Health insurance agents: Who owns your book of business?

Market conditions and an aging salesforce have left many health insurance agents in search of an exit plan. Some prefer to let their business fizzle out and collect commissions for as long as their clients pay premiums. Others choose to sell their book of business, establishing a more solid footing for their future.

But, is the book theirs to sell? Is it possible their career’s work, that they’ve poured blood, sweat, and tears into – is someone else’s?

Yes.

Could my agency own my book?

If you’ve joined an agency, your contract likely has a clause or two about who owns the business you write. And, those clauses will likely tell you what will happen should you choose to leave. It’s not uncommon for an agency to claim complete control over the book, and refuse to release the business to you later. In more agent-friendly agreements, the agency will own the business while you work there and release it if you leave. And in the absolute worst case – there is no contract, setting everyone up for a messy debacle.

What about my Field Marketing Organization?

Agencies and independent agents alike frequently align under Field Marketing Organizations or other entities to get marketing, sales, and service support for their business. But, that service can sometimes come at a hidden cost – your agreement might turn over ownership of your book to your upline.

Some agreements might keep the business under the FMO permanently; you’d have no claim to it when you switch uplines or sell your book. Others might have a strict release policy to follow. And others still, well, they deserve their own section…

Higher-tier uplines might own your book, too

Here’s a real-life example. We’re helping an agent leave the business, and she’s interested in selling her book to us. The book has a good mix of national and regional carriers, some of which she has under other organizations. When it came time to finalize the sale, though, one national carrier put up a huge red flag.

Her direct upline, a local FMO competitor, did not, in fact, own the business. Instead, an agency two tiers above that competitor did.

This is why we choose our carrier partners wisely, ones that we can secure top-tier contracts with. Just another measure to allow our agents to have more control over their business.

Fortunately, we’ve been able to help the agent identify her actual highest upline. She’s secured a release for the business and is on her way to a peaceful retirement.

But the message is clear: even within the industry, and among so-called experts, book ownership gets fuzzy, really quickly.

So, what can I do?

First things first: Find and read your agency agreement, if you’re under one. Next, evaluate any agreements you have with your existing uplines – they’ll also speak to book ownership. If you can’t find the answers you’re looking for there, it may be time to seek legal aid.

Ultimately, though, each of your carriers will be able to tell you where your business is coded to, and who owns the business you’re placing with them. If it turns out that the business belongs to a company you’ve never heard of, it’s time to ask some hard questions of your current upline. If you are satisfied with your answers, though, it can be helpful to keep all that information in one place. That way, it’s easier to make decisions about your business going forward.