An agent of record (AOR) is a person or company that represents your business with an insurance provider. An AOR will negotiate plans and oversee policy details. They will also handle compliance monitoring for your ICs. They will help you determine if workers are properly classified as independent contractors or W-2 employees. This helps you avoid costly misclassification penalties and simplifies IC engagement.

AORs are an important tool for companies with a large number of freelancers, consultants, and contractors. They can help you scale operations, simplify onboarding, and make it easier to manage a large workforce. But, it’s important to use AORs wisely, ensuring they are a good fit for your team.

While the AOR model was once the bedrock of agency business, more and more clients are opting out of using a single agency as their AOR. Instead, many companies are choosing to use multiple agencies based on specialty—perhaps a media shop for traditional buys, a digital agency for things like SEO/PPC, and a creative shop to drive content for those other channels.

It’s also common for AoRs to become independent AoRs as the business specializes or scales. For example, “writing” might split into “copywriting” and “blogging”. AORs can also be carved out when a new hire is brought on to the business to take over responsibility for a particular area of the organization. As your team grows, clear communication and healthy discussions about responsibilities are critical for success.