Starting a Subagency

Jul 14, 2015

  1. rwc_blp
    Offline

    rwc_blp Expert

    Posts:
    22
    Likes Received:
    0
    State:
    Florida
    Hi! I am new posting on here (I stalk it a lot though). I have been an independent for about a year, and a seasonal captive for 4 years with Medicare Advantage plans. I am debating on starting a sub-agency. I only do health insurance (medicare advantage, supplements, ACA plans, etc.) We would provide leads (through my own system), and build our team as demand increases. Aside from getting agents and getting them sales, what are other considerations? Getting subagent contracts with the agencies I work with is not an issue, just trying to figure out if there is anything I haven't considered. Thanks!
     
    rwc_blp, Jul 14, 2015
    #1
  2. somarco
    Offline

    somarco That Medicare Guy

    Posts:
    28,558
    Likes Received:
    1,961
    State:
    Georgia
    Have you explored the override margin? How about your E&O exposure? Commission tracking when carriers fail to pay correctly or timely?
     
    somarco, Jul 14, 2015
    #2
  3. axeman462
    Offline

    axeman462 Guru

    Posts:
    1,667
    Likes Received:
    30
    State:
    Florida
    you're new, but you signed up in 2011..

    You may want to consider building your business first before helping other agents build their business. I can't imagine you have much of a renewal stream after one year indy.

    Aside from that, the only other thing I can think of at this point, that samrco didn't already mention, is be sure to put money aside for chargebacks that your downline may or may not walk away from.
     
  4. rwc_blp
    Offline

    rwc_blp Expert

    Posts:
    22
    Likes Received:
    0
    State:
    Florida
    Axeman- I am new to posting - this is my 9th post. My residuals are enough to support our family and for my spouse to leave his job to assist me, and my referral base is pretty much set. So those aren't an issue for me.

    So if an agent quits with chargebacks, it is the responsibility of the subagency for those chargebacks? Great info guys, keep it coming.
     
    rwc_blp, Jul 14, 2015
    #4
  5. somarco
    Offline

    somarco That Medicare Guy

    Posts:
    28,558
    Likes Received:
    1,961
    State:
    Georgia
    Chargebacks roll up to the general agent. That would be you.
     
    somarco, Jul 14, 2015
    #5
  6. midwestbroker
    Offline

    midwestbroker Guru

    Posts:
    2,371
    Likes Received:
    36
    State:
    Missouri
    That is a big hurdle for many agents...charge backs from their downline.

    If you have an agent under you that writes and leaves to roll business to another carrier (not under you), those charge backs can hit pretty quick.

    Example: Agent works under you for 6 months. They write about 4 Medigap policies a month (24 policies). They roll 12 of them. That is 12 charge backs you would owe. If they averaged $480 per sale (12 month advance), that would be $3,000+ you would owe.

    How many times a year can you afford for that to happen?

    Mind you I am not trying to say having a downline is a bad thing, but you have to be ready for things like the above.
     
  7. healther
    Offline

    healther Guru

    Posts:
    422
    Likes Received:
    0
    State:
    South Carolina
    I've never experienced any issues with chargebacks from subagents. If you have an agent experiencing that many chargebacks they are either full of poo, selling the wrong product, or both.

    I would simply recommend being very selective with your subagents. They can be a huge time suck. Every once in a while you will get an All-Star, but that is rare. The 80-20 rule has been in full effect with our agency, 80% of the production comes from 20% of our agents.

    Truth be told, I often wish it was just me. The overrides are rarely worth the hassle.
     
    healther, Jul 15, 2015
    #7
  8. axeman462
    Offline

    axeman462 Guru

    Posts:
    1,667
    Likes Received:
    30
    State:
    Florida
    What is this hassle you speak of?
     
  9. tins
    Offline

    tins Guru

    Posts:
    3,528
    Likes Received:
    1
    State:
    Missouri
    Save yourself the hassle. If you're able to make a living selling the products yourself, why give yourself the headache of babysitting a bunch of brain dead people that will need their hands held every time they need to piss and then jump ship to the first person to offer 0.50% better commission than you?
    It sounds great- sit back, let others make sales and make money while strolling the beaches...but, it's a fantasy. You will turn into a babysitter and be shocked at how people are able to produce so little, yet take up so much of your time.
    Save yourself the headache...
     
    tins, Jul 16, 2015
    #9
  10. healther
    Offline

    healther Guru

    Posts:
    422
    Likes Received:
    0
    State:
    South Carolina
    I have been a bit taken back by the agents that actually produce a good bit of business. When things are good for them everyone's happy, when they hit a dry spell... whole other ball game.

    But yes, the worst agents often take up the most time.

    rw... I'm not at all trying to discourage you, really just taking the opportunity to vent. You are the only person here that knows your skills and opportunities.
     
Loading...