Broker of Record Letters: Switching Brokers Without Switching Policies

A broker of record (BOR) letter is a signed instruction from you to an insurance carrier saying a new broker now represents you on an existing policy. It usually changes who services the policy, who negotiates the renewal and who earns the commission. The coverage itself stays the same, though a few carriers handle the change by cancelling and rewriting the policy. This guide is for new owners who are happy with some or all of the inherited policies but want a different broker, often one who knows acquisitions or their industry.

What is a broker of record letter?

When the seller's policies stay in force after closing, they come with the seller's broker. A BOR letter is how you appoint someone else on those same policies. It is addressed to the carrier, signed by an authorized person for the named insured (the business the policy covers), and names the new broker who will act for you from a stated date.

This mostly matters after a stock purchase, where the company you bought keeps its policies. After an asset purchase your new company usually needs its own policies, so there is often nothing to move: you simply choose the broker who places them. If an inherited policy names the seller personally, the seller's parent company or another entity you did not buy, you do not have authority to sign for it. Ask the carrier whether it will change the named insured by endorsement, which needs its written consent and may need underwriting, or whether your company needs its own policy.

Carriers commonly accept the letter on your company letterhead or on the ACORD 36 form (the industry's standard agent or broker of record change form). You usually need one letter for each carrier, listing every policy that carrier writes for you. The new broker normally prepares it, you sign it, and the broker sends it to the carrier, or to the wholesale broker if the policy was placed in the surplus lines market.

New owners use BOR letters for two reasons:

• Service. You want a broker who will handle certificates, endorsements and claims for the business you run now.
• Renewal access. Carriers generally work an account through one broker at a time. If your new broker needs to negotiate the renewal with a carrier that already writes your policy, the BOR letter gives it that access. See how to remarket an inherited insurance program.

What does a broker of record change, and what does it leave alone?

The exception is the carrier that processes a broker change by cancelling and rewriting. Encova, for example, said in a 2021 notice to agents that it cancels and rewrites commercial lines coverage on the effective date of the change. A rewrite creates a new policy, sometimes for a short term, which can mean a new policy number, new certificates, a new audit period and possibly different forms. California's State Compensation Insurance Fund, by contrast, says in its published process that it keeps the policy in force and makes the new broker commissionable at renewal. Ask each carrier how it handles it.

When do carriers accept a BOR letter, and how long is the wait?

There is no single industry rule. Each carrier sets its own process, and it can differ by line and by state. Common features:

• The incumbent is notified. Carriers commonly tell the current broker and give it a short window to respond, rescind or let the change go through.
• The waiting period is carrier-specific. California's State Compensation Insurance Fund says it decides the change five business days after notifying the incumbent, and that a waiver in the insured's letter does not shorten it. Encova's 2021 notice describes a 10-business-day rescinding period that only the incumbent agency can waive.
• The new broker must be able to work with the carrier. If your new broker has no appointment or contract with that carrier, the carrier may not be able to accept the letter until it does.
• Surplus lines placements add a layer. If the policy was placed through a wholesale broker, the letter usually changes your retail broker, and the new broker may have to work through the same wholesaler, at least until renewal. Ask how the wholesaler handles it.
• Timing near renewal matters. Some carriers handle a BOR differently close to the renewal date, or apply the change only to the next term.

Ask each carrier for its timeline. The published examples above run 5 to 10 business days, and policies placed through wholesale brokers can take longer. Do not let a renewal deadline pass while you wait.

How do you write and send a BOR letter?

Your new broker will usually draft it, but check that it includes:

• The named insured's full legal name and mailing address, exactly as on the policy
• The carrier's name and each policy number and line of coverage
• The new broker's legal name and, where the carrier asks for it, license number
• The effective date of the appointment
• A statement that it replaces any earlier appointment for those policies
• Permission for the carrier to share policy, claims and loss run information with the new broker
• The signature, printed name, title and date of someone with authority to act for the named insured

Sample wording, to adapt with your broker:

A BOR letter will not fix a policy that names the seller or the wrong entity. Adding or substituting your entity needs the carrier's written consent, and often your company needs its own policy instead; see wrong named insured after an acquisition.

Should you switch mid-term or wait for renewal?

Both work, for different reasons.

• Before renewal is a common time. A BOR letter 90 to 120 days ahead gives the new broker time to negotiate the renewal and approach other carriers. The policy itself is not disturbed.
• Mid-term makes sense when service problems are costing you now, for example slow certificates, delayed endorsements, or a claim that needs an advocate. Check how each carrier processes a mid-term change before you sign, especially if a rewrite would reset an audit or create a short-term policy.

The broader question of when to move coverage is covered in when to remarket: mid-term or at renewal.

A hypothetical example. A buyer closes a stock purchase in March. The policies renew in August. The seller's broker, a longtime family friend of the seller, has placed them well, but the buyer wants a broker focused on lender requirements and add-on acquisitions. In May, the buyer calls the incumbent to explain the change, then signs a BOR letter for the carrier that writes the general liability and auto policies. That carrier notifies the incumbent, waits out its 10-business-day window and confirms the change. The workers' comp carrier rewrites policies on a broker change, so the buyer waits and moves that line at the August renewal instead. The coverage never changes mid-term. The details are illustrative.

If you are weighing which lines to move and when, a Morrow review of the inherited policies can help you sort it out.

How do you tell the seller's broker?

• Tell them first. A short call or email before the carrier's notice arrives is courteous and avoids surprises. The incumbent may have served the seller well; the change is about fit for the business you run now.
• Expect a response. The incumbent may ask to keep the account or to keep certain lines. If the carrier asks, confirm your decision in writing.
• Do not use a BOR as a bluff. Signing a letter you do not intend to keep can confuse carriers and leave no one clearly representing you.
• Ask for help with the handover. Open claims, pending endorsements and outstanding certificate requests should be listed so nothing falls through. Carriers can provide loss runs directly to you or your new broker.
• Reassure them about the seller's other insurance. The seller's broker may also handle the seller's personal or other business insurance, which your letter does not affect.

For the wider choice between keeping, replacing or splitting the inherited program, see keep the seller's insurance or start over, and for the difference between brokers and agents, see broker vs agent.

What should you check after the change takes effect?

1. Written confirmation from each carrier that the new broker is on the policy, with the effective date.
2. Whether any policy was rewritten, and if so the new policy number, term and forms.
3. Certificates of insurance now come from the new broker; reissue any that customers or your lender need.
4. You know who bills you now, especially if the old broker billed you directly (agency bill). If the premium is financed, the finance company has the new broker's details.
5. Your lender's insurance contact, landlord and key customers know who to call.
6. Open claims show the right contacts and nothing was lost in the handover.
7. Any ownership change reporting for workers' comp, which is separate from the BOR, is done.

Keep reading

• How to Remarket an Inherited Insurance Program After an Acquisition
• Should I Keep the Seller's Insurance or Start Over? A Decision Guide
• When to Remarket Business Insurance: Mid-Term or at Renewal?
• Do-It-Yourself, Broker or Second Opinion: Who Should Review Your Insurance?
• Do Your Policies Still List the Seller? What to Fix
• All guides for new business owners

Frequently asked questions

Do I need the old broker's permission to switch?

Generally no. The named insured chooses who represents it, though many carriers give the incumbent a short window to respond, and some let only the incumbent waive that window, so allow time for it.

How long does a broker of record change take?

It depends on the carrier. Many notify the current broker and wait a short window before confirming; published examples run 5 to 10 business days. Policies placed through a wholesale broker can take longer, so ask each carrier and do not let a renewal deadline slip while you wait.

Will my premium change after a broker of record letter?

Usually not for the current term, because the policy terms stay the same. If a carrier cancels and rewrites the policy to change brokers, the new policy could carry different terms, so ask first. The renewal premium depends on underwriting, not on the letter.

Can I change the broker on just one policy?

Yes. A letter can list only the policies you want to move. Many owners move some lines now and others at renewal, though having several brokers on one program can make coordination harder.

What is an ACORD 36 form?

It is the insurance industry's standard form for changing the agent or broker of record on a policy. Many carriers accept it, and many also accept a signed letter on your letterhead. Check each carrier's requirements.

Does a broker of record letter cancel my policy?

Not by itself. It appoints a new broker. A few carriers process the change by cancelling and rewriting the policy, which is why you should ask each carrier how it handles a broker change before you sign.

References

• State Compensation Insurance Fund (California): Broker of Record Process
• Encova Insurance: Agent / Broker of Record Change

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.