- 868
The largest problem I see with captive agencies in health and life is that commissions are assigned permanently and irrevocably to the captive agency which is the price for training, free leads, bonuses, marketing support, stock and trips.
Even though 1099 you are essentially captive if you agree to assign your commissions usually because you need an advance but many captives require commission assignment even if you are earned because they provide you the above mentioned perks. There is no such thing as free lunch or free leads.
The truth about commission assignment
1) You can not be released without the consent of the agency and most will not. What part of permanent and irrevocably did you not understand. Now this may not matter if its some obscure 2nd tier carrier but if its a 1st tier carrier it may. Remember many life carriers allow for multiple appointments but health carriers do not. So when you leave you are locked out of that carrier.
2) You dont own your book. You are not the Agent of Record when you assign commissions. You have no right to roll clients to a better more affordable option down the line. You represent the carriers your agency represents and you are not independent. With many captives you agree not to contact that client and sell them anything after you leave. If you do you will lose all renewals and may be sued.
3) You may even be forbidden from associating with or recruiting fellow agents. The equivalent of a non compete clause. These may not be strictly legally enforceable but most agents are in general broke when they leave an organization and a large organization with deep pockets can make their life miserable.
4) Your commissions can be cut to what ever the assigned agency wants after you leave because the carrier has no obligation to pay you anything and your contract is with the captive agency not with the carrier. This can be a problem if you assign commissions to either an draconian, unscrupulous or financially unviable entity or individual.
Captive organizations provide a service; they train and educate rookies and they provide a corporate environment for the experienced agent but the price is you dont have your own business you are merely an agent in theirs.
Even though 1099 you are essentially captive if you agree to assign your commissions usually because you need an advance but many captives require commission assignment even if you are earned because they provide you the above mentioned perks. There is no such thing as free lunch or free leads.
The truth about commission assignment
1) You can not be released without the consent of the agency and most will not. What part of permanent and irrevocably did you not understand. Now this may not matter if its some obscure 2nd tier carrier but if its a 1st tier carrier it may. Remember many life carriers allow for multiple appointments but health carriers do not. So when you leave you are locked out of that carrier.
2) You dont own your book. You are not the Agent of Record when you assign commissions. You have no right to roll clients to a better more affordable option down the line. You represent the carriers your agency represents and you are not independent. With many captives you agree not to contact that client and sell them anything after you leave. If you do you will lose all renewals and may be sued.
3) You may even be forbidden from associating with or recruiting fellow agents. The equivalent of a non compete clause. These may not be strictly legally enforceable but most agents are in general broke when they leave an organization and a large organization with deep pockets can make their life miserable.
4) Your commissions can be cut to what ever the assigned agency wants after you leave because the carrier has no obligation to pay you anything and your contract is with the captive agency not with the carrier. This can be a problem if you assign commissions to either an draconian, unscrupulous or financially unviable entity or individual.
Captive organizations provide a service; they train and educate rookies and they provide a corporate environment for the experienced agent but the price is you dont have your own business you are merely an agent in theirs.
Last edited:
