Insurance — Handling BOR & New Business Conflict

The conflict between a new business submission and a Broker of Record (BOR) letter arises when an insurer receives a BOR letter for a policy that is already in the process of being underwritten as a new business submission. This scenario creates a dilemma: the insurer must determine whether to continue with the original new business submission from the competing broker or honor the new BOR letter, which may involve transferring authority to the new broker mid-process.

Understanding the Conflict

1. New Business Submission: A new business submission is an application initiated by a broker on behalf of a potential client who is seeking a new insurance policy with the insurer. This typically involves gathering client information, assessing risk, and underwriting the policy.
2. Broker of Record (BOR) Letter: A BOR letter authorizes a specific broker to represent the client’s interests with the insurer. If a different broker submits a BOR letter while a new business submission is underway, the BOR letter effectively transfers representation rights to the newly designated broker.

Key Conflicts Between New Business Submissions and BOR

1. Ownership of the Client Relationship

• The original broker who submitted the new business application believes they have the right to service the client based on their initial efforts.
• The BOR letter, however, designates a new broker, effectively removing the original broker’s rights to manage the account.

2. Underwriting Process Disruption

• If the underwriting team is actively working on a quote or policy terms based on the new business submission, a mid-process change in representation can disrupt their workflow.
• The underwriter may need to restart or adjust the process with the new broker, leading to inefficiencies and potential delays.

3. Commission and Compensation Concerns

• The original broker may be concerned about losing their commission if the policy is ultimately written under a new Broker of Record.
• The new broker, however, may feel entitled to the commission if they’ve secured the BOR designation, believing the client has formally transferred their business.

4. Client Intent and Choice

• This conflict also raises questions about client choice. If a client signs a BOR letter, it implies they want the new broker to handle their policy, possibly due to better terms or trust.
• The insurer must decide whether to prioritize the client’s latest request (BOR) or continue with the initial submission if a contract with the original broker mandates so.

How Insurers Handle New Business Submission and BOR Conflicts

1. Defining Clear Policies on BOR Timing

• Many insurers establish guidelines specifying when they will accept a BOR letter. For instance, some insurers may honor a BOR only if it’s received before the policy is formally bound. This gives the original broker priority if they’ve already submitted a binding offer.
• If a BOR is received mid-submission, insurers may require confirmation from the client to validate the change, ensuring that it’s their intent to switch brokers.

2. Establishing BOR Grace Periods

• A grace period allows insurers to wait a specific number of days (typically 3–10) before processing the BOR, giving the original broker time to confirm or contest the transfer.
• This period helps clarify client intent and minimizes potential disputes between brokers over ownership and commissions.

3. Dual Quotes or Parallel Processing

• In some cases, insurers may issue dual quotes, offering both brokers an opportunity to present competing quotes to the client. However, this is rare, as it can lead to duplicated work and possible conflicts in communication.
• Some insurers prefer to wait until the BOR grace period expires to avoid parallel processing, making the final decision based on the client’s confirmed broker choice.

4. Using Underwriting Workstation Workflows for Management

• Insurers can use their underwriting workstation to track the submission status and implement automated workflows to handle BOR letters efficiently. For instance, the system can automatically pause the new business submission when a BOR is received, prompting the underwriter to resolve the broker conflict first.
• Automated notifications can also be set up to alert both brokers of the conflict and the insurer’s next steps, such as requiring client confirmation.

Leveraging AI, Data Insights, and Automation to Handle Conflicts

To resolve conflicts efficiently, insurers can integrate AI, data insights, and automation into their underwriting workstations:

AI-Driven Client Verification:

• AI can streamline client verification by automatically reaching out to the client when a BOR letter conflicts with an active new business submission. For example, AI chatbots or automated email workflows can ask the client to confirm their current broker preference.

Automated Grace Period Countdown:

• Insurers can automate the grace period countdown, notifying both brokers and underwriting teams of the BOR timeline, which helps them stay informed and prepared for any change in representation.

Data Insights for Broker Performance:

• Data analytics can track which brokers frequently have conflicts, providing insights into potential training needs or policy adjustments. For instance, if a certain broker frequently loses clients during the submission process, it may indicate a need for improved client retention strategies.

Workflow Automation for Seamless Transitions:

• When a BOR is accepted, workflow automation can transfer permissions, documentation, and communication from the original broker to the new broker. This reduces manual work for the underwriter and ensures a seamless handover.

Example Scenario: New Business Submission and BOR Conflict

A small manufacturing company initially engages Broker A to find coverage. Broker A submits a new business application to Insurer XYZ. However, before the policy is bound, Broker B convinces the client to designate them as the new Broker of Record, resulting in a BOR letter submitted to Insurer XYZ.

1. Insurer XYZ receives the BOR letter while Broker A’s new business submission is still in progress.
2. Insurer XYZ’s underwriting workstation initiates a grace period countdown, notifying Broker A of the incoming BOR and pausing further underwriting actions.
3. During this grace period, Broker A contacts the client to discuss the change, while Broker B prepares to take over.
4. AI Automation sends an email to the client, confirming that they intend to switch brokers.
5. Once the grace period ends, Insurer XYZ’s system officially designates Broker B as the new broker, transferring all access and future communication rights to Broker B.
6. Broker B now takes over policy discussions and finalizes the underwriting process with Insurer XYZ.

Conclusion

Conflicts between new business submissions and BORs are common in the insurance industry, requiring clear policies, structured workflows, and efficient communication channels. Insurers can navigate these conflicts more smoothly by leveraging grace periods, client verification, and AI-driven workflows in their underwriting workstations. These measures ensure fair handling of broker transitions, respect client intent, and minimize disruptions to the underwriting process.