If you are actively shopping for an insurance policy for your home or business, you may be asked to sign a broker of record or agent of record letter at some point during the process. While it may seem like a small thing, it can affect the quotes you are able to get for insurance.
Here’s the scenario: your insurance renewal just showed up with a huge increase. You decide to shop around and contact a couple of brokers and insurance companies and put them to work getting quotes for you. Suddenly, one or both brokers is telling you they need an agent of record or broker of record letter because “the market is blocked”. Should you sign?
What is a Broker/Agent of Record Letter?
An Agent of Record (AOR) or Broker of Record (BOR) letter is a document that you must sign that says you are naming an agent or broker as your representative to negotiate coverage and premiums with a particular insurance company.
It may include a statement saying that you wish to rescind a certain waiting period (usually 10 days), which means that the agent or broker can receive quotes from the insurance company right away.
Why Do You Need an AOR or BOR?
Independent brokers and agents are able to access many insurance companies. When you submit an application, your broker will go to all of the available insurance companies that will be most likely to write the insurance for your home or business.
Unfortunately, many brokers have access to the same insurance companies. If an insurance company receives more than one application for the same piece of business they will only provide a quote to the broker who submitted a complete application first.
What Is Blocking The Market?
Some brokers may submit your application to all of their carriers, even those for which they do not intend to provide quotes. The objective is to “block the market” for other brokers, so they will be unable to provide a quote for your home or business.
AOR or BOR letters unlock those markets for brokers who cannot otherwise access them due to blocked markets. If you have not yet received a quote from one company that has been blocked by Broker A, Broker B may ask to sign an AOR or BOR so that they can provide a quote.
Multiple Brokers May Be Bad For Your Bottom Line
While getting multiple brokers on the case may seem like a good idea, that isn’t always the case. In addition to blocking the markets, multiple submissions from different agents may close the market entirely.
How? If multiple brokers submit applications and those applications have conflicting information, an insurance company may opt to not quote the business for anyone. The company may even decide not to quote the following year.
Your Best Bet
An independent insurance broker is always your best bet for getting the best quotes for your home or business. Do you need more than one? Probably not. If your current broker isn’t working for you, you can always get another one and sign a broker of record letter then. Chances are you may not have to.