MGA's Wanting to Co-Broker

[HarryDaBroker]

I have a relationship with my GA and for the last 3 years she has been trying to cobroker with me. The first year we co-brokered because I was weak and didnt know what the heck I was doing. She was supposed to hold my hand and I agreed to pay her 50%. Last year she wanted to give up the GA position and settle on being the cobroker. I got the client to agree to keeping her as the GA even though she couldnt offer what the previous GA was offering. Now this year she wants to cobroker, but she wants me to do it under their subsidiary for 50%, but they are going to give me a complete ben-admin system at no additional cost to the client. I bet theres no additional cost, I'm paying for it in commissions. If she hadn't initially closed the case, I would have been outta there.

Just wanted to get your thoughts. Does your GA always try to get you to cobroker with them? Do you think a ben-admin system is worth 50%? I would rather have a pepm pay model and decide if I thought it was of value and have conversations of splitting the cost with the client. Just want to get the opinion of others.
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hearing the sounds of crickets....

does this mean that nobody understands or uses a GA, or no one cares to provide an opinion?

 

[ABC]

What is she bringing to the table? If she is going to handle on customer service that is is something. Or if she is handling all communications to the carrier. 50% for just a digital platform seem a bit high. Offer her 20% and see if she blinks.

I don't think that is normal for an MGA to change business models with you. I could be wrong.

 

[leevena]

I have a relationship with my GA and for the last 3 years she has been trying to cobroker with me. The first year we co-brokered because I was weak and didnt know what the heck I was doing. She was supposed to hold my hand and I agreed to pay her 50%. Last year she wanted to give up the GA position and settle on being the cobroker. I got the client to agree to keeping her as the GA even though she couldnt offer what the previous GA was offering. Now this year she wants to cobroker, but she wants me to do it under their subsidiary for 50%, but they are going to give me a complete ben-admin system at no additional cost to the client. I bet theres no additional cost, I'm paying for it in commissions. If she hadn't initially closed the case, I would have been outta there.

Just wanted to get your thoughts. Does your GA always try to get you to cobroker with them? Do you think a ben-admin system is worth 50%? I would rather have a pepm pay model and decide if I thought it was of value and have conversations of splitting the cost with the client. Just want to get the opinion of others.
- - - - - - - - - - - - - - - - - -
hearing the sounds of crickets....

does this mean that nobody understands or uses a GA, or no one cares to provide an opinion?

I saw your post, but was confused, and still am. You say in the first year you co-brokered, then she gave up the GA and be the co-broker. Sorry.

Anyway, as ABC says, it's up to you to decide if you are capable of doing this without help. You need to look at it from a variety of perspectives. Do you need help getting quotes? Do you need help analyzing and developing the proposal? Can you handle the customer service and renewal? These are the issues/area's that she can help with.

If you are capable and willing, then cut her loose. If not, then negotiate what is fair. If she brought the product to you, she gets 25%. If she is helping to sell and ongoing service, give her 50%.

Now a personal view about her or carrier reps. They are usually useless, not all of them, but many. Now before anybody goes nuts, I started as a carrier rep almost 30 years ago and have stayed on the wholesale side my entire career. I have never retailed.

Learn the business and cut them loose. You need to learn a few types of coverages (medical, disability, dental,) understand alternative risk (self-funding), how to sell, and how to manage your book. Remember, this is only employee benefits, not physics.

 

[HarryDaBroker]

What is she bringing to the table? If she is going to handle on customer service that is is something. Or if she is handling all communications to the carrier. 50% for just a digital platform seem a bit high. Offer her 20% and see if she blinks.

I don't think that is normal for an MGA to change business models with you. I could be wrong.

she gives me the renewal rates on nice excel spreadsheets...

I saw your post, but was confused, and still am. You say in the first year you co-brokered, then she gave up the GA and be the co-broker. Sorry.

Anyway, as ABC says, it's up to you to decide if you are capable of doing this without help. You need to look at it from a variety of perspectives. Do you need help getting quotes? Do you need help analyzing and developing the proposal? Can you handle the customer service and renewal? These are the issues/area's that she can help with.

If you are capable and willing, then cut her loose. If not, then negotiate what is fair. If she brought the product to you, she gets 25%. If she is helping to sell and ongoing service, give her 50%.

Now a personal view about her or carrier reps. They are usually useless, not all of them, but many. Now before anybody goes nuts, I started as a carrier rep almost 30 years ago and have stayed on the wholesale side my entire career. I have never retailed.

Learn the business and cut them loose. You need to learn a few types of coverages (medical, disability, dental,) understand alternative risk (self-funding), how to sell, and how to manage your book. Remember, this is only employee benefits, not physics.

Thanks for the advice. Thats exactly what I was looking for. My background is engineering. Everything is a formula to me

Just an FYI since you both took the time to give me a thorough response, here's what i was too lazy to write...

Broker who I got business from = BR
General Agency who he partnered with = PM
general agency = GA
third party administrator = TPA

Year 1 - We put them in an association program self insured on the backend just to get the business. Commission was only 3%. BR & PM worked out 50/50 deal and PM agreed to do all the work. Turns into nightmare, PM throws me into the fire to deal with everything. Coming up on anniversary, TPA dropped us from program and refused to provide renewal. Group has 83 employees who almost didnt have any coverage.

1st renewal - PM finally places coverage, but wants out of the nightmare. Suggests we go with previous GA and co-broker with PM to the client. Tries to use leverage that group sees her as the expert which is true. At this point I have the relationship being that I put out every fire. After the meeting I tell PM stay as the GA or I get another one. PM stays, but wants the override plus 1 pt of my commission. NO deal, GA or nothing. PM accepts staying as GA.

2nd renewal - New CFO forces HR director to speak with another broker. They are offering a ben admin portal for 15k. They shop coverage prior to renewal and claim to save company almost 100k as well. HR gives me a copy of their proposal which I give to PM. She suggests that I co-broker with her company 50/50 and client gets ben admin at no cost. All the branding material has their subsidiary which markets to public and is potential competition. I am trying to figure out if PM is mistaking my time in this industry for me being a fool.

 

[ABC]

That is a lot of irons in the fire on 80+ life case.

 

[Sean Joyce]

I have a relationship with my GA and for the last 3 years she has been trying to cobroker with me. The first year we co-brokered because I was weak and didnt know what the heck I was doing. She was supposed to hold my hand and I agreed to pay her 50%. Last year she wanted to give up the GA position and settle on being the cobroker. I got the client to agree to keeping her as the GA even though she couldnt offer what the previous GA was offering. Now this year she wants to cobroker, but she wants me to do it under their subsidiary for 50%, but they are going to give me a complete ben-admin system at no additional cost to the client. I bet theres no additional cost, I'm paying for it in commissions. If she hadn't initially closed the case, I would have been outta there.

Just wanted to get your thoughts. Does your GA always try to get you to cobroker with them? Do you think a ben-admin system is worth 50%? I would rather have a pepm pay model and decide if I thought it was of value and have conversations of splitting the cost with the client. Just want to get the opinion of others.
- - - - - - - - - - - - - - - - - -
hearing the sounds of crickets....

does this mean that nobody understands or uses a GA, or no one cares to provide an opinion?

I know I may be responding a little late to this one but I thought I would add my 2 cents for any issues you may have going forward. A good General Agent in NJ will typically not ask for a commission split. If the GA is large enough, then they have a contract with most, if not all of the carriers in your state. In this case I think it is Jersey. I work a great deal in Jersey and it is my belief you are going through too many layers here. A good GA, with a sufficient back office and resources shoudl be well positioned to provide most of the services you require with no commission split. Of course there are exceptions but they should be few and far between (if they don't have a contract with that particular carrier). My suggestion would be to look around for a large GA and expain your situation. I would be happy to help.
Sean
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