The aviation insurance business operates a bit differently in the commercial and turbine space, in that the insurers require you to work with a broker who represents you and your policy. Most aviation insurers only permit one broker to shop your policy – as such, you need to engage a ‘broker of record’ to represent your policy interests to the 20+ aviation underwriting (insurers) companies in the space.
The broker of record (BOR) letter is the vehicle through which you formally engage an aviation insurance broker. The letter functions much the same way an ‘engagement letter’ works with hiring an attorney or a tax advisor. Once you sign a broker of record letter, it informs the aviation underwriting companies that you have engaged broker XYZ to fully represent your insurance interests in the market or only partially represent your interest (with select insurers so designated on the letterhead).
A good time to engage a new broker if you are looking for new representation is in the renewal cycle queue, which is roughly 60-90 days before your policy renewal date. By changing brokers within that window, you are not only allowing your ‘new’ broker time to review your risk thoroughly thus properly shopping your policy to the market but also providing a professional courtesy to the broker you are moving away from (ie they haven’t invested much time, if any, in shopping your renewal only to be replaced as a broker of record).
I think it’s important to note that you do not want to hire a new broker AFTER your current broker has already shopped your policy in the marketplace – this is for a couple of reasons. Insurers will not change their quotes to your new broker after they have already been released to the broker you are moving away from. Second – if you sign a broker of record letter for a new broker after your current broker shops the policy, you have effectively fired them AFTER they completed the work of shopping your policy to the market. Essentially, engaging someone for a service, but with no compensation after that service has been performed on your behalf.
You can, however, change your broker of record at any time during the policy period. There are cases where something like poor service warrants a change in broker mid-policy. So it’s important to understand that the ideal time to change brokers is in the renewal queue (60-90 days before renewal), but you can change at any time, provided your current broker is made whole – meaning the policy premium has been paid and the broker commission paid to the broker you intend to move away from.