Agent of Record

What is an Agent of Record?


An agent of record (AOR) is an individual or a company that represents an insured party. The AOR possesses the legal authority to manage insurance policies on behalf of another party. Companies often engage AORs to handle health insurance matters, which saves time and effort, allowing them to focus more on their core business strategies and objectives. AORs also provide assistance in making decisions about employee benefits packages. Since they can act as the company’s authorized representative, the company does not need to directly interact with the insurance company. Only an AOR can serve as this intermediary, as insurance companies do not interact with unauthorized entities.

Agent of Record Letter

An agent of record letter is a document that appoints a specific agent to represent a business owner. This letter authorizes the agent to negotiate plan details with insurance companies on the company’s behalf, facilitating various tasks such as negotiating plan costs, managing quotes, and overseeing policy details.

Process of Changing an Agent of Record

  • Decision: A business decides on a new AOR, who then sends an AOR letter.
  • Review and Signature: The business reviews, signs, and dates the letter before returning it to the agent.
  • Submission: The new agent submits the signed change form to the insurance company.
  • Transfer of Policies: The policies are typically transferred within ten days.

Reasons for Terminating an AOR Agreement

A company might switch to a new AOR for various reasons, such as seeking more experienced agents in their industry, dissatisfaction with the current agency, issues in handling tasks, or seeking access to specific insurance markets not available through the current agent.

Considerations Before Signing an AOR Letter

Before signing an AOR letter, it is crucial to thoroughly read through the document, possibly with legal advice. This careful approach helps prevent future issues. The letter signifies the official hiring of a new AOR and the immediate termination of the old one. It’s important not to sign the document prematurely and to complete any final business with the existing agent.

Service Fees and Rescinding Agreements

AORs may charge fees if an agreement is terminated mid-policy term, as they do not receive full payment for the year. It’s essential to check the existing contract for fee details. In some cases, rescinding an agreement is possible within a 5-10 day grace period by signing a rescinding agent of record letter. After this period, signing a new AOR letter with a different agent and incurring any applicable fees may be necessary.