Paying a non-appointed Agent

[honestabe]

Greetings, everyone!

I have an Agent who is clearing up his Vector (paid off over $4K, and owes $1500 still, but these were mostly roll-up debt when he was with a big name IMO) on top of his credit report. No bankruptcies, just slow pay due to some medical and child custody issues he faced. Good guy who faced some bad times and is doing the right thing. However...

I am hearing "soft nos" from contracting departments as far as his appointment until and unless his credit is cleaned up and Vector One is clear. We're talking one decent-sized annuity.

Solution? Would it be possible for me to write the business he brings in, and then pay him via 1099? He wouldn't be appointed, and wouldn't be on the application, but he IS life licensed in the state, and it would therefore not be an illegal commission split as best I can tell. Just looking to help him on his way and not lose out on some business he has developed, and has no place to go.

Looking for any other solutions or ideas you may have, and thank you very much for taking the time to help!

 

[DHK]

Sounds fine to me. I've seen it and done it myself. I don't see any legal or ethical issues there.

The worst problem is that he wouldn't get any "production credit" with the company for the year - which I'm sure is so far removed from being a problem that it's a non-issue.

 

[Allen Trent]

It shouldn't be an issue regulatory wise because most states allow you to pay a licensed person. However, this may be a contractual issue. Some carriers prohibit paying commissions to anyone not listed on the case. I know Minnesota Life prohibits it.

The other issue you can face is if the applications were completed honestly based on the questions asked. That could turn into a regulatory & contractual issue if you are not the one filling out the application & asking all the questions, but you sign it as if you prepared it. If the non appointed person fills out the applications & asks all the question and you merely sign it later, it can be an issue, especially in regard to life insurance as it could void the carriers right to contest a claim if it is signed by you stating you witnessed the application & asked the questions.

 

[VolAgent]

See if your contract with the company prohibit brokering, which this may fall under.

Also, as a CYA, you should personally speak with all parties to the applicant and perhaps ask follow up questions. Whether life or annuity. Remember, it will be your name on the application and you will be the one dealing with any fallout from the company, regulators or the courts if there is an issue down the road.

 

[Norwayguy]

Have them bird dog and get you appointments that you or the two of you run for the commission split.

 

[Todd King]

Greetings, everyone!

I have an Agent who is clearing up his Vector (paid off over $4K, and owes $1500 still, but these were mostly roll-up debt when he was with a big name IMO) on top of his credit report. No bankruptcies, just slow pay due to some medical and child custody issues he faced. Good guy who faced some bad times and is doing the right thing. However...

I am hearing "soft nos" from contracting departments as far as his appointment until and unless his credit is cleaned up and Vector One is clear. We're talking one decent-sized annuity.

Solution? Would it be possible for me to write the business he brings in, and then pay him via 1099? He wouldn't be appointed, and wouldn't be on the application, but he IS life licensed in the state, and it would therefore not be an illegal commission split as best I can tell. Just looking to help him on his way and not lose out on some business he has developed, and has no place to go.

Looking for any other solutions or ideas you may have, and thank you very much for taking the time to help!

So you want to ghost write and sign his apps that he brings to you? Once I phrase it like that it doesn't sound quite as good does it?

Let me just say this. There are crooks in this business. They are some of the best when it comes to getting you to go out of the way to help them get something done. I'm not saying that this guy is, but you would be best off to get the full story behind this Vector hit and why he hasn't pay it yet.

I think I've heard all the stories!

 

[rousemark]

So you want to ghost write and sign his apps that he brings to you? Once I phrase it like that it doesn't sound quite as good does it?

Let me just say this. There are crooks in this business. They are some of the best when it comes to getting you to go out of the way to help them get something done. I'm not saying that this guy is, but you would be best off to get the full story behind this Vector hit and why he hasn't pay it yet.

I think I've heard all the stories!

Not to mention that in most jurisdictions it is going to be illegal for him to solicit and take an app with a company that he does not have a CA with and then you are going to compound the problem with your signing your signature on the app he took.. Band news all the way around.. No amount of overwrite on an agent is going to be worth the risk..

 

[honestabe]

Have them bird dog and get you appointments that you or the two of you run for the commission split.

We actually had a long sit down chat last night and this is a possible arrangement we've discussed and with which we will most likely proceed at this point. The only question, and I am discussing this with my attorney, is whether or not he should be 1099'd or an employee. We've also discovered some other mutual business interests, and a full partnership may be put into place. Again, legal gurus will determine.

THANK YOU ALL for your thoughtful input. While I don't post here a whole lot, I know and appreciate the fact that there are some truly extraordinary people and producers here who have a genuine interest in the proper advancement of our industry.

 

[BMC]

With his history, wouldn't you be most worried about chargebacks? You'll never get your money back and it'll be too expensive to sue him.

 

[rabab]

Just a note for people in other states (assuming this is not a problem in Ohio based on the conversation here). In Florida this situation could lead to both agents losing their licenses or being fined. The reason being that here, by statute a producer has to be licensed and appointed in the line of business that the commission is based on. So if the guy you're paying the referral commission to is not appointed for annuities (assuming we're in Florida now), you can't pay him a commission or any other compensation related to an annuity.

In Ohio, I'm not an expert, but at the very least I would say make sure he's not "acting as an agent of the company" for annuities. If you're confident that you can pay him a referral based on his license status, or if he is appointed by another life and annuity company, just make sure he doesn't appear to be representing "this" annuity provider. ie: taking applications, making representations to the customer, etc. Even a quick glance at Ohio's statutes tells me that would not be Ok.