When should a Broker of Record Letter be used?
Only when an Insured has decided to appoint another broker to handle their account. It should not be used if the intent is to simply authorize a broker to obtain a renewal quotation.
What responsibilities does a broker incur when they take over an account by a Broker of Records Letter?
The new broker is responsible for return commissions if the account is subsequently cancelled. He/she is also responsible, from the date of appointment, for the additional or return premiums resulting from year-end premium adjustments such as audit reports, stock adjustments, etc. The former broker is entitled to the full annual commission, regardless of when the letter is filed, be it one minute after the effective date or three months later. This practice may not be acceptable to all insurers.
What must the BOR letter state in order to be accepted by TIG (Totten Insurance Group)?
The Broker of Record letter must show the name of the business and include the name of the person signing (authorizing the transfer), his/her title and the date of signature. The letter must include the policy number(s), and in the case of commercial insurance, be on the Insured's letterhead. For personal insurance, all named Insureds must sign the letter.
What is the waiting period
TIG's waiting period, pending confirmation from the previous broker that he has, in fact, lost the business is 5 days.
Whose option is it to accept a BOR?
Although it is TIG's decision, in most cases we will support the acceptance of a BOR, as we are strongly committed to letting the client decide whom they wish to have as their broker. There are exceptions, however, and they include, but are not limited to, special arrangements, brokers in good standing and mid-term requests.
What are the expectations and risks for the new broker?
It is critical that the broker be fully aware of the client's exposure before he/she agrees to take over an account as material disclosures are the responsibility of the new broker immediately upon taking over the account. The new broker needs to send us an application signed by them with fully updated information and values.
What other terms apply to TIG's BOR policy?
- Totten will not accept a backdated BOR.
- BOR letters will not be recognized by TIG, prior to effective date of the brokerage appointment.
- Premium adjustments occurring within the policy term prior to the brokerage letter's effective date are the responsibility of the "old (or prior)" broker.
- A letter more than 60 days in advance.