When a Direct Writer AOR’s Your Client

Losing a client to a large direct writer is tough, especially when you have an appointment with them. Unfortunately, it happens, and it presents a challenge for independent insurance agents.

An Agent of Record (AOR) refers to a specific agent or agency authorized by an individual or business to represent them in dealing with insurance companies. It grants the agent or agency the authority to manage the insured’s policy, negotiate terms, and process any transactions, including renewals and claims. The AOR has the exclusive right to earn commissions on the policies they manage.

An Agent of Record Letter (AOR Letter) notifies the insurance carrier that a new agent or agency has been appointed to manage the policy, replacing a previous agent.

If an agent refuses to sign the Agent of Record (AOR) Letter, it can complicate the transfer of authority to the new agent. The policyholder (the individual or business holding the insurance policy) typically retains the ultimate right to appoint or change their agent. Here’s what can happen if the agent does not sign:

• The AOR transfer might be delayed: Without the current agent’s cooperation, changing agents may take longer, requiring additional steps from the policyholder or the insurer.
• The policyholder can still submit the AOR Letter directly: Even if the agent refuses to sign, the policyholder can submit the AOR Letter directly to the insurance company. Most insurers will honor the policyholder’s request, as it is their right to choose their agent.
• Commissions and servicing will transfer to the new agent: Once the insurance company processes the AOR, the new agent will assume the policy’s servicing role and will be entitled to any commissions, regardless of the previous agent’s refusal to sign.
• Potential for agent objections or appeals: The original agent might dispute the AOR change or appeal to the insurer. If the original agent is appointed with the direct writer and objects, they can request a discussion or appeal. However, the insurer will generally honor the policyholder’s decision if the AOR Letter is valid and properly executed. The original agent’s refusal may indicate dissatisfaction, but it typically does not prevent the policyholder from proceeding with the change.

The timeframe to obtain a new agent’s signature on an AOR Letter can vary based on the insurance company’s practices and specific circumstances. Here are some general guidelines:

• Standard Industry Practice: Most insurance companies allow 10 to 30 days for the transition process, during which the new agent’s signature needs to be collected and the change completed. This time frame allows for the paperwork to be processed and reviewed by the insurer and the agents involved.
• Policyholder Rights: If the current agent does not cooperate or sign within that period, the policyholder usually has the right to submit the AOR Letter directly to the insurance company, which can honor the request without the original agent’s signature.
• State Regulations: Some states may have specific regulations governing how long an agent has to respond to an AOR request. Typically, however, the insurer’s policies and timelines will take precedence. It is essential to check with the insurance carrier to confirm their exact timeline and any specific requirements for completing the AOR process.

It may not feel like it, but this situation can be an opportunity to strengthen your agency and retain current and future clients. These strategies can help you navigate similar challenges:

• Understand Why: Contact the lost client to understand the reasons for switching. Knowing why they left can help you manage your approach with other clients. Common reasons include price sensitivity, convenience, and service.
• Emphasize Personalization: Direct writers may offer lower prices, but independent agents can provide personalized coverage tailored to individual needs. You can offer unique policy bundles that cater to specific lifestyles or professions, highlighting your abilities, local expertise, and personal service.
• Digital Solutions: To stay competitive, invest in a user-friendly online portal and website. Offering convenient digital tools can enhance your clients’ experience and make policy management easier.
• Educate on Coverage: Emphasize the value of bundled solutions that may offer better coverage and protection. Educate clients about potential policy gaps and conduct regular reviews to ensure their coverage meets their needs. These reviews can help identify changes in the client’s circumstances or shifts in the insurance market.
• Communication and Service: Customer service is a key advantage for independent agents. Be accessible, proactive, and responsive to your clients’ needs. Build loyalty through personalized support, consistent communication, and customer benefits.
• Lost Clients: Clients who leave for lower prices may experience service or coverage issues later. Stay in contact through follow-ups and newsletters, positioning yourself as a knowledgeable and reliable option if they reconsider.

Losing a client is tough, but it is also an opportunity to refine your approach. Focus on delivering personalized service and embracing digital tools and time-saving strategies.

For example, consider the free 2024 Trusted Choice Hard Market Toolkit Expansion – Enhanced Communication & Retention Strategies. This toolkit provides strategies for improving client retention and winning back lost clients. With your IIABA user email and password, you can download the 2024 Trusted Choice Hard Market Toolkit Expansion.

For additional information, contact Jeanie Giesler, Resource Center Advisor, at jeanie@ohioinsuranceagents.com or by phone at 614-552-3054. By addressing and implementing these strategies, you can show your clients that working with an independent agent brings value, loyalty, and trust.

Legal Disclaimer: This material is intended to provide general background and insight. It does not constitute legal advice regarding any particular facts, circumstances, or issues. This material is not a substitute for legal counsel, and we advise you to consult legal counsel for specific analysis and advice.

More Information: Consult your trusted advisors—Attorney, Banker, and CPA—to ensure that your legal and financial interests are protected. The information provided in this publication is not a substitute for legal advice, and you should consult legal counsel to ensure compliance with state law, as these laws and rules are subject to change. For more information, contact OIA at (800) 555-1742 for the most up-to-date information.

Cited Resources:

• IIABA Trusted Choice Hard Market Toolkit Expansion – Enhanced Communication & Retention Strategies
• 2024 Trusted Choice Hard Market Toolkit Expansion

About the Author:

Jeannine Giesler, CISR, CPIA, and past President of the OIA Board of Directors, Foundation for the Advancement of Insurance Professionals, currently serves as Resource Center Advisor for the OIA. The purpose of the Resource Center is to contribute to building a comprehensive library of resource materials for our members. We pride ourselves on being the one-stop shop for all OIA members and work to solve every problem or situation you may come across.