Starting a Medicare Insurance Agency
If you enjoy helping others and want to start your own business, starting a Medicare insurance agency could be a good fit for you.
The first thing you need to have is a solid understanding of Medicare:
You should familiarize yourself with the Centers for Medicare & Medicaid services (CMS) and their rules and regulations. It is very important that you understand the various types of Medicare plans available and what they provide.
It is also a good idea to have Medicare sales experience. This will help you understand what it takes to be successful in the field and give you invaluable information to train your downline agents. Although there are some large Medicare agencies with owners that do not sell, they employ key people who do have sales experience that help ensure the success of the agency.
Some ideas to get you started:
- It is necessary to develop a business plan to help you get started
- Make sure you obtain all the necessary licenses and certifications to be complaint with all regulations.
- Establish a legal structure such as; sole proprietorship, partnership, limited liability company (LLC) or Corporation. It is best to consult an attorney of advisor to help with this.
- Obtain all the insurance coverage you need including E&O, liability and in some cases, workers compensation.
- Develop a marketing strategy to promote your agency and gain public visibility. Create a website, social media platforms, print media and networking events.
- Decide what staff you need to run a business and make sure they are trained and ready to go.
Agency Contract levels:
The amount each contract level receives is regulated by CMS. Each year, CMS puts a cap on the amount of commission paid for each sale. This amount varies by state.
The different levels of contracts include:
- Street level – carriers pay the compensation directly to the sub agent with the override paid to the agency. The amount of the override depends on the agency level.
- General agency or GA is the first agency level. Agents at this level receive compensation above street level as well as overrides on any business written by downline agents.
- Master General Agency or MGA. This level is achieved by meeting carrier requirements beyond that of the GA level for sales and downline agents.
- Senior General Agency or SGA. There are even more sales requirements as well as a higher number of downline agents needed to achieve this level.
Please keep in mind, the number of subagents and sales that each carrier requires to reach the different contracting levels is determined independently by carrier.
If you have either a GA, MGA or SGA contract, your sub agents can still receive street level compensation with your agency receiving the override compensation. Most carriers pay the street level compensation directly to the sub agent while the agency receives the override payment.
More information about starting a Medicare Insurance agency:
Some agencies work with LOA (licensed only agents). This means, the insurance carrier pays all compensation to the agency. The agency then pays a agreed upon amount to the agent. This model is commonly used by agencies who provide either low or no cost leads to their agents. When this is the case, compensation levels can vary greatly, depending on what type of leads are offered. Some agents receive compensation well below street when this is the model used. With this set up, agencies generally own the book of business and may or may not pay out renewals.
Other agencies offer their agents street level contracts. If this is the case, the agents receive compensation directly from the carrier as well as referrals. In this instance the agent owns their own book of business. Agent who are aware of the street level compensation amounts will rarely decide to work LOA under an agency.
You need agents to make up your agency::
To bring in new agents, you need to have something to offer them. Provide them with leads or a lead program. Make sure you offer training to them as well as be available to answer any questions they may have.
It is also a good idea to provide free tools that can help make writing business easier for them. Like online quoting and enrollment tools.
A proven training program helps your new producers build the confidence to get up and running. Training also helps low producing agents increase sales. Many agents complain about uplines that do not provide the guidance they need to make sales. Many agents are just looking for the support they need to become successful.
Most agencies use several strategies to recruit new agents. Before you bring in anyone, decide if you are looking for agents who are already licensed and experienced or you want to bring on someone with no experience so you can train them from the ground up. Whatever you decide, be sure you bring in someone who has the potential to help your agency grow.
How do I build the agency’s book of business:
The most important part of a Medicare business is finding qualified prospects and enrolling them in policies. That is where finding a good source for leads is very important and finding the best way to work them. Some agents do well on the phone while others may be great at presentations. Maybe you like mailers. This is something that you need to figure out. Leads do not come with a guarantee. Weather you make those sales or not depends on your ability.
The best lead source is word of mouth. When you take good care of your clients, they tend to tell their friends and relatives. This is free lead source and are invaluable. That is why we cannot stress enough; know your stuff! Learn the plans and the enrollment periods. Be aware of the marketing rules and everything in between. This way you can ensure your clients get the best possible coverage and will stay on your books.