FMO Slow Paying and No Paying

supersupps

Guru
534
An agent friend asked me to post this for advice.

He does a few MA plans in Alabama. about 10 a month.. His FMO pays him direct, not from the carrier. The FMO is a one guy opertation with just a few other agents. A few days ago, he asked my buddy if he could pay him next month because he had a bunch of chargebacks from another agent.. After a few more words, the fmo said , no worries and said he'd mail out the money asap. What to do? I believe there are no other fmo's for this carrier and if there were other fmo's what could he do without alerting the ins carrier and who knows what they'd do. any ideas. I worry about his monthly business and his renewals for MA plans.
 
Your friend "Assigned his Commissions". This means that he has agreed to have his commissions sent to another. I think your friend is SOL unless he has, in writing, how much he should get.

Never, ever assign commissions, regardless of what is promised!
 
In a strange way, at least the FMO guy was honest enough to call and ask. While it probably doesn't help the money flow situation, I'd rather be asked than just not paid, with a 'check is in the mail' statuement.

Yep, assigning commissions is a problem. Avoiding doing that avoids problems like this. The carrier likes it though, they got their money back :)

Dan
 
I dont think he assigned his comm.. His fmo is one guy operation who got paid from the carrier and asked if he could delay payment.. different than assigning comm?
 
I dont think he assigned his comm.. His fmo is one guy operation who got paid from the carrier and asked if he could delay payment.. different than assigning comm?

No. That's what assigning commissions is all about. The only way the agent would not get paid directly by the carrier is if the agent signed an agreement authorizing the carrier to send the agent's commissions to someone other than the agent.

The agent gave up his right to receive commissions directly from the insurance company.

Agents do this many times our of ignorance, mostly new agents who don't understand how everything works. They get promised "leads", support, training all of which may be hollow promises at best, however, they make it sound soooooo good.

The agency owner, FMO or whatever else one calls himself may not even explain to the agent what he has signed. They keep it a secret unless the agent knows to ask. A new agent just assumes that is the way it is done for everyone. The agent doesn't find out until it is too late.

I've talked to Med Supp agents, agents new to the business, who were excited because they said they were on a "50% contract". Fifty percent sounded great to them, but 50% of what? How much were they really receiving?

If street level commission is 20% of the annual premium or $300 and the agent has assigned his commission and is on a 50% contract then the agent is only going to get $150 first year commission. The agency he assigned his commissions to gets the other $150 plus their override.

If the agent leaves the agency the agency will stop paying them, period. The agent will not receive any renewals, period. Requiring an agent to assign commissions is a rip off unless the agent understands all of the ramifications of what it means.

I'll bet money it is never explained to an agent that way.
 
Here in Utah, Molina health only pays through your FMO and not direct. If it were an option, he would do it the other way, since all my other contracts and companies pay me directly. It sucks, but fortunately my FMO for that product has more than enough to pay me for the 1 app I may write with them every few months.
 
your friend should start looking for other insurance to sell, the writing is on the wall. the fmo, is honest but broke, ooch!
 
Your friend "Assigned his Commissions". This means that he has agreed to have his commissions sent to another. I think your friend is SOL unless he has, in writing, how much he should get.

Never, ever assign commissions, regardless of what is promised!

Frank is 110% spot-on with this advice. I lost $1,600+ a month in earned commissions & renewals spread across several carriers when our Field Marketing Office (4 person FMO) decided to close the doors. He was in Kansas City, our satellite office was in Illinois.

Calls and letters to the Kansas Attorney General and Department of Insurance yielded zero success. I don't know about other states, but in Kansas there's no law to protect agents who willingly assigned their commissions to another entity. The money is 100% theirs from day 1.
-AC
 
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