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What is an Agent of Record (AOR)?

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An agent of record (AOR) also known as a broker of record (BOR), is an entity that carries out actions for an insured party. The AOR can legally manage insurance policies on a company’s behalf. Since AORs become the company’s authorized representative, the company doesn’t need to interact with the insurance company.

Companies hire agents of record to handle health insurance and employee benefits so the business can focus on strategic initiatives.

How can employers start working with AORs?

The AOR process begins when companies choose an agent. The process can take around ten business days to complete and consists of the following phases:

  • Phase 1: The new agent sends an employer an agent of record letter with the company’s name, the insurance carrier’s name, the policy number, and the policy date
  • Phase 2: Employers review the letter with a legal entity, sign it as an acknowledgment of receipt, date it, and send it back to the agent
  • Phase 3: The new agent sends the signed AOR letter to the insurance carrier
  • Phase 4: In 5-10 days, the policies are transferred

What is an agent of record letter?

An AOR letter is a document that identifies an agent to represent a business. The letter permits the agent to perform duties for the business, such as negotiating insurance plan costs with insurance companies.

AOR letters are a legal necessity for businesses that want to replace one AOR with another. When an AOR letter is signed by both parties, it replaces the previous agreement.

What do companies need to know before signing an AOR letter?

Enlisting an agent to manage an insurance account is a fairly simple process, but it’s important to thoroughly read the agreement with a legal team to avoid issues down the road.
A few areas to note are:

Businesses must fire the existing AOR before working with a new agent: This is a bureaucratic process, so it’s important to read the fine print before signing. This includes officially parting with the existing AOR before starting a relationship with another.

Letters may incur servicing fees: If a business ends an agreement with an AOR in the middle of the policy term, the AOR does not receive payment for the entire year. To make up the difference, the agent/broker may charge a servicing fee since they aren’t paid by the insurance carrier.

Who pays an AOR?

Insurance companies require broker of record letters that state who the company selected as their representative and when communicating with the insurance carrier. In return, the agent earns commissions from the insurance company.

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