What is an Agent of Record (AOR)
An Agent of Record (AOR), also known as a Broker of Record (BOR), is a person or firm chosen to manage a business or individual’s dealings with an insurance provider. The AOR acts as the go-between for all policy talks, renewals, and service issues. This role is confirmed by an Agent of Record letter. This letter details the transfer of representation from one agent to another and gives the new agent the power to speak with the insurance carrier for the client.
Often, the AOR helps assess insurance needs, recommend policies, and ensure coverage matches the organisation’s risk profile. A well-organised AOR relationship helps businesses get better rates, keep compliant policies, and handle complex insurance matters. This support is especially useful when managing employee benefits or employer-sponsored insurance policies.
What is an Agent of Record Letter?
An Agent of Record (AOR) letter is a formal document. The policyholder, usually a business owner or executive, signs it. This letter names a specific insurance agent or broker as the official representative for all dealings with a carrier. It gives the new agent access to existing policy information. The agent can also communicate with underwriters and take over policy servicing duties.
It is most commonly used when a client wants to switch agents without changing the policy or insurance carrier itself. Once submitted, the AOR letter overrides the prior representation, meaning all correspondence and management responsibilities shift to the new agent.
When to Terminate an AOR Agreement
Ending an AOR agreement might be needed for several reasons. Common reasons include poor communication from the agent, low service quality, or a lack of expertise. Other issues could be the agent not providing access to key insurance markets, missing important policy gaps, or mishandling claims and renewals.
In competitive fields, businesses often rethink their insurance partnerships when they expand, enter new markets, or restructure their employee benefits or compensation planning strategies. Changing agents can help align with partners that offer better insights, pricing, or coverage options.
What to Know Before Signing an AOR Letter
Before signing an AOR letter, understand that it legally revokes the current agent's authority and gives it to a new representative. This change may impact ongoing renewals, open claims, and communications with the insurer.
Review all terms of the new arrangement carefully. This includes any servicing fees or contractual obligations. A lack of transparency or rushed transitions can cause service interruptions, billing issues, or duplicated efforts between agencies. Always ask questions, check experience, and confirm the agent’s carrier access before you commit.
These transitions may also affect employee management, payroll deductions, or the continuity of broader HR processes.
How the AOR Process Works
The typical AOR process involves a series of administrative steps:
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Initiation: The new agent prepares an AOR letter and sends it to the business owner for review.
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Signature and Authorization: The business owner signs the letter on company letterhead, acknowledging the change in representation.
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Submission to Carrier: The newly signed AOR letter is submitted by the agent to the insurance carrier for processing.
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Policy Transfer: Within 5 to 10 business days - assuming no objections - the insurance carrier updates their records to reflect the new agent as the official broker of record.
During this transition period, the previous agent may be notified, and any outstanding servicing responsibilities are transferred. In most cases, policy terms remain unchanged unless the new agent initiates a request for endorsement, cancellation, or renewal modification.
What to do if You Signed an Unfavorable AOR?
If a business owner realizes that signing an AOR letter was a mistake, there is typically a brief window commonly 5 to 10 days during which the letter can be rescinded. This is done by submitting a rescinding AOR letter, which voids the original agreement and restores the prior agent’s status.
After that window has passed, the only available recourse is to sign a new AOR letter with a different agent. Doing so automatically revokes the prior agent’s authority and initiates another transition, pending carrier approval. However, frequent changes to AOR status can create friction with carriers and disrupt the servicing of ongoing policies. It may also disrupt employee satisfaction and employee wellbeing if insurance-related benefits are affected.
Why is an Agent of Record Important?
An Agent of Record plays a pivotal role in overseeing and managing a company’s insurance strategy. Whether you’re changing agents for better service, broader market access, or strategic realignment, understanding the AOR process and its implications is critical. From legal authority to policy servicing and carrier communication, the AOR designation ensures that a single party is responsible for managing coverage, advocating for the client, and maintaining accurate records.
Careful review of AOR letters, transparent communication with agents, and attention to policy timelines all contribute to a smooth and beneficial broker transition. Businesses that treat insurance relationships with the same level of scrutiny as employment agreements or vendor partnerships are better positioned to secure consistent, compliant, and cost-effective coverage.
For definitions of key HR and employment terms, visit the Rivermate Glossary.