I have never been a big fan of obtaining business on an Agent of Record (AOR) letter. Somehow it just doesn't seem right to simply have the business owner sign a one-page letter to give you their business when you've not been around to do all the grunt work. It's kind of like being able to have access to all the wonderful things our country offers, but you didn't take the time and interest to vote in the last election.
When you do an AOR, essentially the business owner is transferring all the insurance over to you. You get the renewal information, and access to all the policies and supporting documents. Plus, most insurance companies will pay you the full renewal commission on that account. A lot of agents make a good living by just taking business on an AOR, and are very convincing they will do a better, more efficient job, and save the employer lots more money over the original writing agent. I've also seen some employers sign an AOR and did not know what they were signing. I'm sure the message the new agent was conveying must have been mistranslated. Don't you think?
As a rule, I don't like to accept an AOR against an agent that I know and have worked with in the past. I've been in this business a long time and know a boatload of agents. But, there is still honor among us, and I have passed over some opportunities. Only under extreme circumstances would I do this, and it would be after a long heart-felt conversation with my friendly competitor. I also first have the client contact the current agent if they are truly interested in making a change.
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Although averse to practicing the AOR game in my daily mission as an insurance agent, I do believe there are times when it is appropriate and justifiable. I never bring up the subject with a client, but occasionally after presenting my services and how I conduct my business, the prospect will broach the issue. More often than not, the business owner supports their inquiry with the lack of response, detail, or service received from the writing agent. One business owner advised that, "All I wanted was my agent to return my phone call!" I had another business owner indicate the agent never presented the renewal to them or had an annual meeting. Our's is a business of service, and if you can't bring yourself to get back to your client, then "agent-beware".
Another area of AOR appropriateness is when the original agent is out of the business. I've seen agents that maintain a license, but are technically missing-in-action. I'm not sure a part-time agent has the best interest in mind for the client. I also accepted an AOR from a client whose agent defrauded them and eventually lost his license. Insurance fraud is pretty much a no-no and that's kind of a no-brainer!
I find that after writing this piece, approaching the subject of agent of record letters is like talking about your crazy uncle who the family tries to avoid, but you know he's going to show up at someone's birthday party. It is a necessary, but touchy issue. If you are going to be the best at what you do in this business it will eventually come up in the conversation with a prospect. It's important to approach the AOR issue professionally and ethically.
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