"As the incumbent insurance broker on an account, I prepared all renewal documents and received a renewal quote from the carrier. When I delivered the renewal quote to the client, the client gave a Broker Of Record (BOR) to another broker, using our completed applications and quote that we just received from the carrier, back to that same carrier to be acknowledged as the new broker on the account.
"After the insurance carrier received the BOR from the other broker, the underwriter indicated to me that, since they were under a time constraint on the account due to it renewing in only four (4) days, they would not be able to accept a superseding BOR from me in order to allow me enough time to try to retain the business. I would like to have your comments and opinions, and is there any legal action I can take?"
Since we're not attorneys and not familiar with insurance law in your state, we really can't tell you whether this is legal or not. But, given that March is Ethics Awareness Month, perhaps we can comment from that perspective. I ran this by the VU faculty and got the following responses.
This was not very honorable (or nice!) behavior on the part of the competing broker or the insured. However, assuming you had gotten your best coverage and premium quotation, I don’t think that time allows you to get something better elsewhere (unless you had something else in your “back pocket,” and, if so, presumably you would have presented it first). Scrambling to retain the business with the same insurer seems ill-advised at best given their role in this mess. I think it has to be chalked up to the insured always being right, even if not always fair.
I'll make three points:
1. The carrier does not deserve your loyalty;
2. The carrier should not even accept a BOR because someone is not willing to do their own work; and
3. Their practices are discriminatory and unethical.
That said, it is my opinion that no carrier professing to be an ethical organization should ever accept a BOR under these circumstances. I have taken accounts on a BOR but have never used the other agent's material or work product. I redo the work just as if it is new business, my apps, my exposure review, my coverage recommendations. No way do I want to pick up another’s mistakes. I can make it on my own, thank you. Yes, you could sue but could lose the market, which might not be a bad idea...their actions scream volumes.
There could be a lawyer who would sue on your behalf. Not being a lawyer or knowing the exact terms of your agency agreement, I have no idea who will likely win. One thing for sure, things will never be the same. I think the company is being unfair and unethical in accepting YOUR work from the other broker, but that doesn't guarantee a court victory. The question is, are you willing to overlook this action and, if not, what are you willing to do about it?
What you have experienced occurs thousands of times each year. The problem begins when we presume that a client has a strong relationship with us simply because we issue a price before someone else. In fact, customers do business with folks they LIKE and TRUST. If you haven’t built and maintained that relationship, a much more difficult task than the expertise you have in technical insurance and pricing strategies, you will suffer similar situations several times before you finally ‘get it.’
So let’s say some ‘slick talker’ who plays golf with the client (or who is married to the client’s sister) tells him that he can do the same policy that you have worked hard to accomplish. The critical element is that the carrier failed to permit you to work to subsequently counter the BOR! While not illegal, it is certainly unethical to have worked to establish the coverage and pricing for you and then refuse to let you meet with the client to convince him to rescind the BOR.
BORs have a purpose. If the client will leave you because of lack of trust or relationship but wants to stay with the carrier, the BOR is the appropriate way of him doing so. No carrier should risk losing a long-time client because the client is no longer enthralled with his agent. And if the real reason the carrier won’t allow you to rescind the BOR is because of a confidential request of the client to be allowed to move agents, they should honor that request.
You need to have a frank conversation with the ‘top guy’ (not the underwriter or marketing rep) at the carrier local or regional office and ask him the question directly. Considering how late carriers normally are in their renewal processing, the ‘4 days from renewal’ excuse is certainly bogus.
I guess it’s fitting that this is Ethics Awareness Month. If there’s a bright side, perhaps it involves the answer to the question of whether you really want a client that will take your work and give it to another agent. I don’t know that there’s anything illegal here, but you’d have to ask an attorney for that determination, considering insurance laws and your agency/company agreements. But, based on your side of the story, neither the insurer nor the other agent appear to have acted ethically.
Note: At the time of original publication, March is Ethics Awareness Month for the insurance industry. Consider discussing this issue with your producers. If you would like other ethical scenarios to discuss at staff meetings in March, just search the VU for “ethics” and you’ll find plenty of issues to talk about.
Last Updated: February 26, 2015