What is an Agent of Record (AOR)?


May 16, 2024

An Agent of Record (AOR), sometimes called a broker of record, is a designated individual or entity authorized to represent and manage an insurance policy on behalf of the policyholder. The AOR is responsible for handling policy inquiries, updates, claims, and other interactions with the insurance provider.

Why use an AOR service?

Companies hire agents of record to avoid dealing with health insurance themselves. An AOR can help business owners save time and access more cost-effective employee benefits. With these time and cost savings, you can then focus on more strategic aspects of your business.

AOR pros and cons

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Expertise and advocacy: AORs possess specialized knowledge of insurance products and can advocate for policyholders in negotiations and claims processes.

Potential conflicts of interest: AORs may prioritize commissions or relationships with insurance providers over the best interests of policyholders.

Convenience: Having a dedicated AOR streamlines policy management, inquiries, and claims handling, saving time and effort for the policyholder.

Limited options: Depending on the AOR's affiliations and partnerships, policyholders may have restricted access to insurance products or providers.

Compliance and updates: AORs stay on top of regulatory changes and policy updates, ensuring that policyholders remain compliant and adequately covered.

Dependency: Relying solely on an AOR for insurance management may result in a lack of transparency or control over policy decisions.

What is an agent of record letter?

An agent of record letter (also called a broker of record letter or BOR letter) is a document that formally designates an individual or entity as the AOR for an insurance policy. It grants the AOR authority to represent the insured party or policyholder when negotiating plan details with insurance companies. 

In other words, an AOR letter allows your agent/broker to be able to handle all your insurance needs for you, including:

  • Getting insurance quotes
  • Comparing insurance coverage and pricing
  • Setting your policy terms
  • Communicating with your insurance agency
  • Negotiating your premiums

How does the AOR process work?

When you decide to work with a particular agent of record, you’ll start the process, which usually takes around 10 days to complete. Here are the steps involved:

  1. The new agent sends you an AOR letter. It should include your company name, insurance carrier, policy number, effective policy date, and any other relevant policy details.
  2. You review the letter thoroughly, sign and date it, and send it back to the agent.
  3. Your new AOR sends the signed letter to the insurance company.
  4. Policies are transferred in the next 10 days or so.

What to consider before signing an agent of record letter

If you’re thinking about signing on with an agent of record, there are a few things to take into consideration.

First, not all AORs are the same quality. It’s important to carefully read through any AOR letter you receive before signing it. This can help you avoid issues later on.

Second, signing a new AOR letter means effectively firing your old AOR, if you have one. It’s perfectly OK to shop around, especially if you aren’t satisfied with your existing AOR. Just make sure you finish any outstanding business with your old agent before signing a new AOR letter.

Finally, look out for servicing fees. If you terminate your agreement with an AOR early, they may charge you a fee. Read your letter carefully to make sure you understand any and all costs associated with your agreement with your agent.

Why you might need to terminate an agent of record letter

There are many reasons you might need to terminate your agreement and change insurance agents. Some examples: 

  • You’re not satisfied with their service quality or responsiveness
  • Your business needs or insurance requirements have changed
  • You’ve discovered conflicts of interest or unethical behavior
  • You’ve gotten better offers or opportunities from other AORs or insurance providers
  • You need an agency with more knowledge or experience in your industry
  • You need a specific type of insurance that your current agency can’t access

Luckily, an agent of record change is straightforward to do. All you need is to sign a new AOR agreement with your new agent of choice. The new letter will effectively hire the new AOR and “fire” your current agent, making your agent of record change complete in around 10 days.

What to do if you signed a bad AOR

If you signed an AOR agreement and you regret it or realized the terms aren’t what you wanted, you typically have 5-10 days to act. To back out of the letter, you’ll need to rescind the agent of record letter, which makes the original AOR letter null and void.

If you want to back out of the letter more than 10 days after you signed it, a rescinding AOR letter is no longer an option. In this case, you can find a new AOR and sign an AOR letter with them, which fires your old AOR. However, this may result in servicing fees for not completing the agreement with the original AOR.

Agent of record vs Employer of record (EOR)

While both Agent of Record (AOR) and Employer of Record (EOR) involve representation and management roles, they serve distinct purposes:

  • Agent of Record (AOR): Represents policyholders in managing insurance policies and interactions with insurance providers.
  • Employer of Record (EOR): Assumes legal and administrative responsibilities for a company's workforce, including payroll, benefits administration, and compliance with employment laws and regulations.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.

last edited: June 16, 2024

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