Chargeback repayment

Dec 6, 2018

  1. KG-D2
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    KG-D2 New Member

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    Hello all, I am new here but I frequently read through the forums on a regular basis.

    I was wondering if I could get some insight from you guys.

    I am currently trying to switch to another IMO, and one of the carriers I am contracted with will not release anything due to a debt owed to them from a chargeback, which is understandable. I had tried to get in touch with the client whom I wrote up the policy on, but they have changed their phone number and moved away from their address that I have on file. The policy had lapsed due to nonpayment/invalid bank information. I don’t know what the client is up to but that is their business.

    With this carrier I am currently on a paid as earned commission, which was switched over from 90% 9mo advance when I got released from all the other carriers by my previous IMO a couple weeks ago. I have been trying to reach out to the client and/or his family members in every way since I was notified of the lapsed policy.

    I currently cannot afford to cut a check to the carrier for the full chargeback amount, but they have given me until January 31st to fulfill the debt. I personally want to get this squared away ASAP because they are one of the big dogs and one of my main writing companies, so I would like to get contracted with them through my new IMO and get back in the field.

    I am switching IMOs because of personal issues with my upline and issues with contracting, as well as the IMO itself. To be honest, I have not worked at all since the problems started in September, I have just been working at the family business hoping that it would all be resolved by now. Unfortunately, it hasn’t.

    This all brings me to my question. Being that I am on a paid as earned commission, if I write a policy in which the normal 90% advance would usually cover the chargeback debt, will that actually count towards my debt? Or will it not because I am not being advanced that amount up front?

    I have tried asking the carrier on multiple occasions but they all tell me “I can’t really tell you if it will or if it won’t because I don’t know the amount of the policy”.

    Basically in simple terms I am asking if submitting new business (assumed approval) will cover my chargeback amount if I am on a 90% paid as earned commission, instead of the usual 90% 9mo advance commision I was at.

    Thank you all in advance for your help.

    KG
     
    KG-D2, Dec 6, 2018
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  2. KG-D2
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    KG-D2 New Member

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    I would also like to point out that I am currently awaiting contract request approval by all the other carriers so I cannot write up business under them and use that money to pay the chargeback. My main concern is getting this debt fulfilled so I can get contracted with this carrier as soon as possible.
     
    KG-D2, Dec 6, 2018
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  3. rousemark
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    rousemark Still Here!

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    The amount of commission earned is what will pay down the debt. ie. If you sell a $100 monthly case, $90 will apply to the debt on issue. Then each month it pays it will reduce the debt by $90 through the first year.
     
  4. KG-D2
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    KG-D2 New Member

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    That’s what I thought, thank you for the confirmation. Just needed to hear it from someone else!
     
    KG-D2, Dec 6, 2018
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  5. Newby
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    Newby Guru

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    First, no one company matters all that much. Some agents get all bent out of shape over the one company they can’t write when they have plenty of other companies that they can. Don’t worry about that one until you get it all cleared up.

    Second, If you have no advance with that one but do have advances with others just write the new biz with the others and when you get paid, write a check to the company with the debt. There is no difference except in your mind.

    Third, when you are Transfering IMOs (as long as there are releases involved) there is no period that you need to stop writing business. You just write all along. Just one day your over ride commission s paid to one IMO and the next day it is paid to your new IMO. But it is seamless as far as the agent is concerned.

    If you are transfering and couldn’t get releases from the old IMO that is different of course. With some companies you have to go six months of no production and with others you have to cancel your contract and then sit out from that company for six months.

    We have had agents come to us from all sorts of IMOs. I’ve never seen a single agent that is hindered by not having every single company. If some are tied up for six months, you just fall in love with different ones. Six months goes by fast. And the solution to oweing debt is to get out there and write a lot of new business. The company you owe the debt to will usually not vector you as long as you communicate and get on a reasonable repayment schedule. Pay them $250 per month until the debt is cleared up and get on with your business.
     
    Newby, Dec 6, 2018
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  6. Newby
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    Newby Guru

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    Some companies will have you appointed and ready to write in two or three days. You don’t need every company. Once you have one you are ready to go start making money.
     
    Newby, Dec 6, 2018
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  7. KG-D2
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    KG-D2 New Member

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    Thank you for the response. You are right, no one company matters that much. I guess it’s just in my head that I want everything to be all set so I can start off fresh with a clean slate, so to speak. I will wait to hear from the other carriers and then I will just write business through all them, where in turn I will cut a check out for the debt.

    Your help is much appreciated!

    KG
     
    KG-D2, Dec 6, 2018
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  8. myinsurebiz
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    myinsurebiz Guru

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    This is why we only take 6 month Advances and put newbies on 3 month Advances.

    Pay it - don't let it go to Vector - or - then you're screwed and have to have certain questions on E&O, License Renewals, etc as a Yes . . .


     
  9. pfg1
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    pfg1 Guru

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    I heard someone say (some time ago) if you want an advance, sell annual premium. Otherwise go as earned and you'll never have an issue. I think that is pretty solid advice.

    I would definitely figure out how to pay it. The whole vector thing is ugly from those I know that have dealt with it. Sounds like you have a decent business flow, even if you have to borrow to pay it, hopefully you can pay that borrowed money off quickly.
     
    pfg1, Dec 7, 2018
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  10. Abrasax
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    Abrasax Super Genius

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    I've known agents who were "cleared" with a carrier after a portion of repayment with arrangements for the remaining payments, ideally set up on autodraft (these carriers know what they're doing). That way you could at least have some peace of mind knowing you've made commitments to honor your debts. And since you'd be in a payment arrangement, you could answer no to any other carrier app that asks if you have an outstanding debt with another carrier.
     
    Abrasax, Dec 7, 2018
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