FMO/IMO with 0% Override

[BuckNasty]

Wouldn't it make sense for a group of top producers to band together and start an FMO to get the absolute top contracts available?

This FMO would provide zero services and hence take nothing from the agents in the form of an override. Seems like everyone who was on-board could benefit. Agents could get paid directly from the carriers so there would be nobody needed to disperse funds. Also everyone would be as-earned so there would be no chargebacks to insure against.

What am I missing here? Is there some insurance component, licensing requirement or some other logistical nightmare that I am overlooking? With e-apps these days, it's not like FMOs are even getting involved pushing paper around.

Maybe there is an easier way to go about what I am wanting to accomplish: eliminate the middle-man to increase comp on my med supp business. If there is, please share. Thanks!

 

[somarco]

I could be wrong, but don't most (all?) carriers require recruiting and proof you have existing sub-agents?

 

[Josh]

Ultimately there will always be expenses. You might be able to get away with it as an association paying dues and such, but the reality is there is a lot of admin work that goes into running a fmo so you'd need a way to deal with that.

 

[BuckNasty]

I could be wrong, but don't most (all?) carriers require recruiting and proof you have existing sub-agents?

You may be right somarco, but that seems like an easy hurdle to get over. Afterall, as more reps joined, the carriers would be seeing "recruits" coming on-board.

If downlines were required, the "downline" agents could be paid at a 25.9999% contract a opposed to 26%! Or perhaps rebated with marketing dollars if the fractional percentage contracts are forbidden.

 

[Todd King]

You may be right somarco, but that seems like an easy hurdle to get over. Afterall, as more reps joined, the carriers would be seeing "recruits" coming on-board.

If downlines were required, the "downline" agents could be paid at a 25.9999% contract a opposed to 26%! Or perhaps rebated with marketing dollars if the fractional percentage contracts are forbidden.

It won't work unless the "FMO/IMO" pays the agents. Why you ask? Because some person has to be the top person. Meaning, you can't go and get a 26% contract and put everyone at 26%. First off, all those agents would have to qualify for those levels (which isn't going to happen), so the only way around that is to have all of the contracts/commissions assigned to the top person. Yes, there has to be a person that is the principle of the agency. That top person would have to be responsible for paying the agents.

On top of all of this, who's business would it be? The writing agent? Nope. It's the top person. If the top person ever wanted to be nasty about it they could just cancel your contracts and take all of your business away and there would be nothing you could do about it.

Keep in mind though, you have to qualify (proof of production) to get the levels above street anyway. If your contracts were through us for instance, you would be on the highest level you could qualify for and still be paid direct from the company. What more could you possibly ask for?

 

[Newby]

Wouldn't it make sense for a group of top producers to band together and start an FMO to get the absolute top contracts available?

This FMO would provide zero services and hence take nothing from the agents in the form of an override. Seems like everyone who was on-board could benefit. Agents could get paid directly from the carriers so there would be nobody needed to disperse funds. Also everyone would be as-earned so there would be no chargebacks to insure against.

What am I missing here? Is there some insurance component, licensing requirement or some other logistical nightmare that I am overlooking? With e-apps these days, it's not like FMOs are even getting involved pushing paper around.

Maybe there is an easier way to go about what I am wanting to accomplish: eliminate the middle-man to increase comp on my med supp business. If there is, please share. Thanks!

That's a thought that many of us have had through the years. There are a lot of hurdles though.
1. One person will have to sign off as the responsible party on every contract. Do you want to take on that liability if you are paid zero.
2. While your agency could pool production and qualify for higher contracts the individual agents can not on most of them. So the agency would have to keep track of who gets what and make checks out each week. Also get the money back from who they paid on recisions and other chargebacks. Do you want to do that in your spare time for free?
3. Most agents can't live without advances.

It would be easier to just start you an agency that works on tight margins. Do it the tried and proven way. The majority of agents aren't held back by their commission levels. The ones who are making a lot of money or more often held back by lack of sales for whatever reason.

 

[Andle]

The FMO does not only exist to provide agents services. They also provide recruiting services for the carriers. So this wont happen unless the group of top producing agents wants to stop producing and start recruiting.

 

[Newby]

On the other hand...we might be a bunch of cab drivers telling you to not start Uber.

So who knows.

 

[VolAgent]

On the other hand...we might be a bunch of cab drivers telling you to not start Uber.

So who knows.

Uber still takes a cut, and some drivers say quite a hefty cut. Uber and Lyft may be better compared to the IMO that runs on a thinner margin than most. They still take a cut, just not as much as someone else.

Of course, the IMO would have to ignore laws and flaunt the rules as well.

 

[GoPokes]

If you start your own medicare supplement insurance company, I think you could achieve this. Otherwise, probably not.