Value of an FMO

[Guest]

FMO's promise leads where you are on your own with companies direct right? I noticed Humana and UHC both are on TV now gearing up for open enrollmentfor MA who gets all these hot leads?

 

[ATM]

I've worked for FMO's, Brokerage houses, insurance companies and as a captive and independent agent so maybe I can add some insight.

If you are an independent agent I think you need both an FMO and a primary carrier and here's why. As has been noted the FMO will always try to pay you as little as possible on your business because they get paid on the spread. Typically this will be 30-40% override but independnet agents need to remember that the payout to the FMO is loosely based upon the FMOs total premium with that carrier that drives their contract so you aren't giving up 30-40%. You might not even be giving up anything if you don't do a great deal of business.

With your primary company, and there are a good number you can go directly to and who will work with you almost as though you are a captive agent but you're not. You can build a relationship with the key people who help drive your business, the underwriters and case managers etc and you can focus your business and service on that particular company or companies.

As most of these types of companies will pay you directly you will tend to make much more money over time while still retaining the FMO relationship for those cases thaty don't fit or need more competitive underwriting etc.

I have a main carrier that gets the majority of my business and I have an FMO relationship where I can shop those cases that need it. I make more, I'm more efficient so clients get better service and everyone is happier.

 

[padthaiforlunch]

I'm contracted directly with all the major health carriers (not so with life, annuity and med supp). My commission level is the standard street.

I looked into Health Choice One. Their contract states that they own the client. That is not worth any amount of support they offer.

 

[Yoda]

Heres another risky scenario that I have seen happen many times in my career. Lets say that you contract with say Gerber Life through FMO or MGA that you met on this site with. Now morph into the future 5 or 6 years and you have sold a hundred or two hundred policies through Gerber but they are no longer competitive. You end up contracting with another FMO or MGA to sell the newestt hot med supp company to come out and your not doing any business with Gerber anymore. Now Tony soprano er I mean your old FMO from Gerber realizes that you are not his boy anymore. So what does he do, he takes the list he has of all your Gerber clients and gives it to a Career agent who is a shark and that shark starts looking up your clients and rolling them and they split the commissions and you are left in the cold..This scenario happens every day folks believe it!

 

[Cenla Agent]

FMO's promise leads where you are on your own with companies direct right? I noticed Humana and UHC both are on TV now gearing up for open enrollmentfor MA who gets all these hot leads?

It is primarily captive agents who get those leads. I don't know how UHC does it, but that's how it is with Humana. Humana has some FMO's that can provide leads, but only in areas in which their captive sales force is not concentrated--usually rural areas with higher premium plans.

 

[Thatguy]

I'm contracted directly with all the major health carriers (not so with life, annuity and med supp). My commission level is the standard street.

I looked into Health Choice One. Their contract states that they own the client. That is not worth any amount of support they offer.

I did a conference with HCO today. They made it very clear that the agent owns the business and that we are paid direct. Did I miss something?
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I've worked for FMO's, Brokerage houses, insurance companies and as a captive and independent agent so maybe I can add some insight.

If you are an independent agent I think you need both an FMO and a primary carrier and here's why. As has been noted the FMO will always try to pay you as little as possible on your business because they get paid on the spread. Typically this will be 30-40% override but independnet agents need to remember that the payout to the FMO is loosely based upon the FMOs total premium with that carrier that drives their contract so you aren't giving up 30-40%. You might not even be giving up anything if you don't do a great deal of business.

With your primary company, and there are a good number you can go directly to and who will work with you almost as though you are a captive agent but you're not. You can build a relationship with the key people who help drive your business, the underwriters and case managers etc and you can focus your business and service on that particular company or companies.

As most of these types of companies will pay you directly you will tend to make much more money over time while still retaining the FMO relationship for those cases thaty don't fit or need more competitive underwriting etc.

I have a main carrier that gets the majority of my business and I have an FMO relationship where I can shop those cases that need it. I make more, I'm more efficient so clients get better service and everyone is happier.

Now HERE, I agree with 100% of what you said. I was trying to see what else you had posted on the same line as your suggestions against contemplation of death, but it seems like you do have some sound advice. Looks like you are not another Yoda.

My apologies if I came off a little harsh on my previous post.

 

[padthaiforlunch]

I did a conference with HCO today. They made it very clear that the agent owns the business and that we are paid direct. Did I miss something?

Sections 8 and 10 mention client lists.

Section 8: So, if they provide you with a list of your clients and commissions, they own that list. Perhaps I'm missing something. Does HC One give you lists of clients that aren't yours? If not, then why do they mention client lists in the contract sections dealing with ownership and confidentiality?

AND

Section 10: So you are restricted in how you use your own client list. The way I read this, you are restricted from moving your clients to a carrier that you aren't contracted through HC1. Nor can you sell your practice to someone else who may roll clients away from HC1.

 

[Mr. Bill]

Oh you've just got to love the language

"whether or not developed, devised, or otherwise created in whole or in part by the efforts of Contractor."

Absolutely positively crystal clear.

 

[padthaiforlunch]

Right, so by article 10, they own your clients that you write through them, and by article 8 (last sentence) you are not allowed to keep a copy of your client list that they gave you.

 

[TristanTLC]

that is one particular interpretation, and I can see how one would think that. I talked to Scott from HCO as well, and I think I would have to disagree with this interpretation. The MATERIAL belongs to them, but in actuality - it belongs to the insurance carrier; but it doesn't say anything about the actual business. If I am paid direct by the carrier, then I own my business. I think this is one of those clauses in a contract that are just there and sound like a big scary clause, when it's actually more of a CYA thing. If you read your standard agreement with the insurance company, you'll find your fair share of scary clauses.

From what I understand, the agents are paid direct in as much as an amount as allowed by the carrier, and any additional amount above what is allowed would come from HCO. If I am paid direct, then my renewals go with me.

I have no experience with HCO, just the conversation with Scott and I believe him to be an honest man.

Here is a quote from my contracting kit with Nationwide, this is actually from the carrier on their contracting paperwork:

"(e) Company Property. All Nationwide supplied material, including but not limited to, manuals, forms, supplies, sales brochures, software, or lists of policy owners or insured persons shall be and remain the property of Nationwide and shall not be shared with, or made known to, any third party without the written consent of Nationwide. Upon termination of this
Agreement for any reason, the Agent agrees:

(1) to assemble and deliver promptly to Nationwide all such material (including copies) whether such be in hard copy form or otherwise; and
(2) not to use any such material for the Agent’s commercial purposes or for that of any other entity."