The second column is what most employers want to know. Nobody has to re-enroll.
Key Takeaways
The commission is already part of the premium whether or not anyone earns it, so a change of broker adds no cost. It only decides who gets paid for the work you already fund.
Mirror the term printed on your carrier’s own paperwork and your meaning will be understood.
Carriers generally take a letter in about this format, on company stationery, signed by an officer able to commit the plan.
What a Broker of Record Letter Actually Does
An agent of record (AOR) or broker of record letter is a brief signed direction from an employer to its carrier. It names the agency that is authorized to service the policies and to be paid the commission that is already part of the premium.
Be clear about what it does not do. It is no contract with the incoming broker and no request to alter your plan. Nothing is cancelled, and your only commitment is the appointment, which you can undo.
What Changes, and What Does Not
| Changes | Stays Exactly the Same |
|---|---|
| Who looks after your account | The carrier itself |
| Who gets your renewal and claims reports | Plan design, deductibles and network |
| Who collects the commission already in your premium | Your current-year rates |
| Who HR phones when something goes wrong | ID cards, enrollment and claims already underway |
Coverage continues without a gap, and employees typically never find out. Because the commission sits inside the premium whether or not anyone is working for it, switching brokers adds nothing to your cost. It simply redirects that money to whoever does the work.
Agent of Record or Broker of Record?
Carriers do not agree on which label they print, and the two are treated as the same thing. Each identifies the party authorized to service a policy and be paid its commission, so either wording is normally accepted. Mirror the term printed on your carrier’s own paperwork and your meaning will be understood.
A Broker of Record Letter Template
Carriers generally take a letter in about this format, on company stationery, signed by an officer able to commit the plan. A few insist on their own form, so ask before you send anything.
[Employer letterhead] [Today's date] [Insurance company name] [Insurance company address] SUBJECT: Designation of Broker of Record for [Employer name], Policy/Group No. [number] Dear Sir or Madam: Beginning [effective date], [Employer name] names [Agency name] as the Broker of Record on all group coverage presently active with [Insurance company name] under the numbers above. This designation replaces any earlier broker or agent of record on file and stays in force until [Employer name] revokes it in writing. [Agency name] is entitled to receive information on these policies, such as claims experience and renewal and rating details, and may act on our behalf to service them. This letter gives no approval to alter the plan design, the carrier, the rates or who is covered. Respectfully, _______________________________ [Signer name], [Signer title] [Employer name] [Phone] | [Email]
How the Process Runs
- Find out what the carrier prefers. One carrier may take a letter in any sensible format, while another requires its own template or a particular place to send it.
- Write a separate letter for each carrier. A letter takes effect only with the carrier that receives it. When health, dental, vision and life coverage are split across several carriers, expect to send several letters.
- Plan on a short delay. Carriers frequently pause the change for about ten days. The current broker may reach out in that window. That is routine rather than a roadblock, and it ensures the decision plainly belongs to the employer.
- Ask for written confirmation. After processing, the carrier will confirm who the new broker of record is. File that confirmation with your plan documents.
Timing: Why Before Renewal Matters
You can send a letter in any month of the plan year, but its value depends on timing. A broker brought on well ahead of renewal can take your group to market, test other funding approaches and return with options before rates are fixed. One brought on after the renewal is settled can do little beyond servicing the year already in place.
With a renewal about ninety days away, the appointment counts for the most. That is also when many employers hold off, since the renewal has not yet landed to force the issue.
Questions Worth Asking Before You Sign One
- How will the new broker be compensated, by commission, a fee or both, and will that be put in writing?
- Concretely, what will they accomplish in the first ninety days?
- Who handles your account every day, and what is the backup when that person is out?
- Will they take the group to market at renewal, or simply hand over the incumbent carrier’s renewal?
- Which compliance tasks come with the service, and which are billed on top?
Insist on a straight answer to the first question. Commission is in your premium regardless, so what matters is whether you can see what you are paying and what it buys. If a change is on your mind, send us your current renewal and we will explain what it shows. Our approach is a sensible place to begin: how we work is a reasonable place to start.
Questions We Get
What is a broker of record letter?
A short signed letter, sent by an employer to its carrier, naming a new broker or agency as broker of record on a policy. It instructs the carrier and does not create a contract with the new broker; servicing rights and commission on the existing policy shift as a result.
What does AOR mean in insurance?
AOR (agent of record) and BOR mean the same thing in practice, since each names whoever may service a policy and collect its commission. Forms differ from carrier to carrier, so use the term your carrier’s paperwork uses.
Does changing your broker of record disrupt employee benefits?
No. The letter shifts who services the policy and leaves the policy as is. Your carrier, plan design, network, rates, deductibles and ID cards are untouched, nobody re-enrolls, and employees typically do not notice.
How do I change my broker of record?
Put it in writing on company stationery. Identify the current carrier, the group or policy number, the new agency and the effective date, and have someone authorized to bind the plan sign. Send it to the carrier, normally with a copy to the incoming broker. Most carriers send written acknowledgement after processing.
How long does a broker of record letter take?
A waiting period of roughly ten days is common before the change takes hold, giving the current broker a chance to respond. Timing differs by carrier, so check the process with yours.
Can a broker of record letter be rescinded?
Yes. Sending the carrier another signed letter withdraws or replaces the earlier one, and the most recent valid letter on file controls.
Does changing brokers change my rates?
By itself, no. The carrier sets your rates from your group’s profile, not from who services the account. A new broker can influence future renewals by taking the group to market or revising plan design, but signing the letter leaves current pricing alone.
Do I need a separate letter for each carrier?
Typically yes. Because a letter binds only the carrier it is addressed to, an employer that places health, dental, vision and life coverage with different carriers usually sends one to each.
When is the best time to change brokers?
Letters can go out at any time of year, but the advantage comes ahead of renewal. A broker with enough lead time can take your group to market and shape the renewal, while one named after rates are set mostly provides service until the next cycle.
Unhappy with your current broker? Switch to CFH. Your employees won’t notice. You will.
CFH Insurance Consultants is an independent employee benefits consulting firm. We help employers manage cost, compliance and renewals, and we work in teams for proper coverage of every account.
