Direct Carrier Contracts

[thomasm]

IMO? FMO? What's the highest you can go?

I realize that most agents on here recommend finding the right IMO with excellent contracts is the best way to set yourself up for a successful career in the insurance industry.

My question is, for the more entrepreneurial independents out there with loftier goals, what's the highest distribution level you can attain short of putting together an executive team, raising capital, and acquiring an insurance company?

I'm sure a lot of people have entertained the idea of going BIG by securing direct contracts with carriers and building a national sales force. What are the minimum production requirements required to get those direct contracts with life carriers? What would be the best way to go about finding more out this information. I've tried contacting carriers directly and asking about minimum production requirements but I keep getting the runaround!

 

[thomasm]

To further clarify, I'm just curious about how the whole distribution model hierarchy works. Say if a group of industry veterans got together, and formed a start up career agency, what level of production would be required in order to negotiate the highest contract level with life carriers?

You don't have to divulge the the actual percentages, I know that's a big secret that only industry insiders should know, but any help explaining how the whole hierarchy food chain works would be enlightening!

 

[Josh]

You're missing the way the industry works. If you are starting from scratch, you will need to build a production history. You can do very well under a legitimate FMO. Most carriers aren't going to bother dealing with you if you're talking like this because so many folks talk big and don't produce. There is plenty of money to be made at good contract levels that are easy to get, it really makes more sense to work with those first. There are plenty of FMOs willing to partner with folks with no production history but a solid business plan. That's where you should start.

 

[thomasm]

You're missing the way the industry works. If you are starting from scratch, you will need to build a production history. You can do very well under a legitimate FMO. Most carriers aren't going to bother dealing with you if you're talking like this because so many folks talk big and don't produce. There is plenty of money to be made at good contract levels that are easy to get, it really makes more sense to work with those first. There are plenty of FMOs willing to partner with folks with no production history but a solid business plan. That's where you should start.

Yeah I certainly understand that an IMO/FMO is the best place to start. I guess I'm just nosy about how the whole distribution chain works. It looks like any other industry with wholesalers (FMO/IMO's) selling to retailers. (GA's/Agents)

 

[Josh]

Yeah I certainly understand that an IMO/FMO is the best place to start. I guess I'm just nosy about how the whole distribution chain works. It looks like any other industry with wholesalers (FMO/IMO's) selling to retailers. (GA's/Agents)

At the top there are monsters FMOs that pool together and go to carriers and commit to filthy amounts of production. The more production a given group of agencies bring to the table, the better the cut. That's a very small world. You can't walk into that from the street, carriers won't care. Most of the "FMOs" on this board aren't even within a layer of that discussion.

 

[Newby]

To further clarify, I'm just curious about how the whole distribution model hierarchy works. Say if a group of industry veterans got together, and formed a start up career agency, what level of production would be required in order to negotiate the highest contract level with life carriers?

You don't have to divulge the the actual percentages, I know that's a big secret that only industry insiders should know, but any help explaining how the whole hierarchy food chain works would be enlightening!

Most insurance companies will let you contract direct with no production history or commitment at all. But you will be at the same or a lower contract as you would through an FMO. You are giving up what a good FMO does which is teaches you the product.

To get higher commission levels direct from the company, most will move you to a true recruiting level contract with a one million dollar commitment. To get to the absolute top level contracts you will have to have even higher than that.

It doesn't make sense at first that agents will get higher commission levels through an FMO with lower production commitments than they can get direct from the insurance companies. But that's the way it is. The insurance companies want not only high production commitments but also a history of good persistancy and paying your debts. Too many agencies put up big numbers by flipping business that they already sold before.

I may be biased but, an agency like ours is the best place for an agent who wants to build a downline to do it. You are paid direct from the companies BUT you can get higher contracts with multiple companies based on the production you run through us rather than just build a big contract with one company. You want to make certain that where you go has the big contract levels high enough to allow you to grow.

 

[TwiLight]

I may be biased but, an agency like ours is the best place for an agent who wants to build a downline to do it. You are paid direct from the companies BUT you can get higher contracts with multiple companies based on the production you run through us rather than just build a big contract with one company. You want to make certain that where you go has the big contract levels high enough to allow you to grow.

I agree with this premise completely. We worked a deal with an IMO as an MGA building an agency.

Now we are a 50/50 partner in their IMO and we continue to grow. This has only been 3 years.

Bottom Line is you can always get an opportunity, but if you don't produce, it does not matter what your contract level is.