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What is an Agent of Record Letter?

If you’re asked to sign an Agent of Record letter, it’s important that you understand what it means.

Also known as an AOR, Letter of Authority (LOA), or Letter of Authorization, this letter is used by a benefits broker for a few ends:

  1. Secure the client relationship;
  2. Block any competing benefits brokers from being engaged by the client;
  3. Direct any commissions to be paid to the broker; and, most importantly,
  4. Ensure that an insurance company is forbidden from providing a quote to any other benefits broker.

When you sign an AOR, the insurance broker would immediately send it to the insurance company so that they can arrange for commissions to be paid, as well as quotes to be released to that broker, and no other broker.

If you have previously engaged a different broker, that broker will be notified by the insurance company of the new AOR, and be given 5 to 10 business days to have a chance at reaching you, to try to rescind the AOR. The insurer effectively warns the incumbent broker of the new broker, gives them a chance to save the client relationship, and if it cannot be salvaged, pays the new broker commissions at the end of the grace period.

If you’re asked to sign an AOR, always ask the new broker:

  • What is the commission you will be paid on this case?
  • Is that built into my premiums? So if your commission increases, will my premiums increase?
  • What will you be doing with this letter?
  • Does this terminate my existing broker relationship?

Also, ask your incumbent broker:

  • Does signing an AOR with a new broker jeopardize my existing relationship with my insurance carrier?
  • Does this put me at risk in any way?
  • Would you be able to provide or match the services of the new broker?

If you have any questions, feel free to contact Beneplan at 1-800-387-1670.