1. An agent of record (AOR) is an individual or entity that is legally authorized to represent a company in selecting and managing an insurance policy on its behalf.
2. The responsibilities of an AOR can include handling policy renewals and changes, submitting claims, negotiating settlements, and acting as a point of contact between the insured and the insurance company.
3. Some of the benefits an AOR can offer a business include expert advice and time and cost savings. However, choosing an AOR may restrict the insurance choices available to a company as well as create an overreliance on its services.
4. An AOR is sometimes referred to as a ‘broker of record’.
It is common practice for companies to hire an AOR when it comes to the administration and management of their insurance coverage. Without the need to deal with such matters themselves, businesses can focus on their core activities knowing their insurance needs are being taken care of. An AOR can also be used by a PEO to handle certain tasks related to managing employee benefits or arranging PEO insurance coverage for its client companies.
This article will look more closely at the role of an AOR and will discuss some of the pros and cons of choosing one for your business.
What is the definition of an “agent of record”?
An AOR sometimes referred to as a ‘broker of record’, is a company or individual that is legally authorized to represent the insured in the purchase and management of their insurance policy. An AOR can also help a company evaluate and select appropriate employee benefits including health insurance, life insurance, and retirement plans.
As a legally authorized representative of the company, an AOR will deal directly with the insurance company and will receive all communications on behalf of the policyholder enabling it to carry out its duties which include handling policy renewals and changes, submitting claims, negotiating settlements and representing the policyholder in dealings with the insurance company.
An AOR is typically designated by the insured in writing through a letter of appointment and the insured may change their AOR at any time by submitting a revised letter to the insurance company authorizing the release of information and handling of their insurance coverage with the newly designated AOR.
It is worth noting there are competing definitions of an AOR and it is sometimes used to describe a company that manages independent contractors who assume responsibility for all payment, regulatory, and tax matters in compliance with the country they are working in. For the purposes of this article, an AOR will be an agent for insurance purposes only.
What are the pros of choosing an Agent of Record?
Companies use an AOR for a variety of reasons. Below are some of the pros of choosing such as agent for your business:
What are the cons of choosing an Agent of Record?
Below are some of the potential drawbacks to hiring an AOR:
You may limit your options in terms of insurance providers if you choose an AOR as some only work with specific insurance companies. This not only limits your coverage options but also your ability to choose the most competitive price on the market.
In addition to potentially paying more for your insurance coverage due to a lack of options, your overall costs of insurance could be higher due to additional fees charged by some AORs.
There is the risk that an AOR may not fully comprehend the specific needs and risk profile of your business resulting in them selecting and purchasing an insurance policy that provides inadequate coverage. Periodically reviewing your company’s insurance policies to ensure they continue to serve the needs of your business can help to mitigate this risk.
Reliance on a single provider to arrange your insurance needs can be problematic if they are no longer available to provide this service or choose to leave. It is also important for a business to have an understanding of its own insurance needs and to be proactive in selecting the right insurance provider as overreliance on an AOR to make all insurance-related decisions can lead to oversights and the inability to make informed decisions about the coverage they need.
A final word…
Frequently asked questions
Yes, an agent of record (AOR) is also known as a ‘broker of record’ as both are appointed on behalf of an insured to act as their representative in dealings with an insurance company.
An employer of record (EOR) manages the foreign employment relationship on behalf of a company ensuring compliance with local employment laws and regulations, whereas an agent of record (AOR) is responsible for managing insurance coverage and handling claims or issues that may arise on behalf of the EOR’s clients.