Questions to Consider When Choosing an FMO

MARCH 22, 2024

An FMO is the “go-between” for the agents and the carriers to whom an agent is contracted.

Definition: These organizations work on behalf of the insurance carriers they represent to support independent insurance agents in driving sales productions through marketing incentives, marketing materials, and sales training at no charge to the agent or agency.

The FMO that you choose can greatly affect your business, from the commissions you are paid to the training you receive from carrier products on to how to run a business and the marketing monies that carriers and FMOs have to offer. So be diligent in getting your answers on the following topics—in writing is better!

National or Regional – Be aware of who uses the terms FMO; there are large agencies that say they are FMOs, but they truly are not FMOs; therefore, they cannot give you the highest commissions or work with the carriers for marketing dollars. Also, are you planning on growing outside of the state you live in? When starting out, many agents need to realize that when a client moves out of state or your friends and family learn you offer these products from other states, they will want you to help them in whatever location they are in. And you, as an agent, will want to retain that business. IF your FMO is not licensed in those other states, you cannot write business as you are tied to your FMO.

Thought-Provoking Question for You: Is your current FMO licensed in other states?

Product Availability – know the products that the FMOs offer. Do you want an FMO that focuses on a specific health industry, such as Senior Products, Life, Long Term Care, etc., or one that has it all? Your FMO would need to be diverse in their industry so you can offer your client a comprehensive portfolio. For example: If your main area is those eligible for Medicare you would want Medicare Advantage, Medicare Supplements, Prescription Drug Plans, Ancillary products such as: Hospital Indemnity, Short Term Care, Dental, Final Expense, etc.

Thought-Provoking Question for You: Does your current FMO offer you a comprehensive portfolio?

Relationships with the Carrier—It is important that your FMO has a relationship with the carriers for many reasons. Carriers offer co-op marketing dollars to help the agents grow. Carriers and FMOs also help you with grassroots efforts that include how to get into Senior Centers, Disability or Estate Attorneys, and will set up events for you. You should also be able to rely on your FMO when there is an issue with a client or commissions.

Thought-Proking Question for You: Has your FMO connected you with carrier reps in your area?

Technology—Only a couple of important pieces of technology are needed to make your business so much easier. One of the most important is a Quoting and Enrollment Tool that allows you to quote and enroll your carriers. Another important piece of technology is having a Recorded Line for MA-compliant calls. These products should be free to you as an agent through your FMO.

Thought-Proking Question for You: Can you quote and enroll all in one place with your current FMO? What about a compliant recorded line for MA calls?

Training—You would want an FMO that offers in-person or via webinar training. You also want to be sure you are talking to a licensed agent and, more importantly, one active in the field. It is difficult for a trainer who has never sat across the table from a client or made a sale to know your business’s ins and outs. These trainings are valuable to new and seasoned agents as there is always something new happening in the field or even to refresh you on the things you’ve forgotten!

Thought-Proking Question for You: Does your FMO provide training to you from an active, licensed agent?

Compliance Capabilities—As you most likely know, the insurance industry is filled with compliance. Let your FMO maneuver through compliance concerning the TPMO disclaimer, what you can and can’t do for events such as AEP, OEP, Educational, and outbound calls, what your marketing piece can say, etc. Your FMO should be able to break it down so it becomes a manageable, easy habit.

Thought-Proking Question for You: Does your FMO talk to you about compliance?

Contract Structure – Commissions – Understanding how your FMO will pay you is crucial. There are typically two ways: 1. To be captive, the FMO/or agency in the FMO hierarchy will pay you, and often, that FMO/Agency will take a cut of your commissions. You may also have what is called vesting. Vesting means that you must be with the company for a period before you can leave and take your Book of Business. 2. As an Independent Broker, you want to be sure that your Book of Business is truly yours from day one. And you are paid full commissions. Meaning whether the FMO/Agency pays you or the carrier, you are getting what the carrier would pay you direct.

Thought-Provoking Question for You: Has your FMO explained how they are going to pay you?

Book of Business – All you need to ask: Are all my clients mine from day one? If you choose to leave, do you take your clients or, as called in the industry Book of Business (BOB)

Thought-Provoking Question for You: Do you really own your BOB?

Releases – There are two types of releases, an immediate or open release, which means that when you request the release from your FMO, the FMO signs off, and you may move immediately. The second type is the FMO, which follows the carrier guidelines for a release. This means you would go to each of the carriers you are contracted with and request to follow their release guidelines, which could be up to 6 months of waiting time before the release will happen.

Thought-Provoking Question for You: Are you aware of your FMO release policy?

Company History and Service – You will want to look for a company that has a history in the business. You will find newer FMOs/Agencies with a flashy piece of technology to offer agents, or maybe they have multiple agencies and are only looking for growth. Ensure they can answer all of the questions we have discussed in this article. Also, when interviewing your future FMO, save some of your questions for follow-up calls. You will want to know if you have the same contact person who will get to know your business, AND most importantly, they will return your call promptly.

Thought-Provoking Question for You: Do you have one point person at your FMO?

PRO TIP: Get to know agents and carrier reps, anything related to your industry. Think of them as mentors. If you can, take them to lunch and ask questions. They can help you find the FMO that best fits your needs and help with many other aspects of your business.

There are many points here and things to consider, but your livelihood will be dependent on your FMO. After having these conversations, ask them to follow up in writing about how they will handle these situations. If you cannot get what they’ve promised you in writing, you should continue shopping for the FMO that can!

And of course, please let us be the first to answer your questions as to what UIG can do for you. No FMO can fit perfectly, but we can do our best to be what works for you. You can reach us by clicking here and filling out our form or by calling us at (800) 878-1058, ext. 1380.

Written by: Libby Elliott, UIG Broker Sales Specialist