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InsuranceMan 2.0

Tuesday Morning Insurance Tidbit - BOR/AOR

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Happy Tuesday morning, ADI,

                In today's installment I want to start out by saying I hope everyone had a very wonderful and reflective Veteran’s Day.  The recognition of this day is something that I personally hold very near and dear to my heart.  I have Veterans in my family, friends that have served, and I am proud to say that I work with many former and active military members who own and operate distilleries.  To all Veterans everywhere, you have my loyal thanks and gratitude.  Let us never forget all you have done for this country and our freedoms.

                Now on to the topic at hand:  The nasty, low-down, evil, and vile BOR/AOR!!!!!!!!

                What is a “BOR/AOR” you may ask … Well let me tell you …  The acronym “BOR/AOR” stands for “Broker of Record” or “Agent of Record” letter.  This is one of the oldest, nastiest, dirtiest, and possibly the most deceitful things that Insurance Agents have in their box of tricks.  The function of a BOR/AOR started out, as most things do, as a good and helpful tool in the insurance world.  However, it was not long after this process was developed that many chose to use it for evil instead of good. 

                The BOR/AOR process was developed to assist clients in moving their insurance from one agent to another in the case that the current agent was unresponsive, or if the agent and client reached an impasse and could no longer work together for whatever reason.  In some instances, it can be useful when a client wants to move a policy to someone with expertise in a certain area.  The BOR/AOR process allows the client to reassign their existing policy, via the same carrier, to another agent all while retaining their current coverage and premium.  Again, this process was to only be used in unusual circumstances where the client and agent simply could not see eye-to-eye anymore, or an agent possessed a certain expertise or skill set.  It should only be used to counteract “Irreconcilable differences” shall we say.  The same could be said for the quoting process, and many agents use the BOR/AOR even in the early onset of working with a client, tisk-tisk!  Most insurance carriers will only release one quote proposal to the first agent that has submitted the business accompanied by a full application.  The reasoning for this is that the carrier does not want to complete with itself across several different agents who may be submitting information that differs from one to the other.  One agent may submit information stating that the insured is doing x, y, and z, while another may say they are doing a, b, and c.  Completely different things, completely different proposals.  Therefore, most insurance companies avoid releasing multiple proposals whenever possible.  This is where the nasty agents come in and try to BOR/AOR the quote proposal.  The NERVE!!!!!!!!

                Fast forward to about 5 minutes after this potentially good process was put into practice and you will see THE DARK SIDE!  Insurance agents discovered quickly that this process could be abused in order to obtain fully written policies or proposals quickly and without having to put in much work.  They found that they could simply have someone sign a letter, submit some information, and BAM!  Instant money!  Sounds like a pretty good gig, right?!?!?!?!?!?!  Well, that all depends on your point of view and how the process is presented.  Again, if this process is utilized correctly, then there is nothing wrong with it and it is useful.  If your agent is a “hit it and forget it” kind of sales person who wrote your policy and then never spoke to you again, but your coverage is good, and you want to keep it but move it to someone else, then this is a potential way to make that happen.  This is not usually how it is presented though.

                Most agents will tell a potential “easy mark” client that in order for them to quote the business, or open up the markets, that all you have to do is sign this letter to give them access.  Many times, they won’t even say that much.  They will simply say that you need to sign the letter in order to allow them to work on your behalf.  Afterall, you have to sign so many documents anyway, what is one more?  So they just slip it in.  Many agents will go with the out-and-out lie approach. 

Now, I will throw in a caveat here … I have probably handled around 100 or so BOR/AOR’s in my career over the last 16 years.  Each and every one of them has been on the up-and-up though.  I always preface this process in the same way, and in my assertation, the correct way.  I ALWAYS say to the client, “By signing this letter you fully understand that you are FIRING your current agent and HIRING me as your authorized representative, correct?  Once you sign this letter, the other agent will be notified directly by the company and given 10 days to try to win you back.  They will call you, they will email you, and they may even get mad at you.  I want you to fully understand that by signing this letter you are giving me the authority to represent you and your coverage to the insuring company.”  In my case, with this understanding laid out in advance, I have never had a client say that they did not want to go through the process.  With me, it is due to my expertise and abilities that clients will knowingly move their policies.  I will say though, that in ever case, I will try to find replacement coverage that is as good or better than what the client has prior to ever even broaching the BOR/AOR subject with them.  It is never, and should never be the first thing that an agent does in the process of assisting you with your insurance.  That is just deceitful and not how relationships are built.

A quick story … about two years ago I had a client that had a partner and that partner agreed to meet with a local insurance agent.  They had the meeting (although my friend did not want to) and found out quickly that not only was the other agent not an expert in distilleries (as he had led them to believe), but he was also new to insurance as a whole.  They thanked him for his time, and as they were literally getting into the cab back to their office, he ran up to the car and told my friends partner that he needed a quick signature in order to prove to his boss that he was out at a meeting.  They both thought this was strange, but the partner signed his name anyway, figuring maybe it would help this guy out.  Well, lo-and-behold, it turned out that he was actually having him sign a BOR/AOR letter!!!!!!!!!!!  I was notified the next day that my friend had signed over all authority on his policy that we had work on together for years.  So, I called him up to find out what was going on.  He stated that no one signed any such letter, that they would never reassign my work to someone else.  As he reflected on it, he recalled that his partner signed something, but it was just a verification that they had a meeting with this agent.  I told him to get a copy of that document and really take a look at it.  Sure enough, it turns out it was a BOR/AOR letter, but the other agent had hidden that part under another sheet of paper, and his partner was deceived into signing the policies over.  In the end, we countermanded the letter and that agent lost his insurance license and faced penalties and fines for his deceitful behavior. 

The long and the short of this Tuesday Morning Insurance Tidbit is this … Look at everything you are signing.  Know what you are signing.  Ask questions about what you are signing, and if you ever find yourself in a similar situation, walk away.  If someone is willing to use deceitful practice in order to start a relationship with you where they are supposed to be taking care of you and have your best intentions in mind, the relationship should never be started in the first place.


Stay Vigilant,


a.k.a. InsuranceMan 2.0


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