Highest Possible Direct Contracts with Carrier?

[ohbrother1]

We're looking at getting licensed directly with the carrier and cutting out the middleman/wholesaler if possible. Probably thinking about 3 strong FE companies. Our agency does significant annuity and life insurance business and can verify production there but are just getting started with FE.

We don't need any help in terms of training or leads. Any recommendations on top 3 companies and the contracts we could expect starting off without going through middlemen?

 

[Josh]

I think you're missing pieces of the picture. The "middlemen" actually help you get better contracts. I don't know what you're considering "significant annuity and life insurance business", but unless you can commit to doing millions in premium with a carrier, an upline can probably actually help you.

To take that point further, many carriers would rather deal with a single organization than hundreds and thousands of smaller ones, so they'll either only go through large distribution channels or they will only offer street contracts direct and you'll be able to get better contracts through an upline.

You should probably talk to Todd King and he can probably either help you or get you pointed in the right direction, Final Expense Contracts | Life Insurance Agent Contract .

 

[Mattschmidt]

Oxford lets you contract directly. You may just want to call individuals company's and see if they will let you contract directly, and what contracts they will give you, if you don't want to work with an IMO

 

[TwiLight]

The Vast majority of FE companies ONLY use the IMO channel. This has been a fundamental change with insurance companies since the Mid to Late 90's. Most direct contracts are in fact lower than what can be gotten with an IMO.

One of the main reasons companies have moved to IMO distribution is to reduce the Chargeback/collection risk. If you have an IMO take on the risk they in turn give them the spreads for that risk.

Some companies will require prior proof of production before going above street and some leave the IMO to determine that.

It is best to talk with quality IMO's or MGA's to negotiate a contract. You will do far better on Product quality and commission in doing so. There are many on this forum that can assist you including our company

Good Luck.

 

[Newby]

I agree. Best thing is to check both ways. Many companies will contract you directly but for the most part you'll get lower contracts that way. But it never hurts to find out.

 

[jacobtn]

so I take it you would rather go through an IMO, thus sharing commissions? sounds reasonable.

 

[360]

It will largely depend on what your verifiable life production is and if the carrier is entertaining new direct relationships. One thing to keep in mind when going direct is that you're also going to have production requirements to hit to keep your contract in most cases.

I think you'll find that if you align with the right group you will more than likely hit or exceed your comp goals and pick up most of the carriers that you need without the ongoing production requirements if you have proven production and a solid marketing plan to move into the FE market.

 

[Josh]

so I take it you would rather go through an IMO, thus sharing commissions? sounds reasonable.

I'm not sure you get the point.

Let's say street with XYZ Carrier is 100%.

An IMO might get 145%, but the carrier might only give a direct contract of 120%. That being the case, going under an IMO gives you more upside potential.

Let's get a little more advanced:

Assume all of the above, but let's add production requirements. If you're giving the IMO $300k/year of premium with XYZ carrier and getting even just the 120%, there may be a production requirement of $500k/year to keep that 120% contract. You might even be able to get 130% with no production requirement if the IMO and you can strike the right deal and want to work together.

Some carriers will work differently, but as TwiLight has pointed out, many carriers rather work with an IMO as a single point of contact rather than chasing debt and handling contracting with agents directly.