Omaha's Replacement Rules for Compensation?

[sman]

Please share your understanding of the rules. Let me give you the scenario. Received a call from a lady who was referred to me. She HAD a Med Supp with United of Omaha. I was not the agent of record. Due to taking care of a sick mother she overlooked paying her quarterly premium. It lapsed at the end of March. I contacted my FMO to make sure if I wrote her with Omaha Insurance I would still get paid something. Here is the correspondence between me and my rep at the FMO:

Hello XXXX, I received a phone call from a referral today who had a United of Omaha Medicare Supplement. Due to an oversight, her coverage canceled back at the first of April and she just realized it yesterday. Can I write her Omaha Insurance without getting a reduction in commission?


Thanks,


Scott

His initial response:

Unfortunately not, Scott, they’ll pay 90% of new business comp for what Mutual / OIC refers to “affiliate replacements”

My follow up:

Even if it isn’t a replacement? It was paid through March 31st so it has been lapsed for nearly 6 months. And I wasn’t the agent of record if that matters at all.


Scott

His reply:

That’s worse, I’m afraid Scott…if not original agent of record, Mutual won’t pay any commission

I sent this message and haven't gotten a response:

That makes no sense. I could understand if the policy was still in force and I replaced it. But this policy lapsed six months ago. I realize you don’t make the rules, but what is the justification for not paying an agent when they aren’t replacing the business, just writing a new app?


Scott

My understanding is there is a reduction if you are replacing internal business and if you aren't the original agent of record, you get no commission. The commission schedule clearly states this about replacements, but doesn't state that writing a new app on a former Mutual client is considered a replacement. Evidently my FMO has a different understanding. What is your understanding?

Guess I'll give Omaha a call.

UPDATE:

Spoke with Omaha Insurance. They confirmed my understanding of the rules. If the policy has been lapsed for more than 60 days, they would consider it a new app and not a replacement. Guess my contact at the FMO needs some additional training.

 

[senior-advisor-indiana]

Thanks for answering your question for us.
I wasn't sure on how long the policy had to be lapsed to have a new agent of record. The longest I have heard with some companies is 6 months.

 

[sman]

Thanks for answering your question for us. I wasn't sure on how long the policy had to be lapsed to have a new agent of record. The longest I have heard with some companies is 6 months.

I've heard 6 months as well. When the person at Omaha told me they would treat it as a new app, I specifically asked how long the prior policy had to be lapsed and she said "about 60 days".

Funny thing is I sent this info back to my rep at the FMO and asked him to confirm it. He says he's trying to get an answer. I figured the FMO could get an answer quicker than I could. Can't wait to get his follow up.

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Now a slightly different response. From my FMO (which they forwarded to me from their contact at Omaha):

“Full comp is paid at the 90 day point from policy termination (60 days past the grace period).”

I guess it could mean the same thing Omaha told me directly. She did say "about 60 days". She just didn't say 60 days after the grace period. So now we know it's 90 days from the effective date of lapse. And that is regardless of whether or not you were the original writing agent.

 

[senior-advisor-indiana]

I've heard 6 months as well. When the person at Omaha told me they would treat it as a new app, I specifically asked how long the prior policy had to be lapsed and she said "about 60 days".

Funny thing is I sent this info back to my rep at the FMO and asked him to confirm it. He says he's trying to get an answer. I figured the FMO could get an answer quicker than I could. Can't wait to get his follow up.

----------

Now a slightly different response. From my FMO (which they forwarded to me from their contact at Omaha):

"Full comp is paid at the 90 day point from policy termination (60 days past the grace period)."

I guess it could mean the same thing Omaha told me directly. She did say "about 60 days". She just didn't say 60 days after the grace period. So now we know it's 90 days from the effective date of lapse. And that is regardless of whether or not you were the original writing agent.

That's good to know. I guess that's "about 60 days". Gotta love home office people...

I had a problem with another well known company this week. It was like talking to someone at Medicare. 1st they had my upline as someone it wasn't, then they gave me wrong info on how to sign up with a sister company while giving my upline a different answer. Finally got it straightened out after 3 days and talking to a different home office rep.