A broker of record letter (BOR) is a document a board member or community manager (if applicable) can sign, that identifies one broker as the representative for an insurance policy. Signing a BOR in favor of a broker, gives that broker sole authority over the policy named in the letter. Carriers typically won’t offer insurance quotes to multiple brokers. In most cases, only one broker can service a policy at a time.
A broker of record letter may be appropriate if the association has a policy they want to keep for one reason or another, such as claim service, broad policy form or strong ties to a particular carrier. However at the same time, perhaps their broker isn’t successfully servicing the account,whether they haven’t heard from or seen their broker, in some cases, ever, or their broker hasn’t educated the board on increasing value/replacement cost, etc. This is the appropriate time to sign a BOR. You can keep the policies you want but have them serviced by someone you are more comfortable with, and someone that will maximize the policies in place and add value to your insurance.
Sadly, I have known some brokers to abuse a broker of record letter and “slyly” ask a community to sign this type of letter, without really explaining the intent. What I don’t like about some BOR tactics, is in a scenario where a new broker is asked to quote coverage. That broker shops to several appropriate carriers (that match your property’s needs, exposures and price points) and when the current broker catches wind, quickly (last minute) goes to shop other options for the first time (in many cases) in years, and finds themselves frustrated when someone else did the work they should have done all along. They find themselves unable to obtain these quotes as carriers have offered options to another broker. In turn the broker may ask their client to sign one or several BORs in order to obtain the policies another broker already acquired. Often times, this isn’t explained to the client adequately and the broker that “sat on it” gets away with the results of the hard work the newly approached broker prepared. When a broker doesn’t clearly explain the purpose of a BOR, it is effectively stealing another broker’s work.
If a broker renews coverage each year with the same carrier(s) and never mentions other options or how the open market may or may not suit your insurance needs, it could be that they are not actively pursuing the best policy at the most competitive premium each year, a disservice to the community. You should feel confident your broker is putting in the work each year, evaluating replacement cost changes, confirming policy limits and comfort levels, and sharing with you the open market results based on your association’s needs.
