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Insurance: We all know we need it, but if you don’t understand how the process works, you could be led astray. If you aren’t careful, you may even find yourself with extra work you hadn’t expected.
A prime example of this extra work can come in the form of the Broker of Record (BOR) process and the concept of “Blocking the Market.”
Broker of record
What is a broker of record? All brokers want this esteemed title from your business, but some brokers fail to explain what it really means. The broker of record is the broker chosen by you, the client, to serve as your risk advisor and liaison with the insurance carriers who provide insurance coverage.
The broker of record is responsible for a variety of tasks:
- creating the insurance portfolio for you
- advising you on risk management
- reviewing and helping you understand your insurance coverage options
- negotiating your premium and coverage with existing and new carriers
- assisting with claim consulting and advocating on your behalf during claims
When you sign a BOR Letter with a new broker, it simply transfers the stated policies to that new broker from your current broker. The current broker is essentially fired, and the new broker is hired.
Blocking the market
Clients sometimes have the perception that quoting with multiple insurance brokers is a good way to obtain competitive insurance results. What they may not understand is that having a broker obtain a quote essentially blocks the market for other brokers, including their current broker of record.
Blocking the market occurs when another broker seeks a premium quote from an insurer for an organization before being officially appointed as the broker of record. The issue arises because once an insurer issues a quote, they won’t provide another, even if the current broker of record later contacts them for a quote. In essence, the broker of record is prevented from obtaining a quote from that insurer, unless the client sends a broker of record letter to the insurer asking them to release the quote to the current broker.
While medical benefits insurers will provide quotes to more than one broker, that isn’t the case in property and casualty. In the property and casualty market, the first broker to approach the insurer gets the quote. All other brokers are blocked.
What that means for you
When a broker blocks another broker from a given carrier/market, it leads to an inefficient process in which there is a lot of back and forth between the client, the different brokers and insurers.
As a result, your renewal could be delayed as your existing broker is forced to spin its wheels in an effort to get the proper quotes your business needs. This delayed process can translate into a variety of issues for you, including:
- Rushed/last minute renewal review meetings
- Limited review of coverages and even coverage gaps
- Potential limited options for carriers and coverages
- Delayed carrier selection
- Frustrated customers seeking timely Certificates of Insurance
So, how do you stop this from happening?
- Contact your current broker if another broker approaches you to request a quote on your behalf. Don’t assume that the insurer will reach out to your existing broker upon receiving a quote request from a competing broker.
- Make sure your broker is strategically selecting the right carriers that can meet your needs. Competition is good but select a broker who can provide a tailored plan for your insurance portfolio. Consider your goals regarding coverage value, competitive pricing, claims handling and level of broker expertise/service.
- If you are asked to sign a Broker of Record Letter by a competing broker, understand the implications and understand that it means you are essentially firing your current broker. Is this new broker the right fit for you? Does the new broker possess expertise in your industry? Does the new broker have the proper team to handle your insurance needs? Will this BOR make your insurance renewal easier or harder? Will you be giving up valuable risk management resources that protect your firm’s bottom line?
Oswald’s experienced advisors represent and have longstanding relationships with nearly all carriers. For more than 130 years, we have operated with the best interests of our clients in mind.
Contact us below to talk about your insurance needs, obtain a risk assessment, or renew your existing insurance.
