was then presented with "quotes" from four companies. The agent wanted the business placed with one certain company, so he quoted that company's discounted rate against the manual rates of the other companies, which made those quotes higher. A more recent example was a case where an agent told a group that he would get quotations from three companies, and then told the group that only one of the companies would render a quotation. We were called and opined that something did not sound correct. The BOR was rescinded and it was determined that the other two companies would, in fact, quote the group, and one was offering a lower premium.

As it is not in your best interests to give a BOR letter to any agent or agency (save for the two examples above), we do not demand that you use them. We believe in competition Giving a BOR letter to any agent or agency, prior to them doing any work for you, decreases or eliminates competition and places you at the mercy of the person in possession of the BOR letter. You do not have to sign a BOR letter to obtain premium quotations and any agency asking you to do so should be viewed with skepticism.