What Employee Benefits Brokers Should Consider When Choosing a General Agent

Did you know a general agent can help you make more money without costing you anything?

Being a benefits broker today means keeping up with technological advancements that affect how employees consume their benefits and staying on top of regulatory changes and the increasing cost of healthcare to help businesses achieve and retain financial stability. But there’s one challenge that remains the same: finding insurance solutions that attract and retain top talent for their clients, all the while meeting their day-to-day account management needs.

This is where general agents come into play. However, the term general agent (or GA) can be confusing for most people, even those in the insurance industry. For this very reason, more often than not, it’s not easy to fully grasp the value a GA can bring to an insurance broker. If you’ve never worked with general agents before, you might not even know how they operate or how they make money.

Generally speaking, GAs partner with different insurance carriers to help them market and distribute their product portfolios to brokers in a cost-effective way. It’s the carriers that are responsible for compensating the general agents in the form of an override (separate from the broker’s commission) on business sold through the GA.

Why partner with a general agent?

The primary goal of a GA is to support their broker partners, filling the gaps in the resources needed to help them increase their sales and improve their services. They remove the complexities of accessing the top insurance carriers and offering personalized strategies and consultations.

As a broker, working with a general agent can help you reduce certain overhead expenses and allow you more time to look for new clients. In other words, working with a GA is the most profitable and efficient solution for both insurance brokers and your clients.

Common questions asked when choosing a GA

Does working with a GA mean a reduced commission?

Not at all! The insurance carrier pays the GA directly in the form of an override, ensuring that the writing agent remains the case’s broker of record and earns the full commission.

Will working with a GA cost money?

On top of not representing an additional cost to brokers, general agents can also save them money. When a broker partners with a GA, they gain operating efficiencies and lower their overhead costs. Furthermore, using a GA helps brokers devote more time to marketing, leading to more sales opportunities.

Does working with a GA affect the broker’s relationship with the clients?

No. The broker owns the book of business while also maintaining the relationship with his or her customers. The broker is the GA’s client, and GAs don’t deal with the broker’s clients directly.

After partnering with a GA, do the broker’s clients have to pay more? 

Never. Brokers and customers would never be charged fees by a general agent. All services offered by GAs should come at no cost to the broker or the end customer. Additionally, using a GA would have no impact on the client’s premium.

Not all GAs are created equal

Now that we’ve looked into what general agents do, we hope we’ve dispelled some of the popular myths about them. Working with a GA, without a doubt, provides brokers of all sizes and levels of experience with tools and services that make their jobs easier and enable them to succeed.

Not all GAs, however, provide the same services or operate in the same market segments. Here are some qualities and capabilities to look out for when choosing your GA:

  • Has extensive knowledge and experience:
    A GA should be an expert in their niche of services, staying on the pulse of the ever-nuanced benefits landscape, and possess the carrier relationships to get the job done.
  • Provides the right mix of services:
    Brokers should always look for a GA that offers the best mix of services to suit their clients’ specific needs.
  • Is structured to meet your needs:
    There are various arrangements available, and not every entity claiming to be a GA meets the proper criteria. It’s critical to search for a “real” GA. Be wary of revenue-sharing brokerages pretending to be GAs.
  • Values partnership:
    Selecting someone to work with that provides a transparent and trusted relationship. A GA should have your back.

If you are exploring the idea of partnering with a general agent and the information they provide you with doesn’t align with what we’ve covered above, perhaps you should consider that as a red flag.

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