Burand’s Agency E&O Blog: Tip #39

AOR/BOR Procedures for Benefits. For some unknown reason, I continually find Benefits Producers thinking the P&C AOR/BOR procedures are not applicable to them because the risk on the P&C side does not exist on the benefits side.

This belief is a complete fallacy. Significant risk exists, especially under the ACA. Additionally, because a much higher proportion of benefits accounts are written using AOR/BOR selling strategies, the number of accounts exposed to this risk is much, much greater. When taking over a benefits account on an AOR/BOR basis, it should be completely re-underwritten. The agency should obtain all the data they would obtain when writing a new risk in the traditional manner without copying any of the old data. The data should be gathered fresh. Otherwise, the agency may be acquiring all the old agency’s E&O errors. If the old agency was so good and did not make any errors, why would the insured be moving the business? Do you really want to assume the old agency’s mistakes?