Mistakes to Avoid When Getting Contracted with an Insurance Carrier

Published by Robiny Mitchell and Carolyn Portanova

​Independent insurance agents have the benefit of picking and choosing which carriers to work with and what products they want to sell. With that freedom comes the responsibility to carefully contract with carriers who will provide the products their clients need. Each insurance carrier and state have specific rules when it comes to getting appointed. It’s important to know the details especially if you’re adding multiple products to your contract. Below we’ll go through some common mistakes that agents make and how to avoid them.

​Agency License Required to Receive Commissions
Carriers have a short list of states in which they will require a contracted agency also have a state license in order to receive commissions. The list of states will vary by carrier, but a common example is Georgia. If an agent is contracted so that either their commissions or override commissions go to an agency, then most carriers will require that the agency receiving commissions have an agency license in Georgia as well. This applies for resident and non-resident situations. Furthermore, in some cases, if the agency gets the necessary license AFTER the commissions have been generated, the commissions will not be released.

​Long-term Care Certification
Agents who write Long-term Care applications MUST be sure that their LTC Partnership Certification is up to date. This requires updated training every two years. Many times agents will do the training AFTER they have already signed a client application. This is NEVER allowed and that client application will trigger a “Declined due to Licensing” notice directly to the client(s) and the client application will have to be taken again. The training certificate must be dated and compliant prior to any client application.

​Are you Ready-to-Sell (RTS)? 
This continues to be a common mistake for agents writing in the MAPD (Medicare Advantage Prescription Drug) marketplace. Carriers will allow agents to take a client application even if they are not Ready-to-Sell. However, the agent runs the risk of not getting paid. Typically the application will be processed and the policy issued, but it is the agent's responsibility to complete their carrier-specific certification training and ensure their status is RTS in order to receive their commission. Agents can always check their RTS status by logging into the carrier's agent portal, logging into MedicareCENTER or asking their upline hierarchy for their Ready-to-Sell status.

Transferring an MAPD Contract to a New Hierarchy/Upline – Plan ahead! 
Carriers all have blackout dates during which they will not allow contracts to be moved. The transfer process can take time and may often require that agents obtain a signed release from their current upline - this does not always happen quickly. Agents need to be sure to start the process early if they wish to move their contracts to a different upline/FMO.

Doing Business in More than One State
Many agents write business in more than just their resident state. When it comes to writing products such as Medicare Supplements or Life Insurance, carriers will have a short list of states where agents must be pre-appointed. Pennsylvania is a great example. The request to be “appointed” in the state of Pennsylvania must be sent to a carrier, processed by PA and confirmed by the carrier before any client application can be dated. Carriers in the MAPD marketplace will require that agents have all necessary non-resident state licenses AND the matching state appointment be turned on with each carrier BEFORE they can write a client application in any non-resident state.

Contracting doesn't have to be a headache if you make sure you've completed your licensing and/or certification requirements. And if you have questions, we're always here to guide you. Reach out to us today if we can assist you with your contracting.

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