Benefits Buzz

Top 5 Misconceptions About Working with a General Agent

Posted on July 24th, 2018

Last week, we discussed the role that General Agents play in the insurance industry and how they provide value to brokers. This week, we’d like to clear up some of the biggest misconceptions about working with a General Agent (GA).
 
  1. Working with a GA costs brokers money in reduced commissions and bonus programs. This is not the case at all! GAs receive compensation directly from the insurance carrier in the form of an override, which means that the writing agent remains the broker of records on the case, receives full commission and is eligible for all bonus programs. Not only do GAs not cost brokers money, but they can also help brokers save money. Doing business with a GA results in operational efficiencies and savings in overhead expenses. Plus, using a GA allows brokers to spend more time focusing on marketing, which generates additional sales opportunities.
 
  1. If I work with a GA, my client relationships will be compromised. Not true! The broker maintains the relationship with his or her clients and owns the book of business. The GA’s client is the broker, and GAs do not communicate directly with the broker’s client. Remember, the broker represents the client—the GA represents the insurance carrier. 
 
  1. I will lose my commissions if I end my relationship with a GA. This is false!  If a broker were to part ways with a GA, the broker remains tied to the client and will continue to receive full commissions.
 
  1. The cost for a GA’s services is passed on to the broker’s client in fees and/or rates. Incorrect! A true GA will never charge fees to brokers or their clients. All GA services are provided completely free of cost. In addition, the client’s premium will not be affected in any way by using a GA.
 
  1. Only small or inexperienced brokerages need to use a GA. This couldn’t be further from the truth! GAs provide an array of services to brokers and brokerages of all sizes and experience levels. As carriers are demanding more self-servicing, the natural progression is to rely on a trusted source for back-office support, reducing operating expenses and maximizing profits.
 
We hope we’ve helped to clear up these misconceptions and set the record straight. The bottom line is that GAs provide brokers with tools and services that make their jobs easier and help them succeed. 
 
Still, not all GAs are created equal. They don’t all offer the same services or work within the same market segments. It’s important for brokers to look for a GA that offers the right combination of products and services to meet their unique business needs.
 
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