What is an Agent of Record Letter or AOR?  An AOR is a written declaration by an insured designating which insurance agency they want representing them in the insurance marketplace, or to a specific insurance company within the marketplace.  

In the Property and Casualty marketplace, most insurance carriers will only work with a single agency at a time on a specific client.  This is completely different than the health insurance marketplace, where most insurance companies will quote for multiple agencies simultaneously on the same client. 

Confusing?  Yes, even to many persons who work in the insurance industry!  

So, what’s the big deal about AORs?  Simply put, they are important instruments that are frequently misunderstood and misused, resulting in harm to both client and agent.  There are certainly times when an AOR should be used and when they should not.  Let’s explore both scenarios. 

An AOR should be used when a client is dissatisfied with the service of their agent or agency, there’s a communication disconnect, or they simply don’t feel like they’re being treated as a valued client.  In these cases, the client relationship has simply become stale. Perhaps the salesperson who wrote the business may have moved on to another agency or line of work leaving the client relegated to being the “glorified house account” receiving limited attention and service. Unfortunately, it happens in practically every agency in the country, and on every size of client.

Another situation an AOR should be executed to move the business from one agency to another is when the client perceives there’s a significant expertise gap between the agencies value propositions or expertise.  For example, let’s say the GENERAL INSURANCE AGENCY has a single milk delivery client and only provides basic insurance intermediary services.  The milk delivery company later becomes aware of MILK INSURANCE AGENCY. They have developed a specialized and tailored placement and service process specifically designed for milk delivery companies that includes safety management, dedicated claims and litigation management, and an excellent reputation affirmed by their extensive milk delivery clientele.  In this case, the milk delivery company believes its business will be better protected, serviced and monitored by the MILK INSURANCE AGENCY, and they execute an AOR that terminates the representation from GENERAL INSURANCE AGENCY. 

Unfortunately, many times clients are misled into signing an AOR by a competing agency by simply telling the client “sign this paper so I can get you a quote from XYZ Insurance Company.”  What they fail to disclose to the client is that by executing the AOR they are in fact terminating or blocking the incumbent agent and agency.  Again, there are reasons agencies should lose their business as noted above, but not from a competing agent being less than fully transparent and honest with them.  If you are asked to sign an AOR so the agent can “get a quote” hopefully you’ll recognize the game being played and will not fall prey.  

Another all-time AOR ploy by some less scrupulous agencies is telling a client “We are the biggest agent for ACME Insurance Company and therefore we’ll get you a better deal,” or “We have a special relationship.”  Don’t fall prey to these underhanded and deceptive attempts to literally steal your business from your incumbent agent/agency who worked hard to gain your business in the first place.  Ask for specific examples of how and why their agency is better prepared to represent your company and steward your insurance programs.    

There are legitimate times and reasons to execute an AOR.  We urge you to understand that by signing the document you are hiring AND firing the respective agents and agencies and to use informed discernment in making the decision.  As always, we are available to discuss the circumstances in your specific decision-making process as respects all aspects of your risk management and insurance programs.