Three sneaky ways health insurance agents lose Agent of Record status

Of course, you chose to become an independent insurance agent because you wanted to help others navigate this complex industry. But whenever you were weighing the pros and cons of striking out on your own, you probably also saw an opportunity to build active income from new business and passive income from renewals.

The wrong business moves could quickly cost you both. Worse still, you could lose agent of record status for some or all of your book of business, meaning you’ve lost equity, too.

We’re seeing a few trends that all independent brokers should be wary of.

Your vendors could become the Agent of Record

We’ll shout this 1,000 times: check your contracts and terms & conditions, and even software settings.

A popular Enhanced Direct Enrollment platform for Marketplace plans, for example, makes their practice pretty clear: you can refer business with carriers you don’t write to the platform. The platform becomes AOR and pays you a one-time finder's fee for your trouble. Those kinds of arrangements can make sense, and let you help clients you wouldn’t otherwise be able to.

But, buyer beware in the quickly growing Individual Coverage Health Reimbursement Arrangement (ICHRA) market.

Employer groups appear to be adopting these plans somewhat more frequently, primarily to reduce their own costs in offering and administering employee benefits. Instead, they establish an ICHRA and fund those accounts so that employees can purchase their own coverage on the Health Insurance Marketplace. That, of course, brings its own set of administrative headaches, and many vendors have popped up to fill that need.

But guess who becomes AOR on all those brand-new Marketplace contracts? Not you.

You may still have the group’s dental, vision, and supplemental coverage in your name -- and maybe even a finder's fee from the ICHRA vendor -- but you’ve lost the passive income and equity that would have come with the group’s medical plan.

Bummer.

Your uplines could become the Agent of Record

Check any contracts you might have with your uplines, too.

Sometimes, when you’re looking to exit the business, changing the AOR to your upline or another agency can make good sense. That firm now owns the business and can continue to service it just as you would. And, they’re likely paying you for your privilege. As long as everyone’s aware of and comfortable with such an arrangement, it can be a win-win for everyone.

Trouble is, not everyone’s always aware.

Time and time again, we’ve seen a rather insidious plot. Agents get recruited to join a new upline and are promised the sun, moon, and stars. But, tucked away in that paperwork is a clause (or several) that designates the upline as Agent of Record for any business the agent writes.

Sure, you might get paid a commission split under these arrangements. But when it comes time for you to exit the business or change uplines? All you’ll have is that income, and nothing to sell off or take with you.

Double bummer.

Consolidation muddles whether your uplines even own their own book

Have we reminded you to check your contracts yet?

Consolidation is everywhere – health systems, insurance companies, and yes, even among insurance agencies. Agencies, general agencies, and field marketing organizations are getting gobbled up by giant nationals left and right. And, unless your upline starts putting the national’s brand all over their own materials, you might be in the dark about where your business truly lies.

That’s problematic for a few reasons.

If your direct upline doesn’t control the book of business, they can’t release it, should you ever want to move elsewhere. Instead, you’d have to seek a release from the highest upline in that particular hierarchy. That’s really hard to do if you’re not even aware you have a higher upline.

Or, their upline might have additional language about who retains ownership of the business.

Avoid the triple bummer, and ask your uplines if they have top-level contracts with each carrier, or if they roll up under another hierarchy.

How does Action Benefits handle AOR concerns?

It’s simple. Your business is your business, and it stays that way for as long as you designate Action as your field marketing organization. However, should you decide to leave the business for any reason, we’re happy to help you develop an exit plan, which may include purchasing your book of business.

We only pursue carrier relationships for which we can secure top-line contracts, which grant both ourselves and our downlines more flexibility in our business relationships.

And, we’re not for sale. Unlike other local competitors, we’re in full control of the business, just as we have been for over 35 years.

Ready to work with a truly independent upline that helps protect your income and equity? Get appointed.