Now that you know which carriers you want to add to your portfolio, it’s time to talk about contracting. We also call this the appointment process.
Think of it this way, you contract with a carrier, the carrier then appoints you in the states you request, where their product is available, and you are licensed.
An additional step of certification is required with specific product types, like Medicare Advantage and prescription drug plans.
Once you’ve got your list of target carriers, you’re ready to start the appointment process for each of them.
This process can look very different based on the carrier and products you choose to add to your portfolio.
Let’s review some key aspects of contracting, as well as how you can get started and get some help from us here at Ritter along the way.
So, I just mentioned that the contracting process can differ from carrier to carrier.
Some aspects that might change are a carrier’s requirements, the questions asked in contracting paperwork, the method to fill out and submit a contract, and even the additional documents that are required to be sent along with the submitted contract.
Let’s look at the elements of a typical contract.
The usual required documents include Errors and Omissions insurance, licenses, banking information for commission payments, and a W-9 for tax purposes.
You’ll fill out the basic producer contact information. Name, address, email, NPN.
If you’re an agency, this will include basic agency information, but we’ll cover agency specifics in more detail in another module.
Next, you’ll fill out background information, including answering a series of personal questions, which usually include some credit-related and criminal history questions.
Answer these questions truthfully and be prepared to offer an explanation of the circumstances, if requested. Some contracts will allow you to submit an explanation of any affirmative answers along with the contract.
For other carriers, a contract may be declined with the ability to appeal, so make sure you have access to any documentation that supports your explanation prior to submitting a contract.
One thing to always keep in mind, if you answer ‘no’ to a background question, and something comes up in the carrier’s background check, there is a good chance it will be an immediate decline with no chance to appeal.
Let’s move on to banking information.
Most carriers will require an ACH form and a copy of a voided check to complete commission payment setup.
You’ll need to include standard bank information, like the location, street address, city, state, zip code. You’ll also need the bank’s ABA routing number and your account number.
The routing number is the nine-digit number found at the bottom, left side of a check.
How do you decide where your funds go?
Well, one thing we recommend, for bookkeeping reasons, is to not co-mingle your personal funds with your “business” commission payments.
Tax time will be much easier when you don’t have to sift through a year’s worth of business and personal account statements all mixed together.
Another tip, this may also be a good time to consult with an accountant. Insurance agents for the most part are considered self-employed, independent contractors.
Insurance carriers will, for the most part, pay agents’ commissions directly and report them to the IRS. Agents will receive a 1099 form prior to the end of January the next year from each company that has paid them commission.
Commissions are paid out at a gross level; this is before taxes are deducted. So, you will need to make sure that you account for this. A good standard is to put back 25 percent of all commissions that come in.
Having an accountant to help you get things set up so that your tax bills are covered when they’re due is beyond priceless.
Now that we’ve got that banking info in order, let’s talk about the potential costs of contracting.
The most common costs involved with getting contracted with an insurance carrier are state appointment fees.
Each state may charge each of the carriers a fee for filing an agent or agency appointment with the carrier.
These fees can fluctuate tremendously, ranging from no fees to over one hundred dollars per appointment.
Appointment fees can also vary dependent on if it’s your resident state, or a non-resident appointment.
Florida, in particular, adds on an additional county fee for some counties if you’re not a resident of that county.
In most cases, MAPD and PDP carriers will cover the appointment fees, however, most other senior market carriers will require payment of appointment fees at least in non-resident states.
And just like the amount, the method of collecting fees also varies. Some carriers require that the appointment fee is paid upfront. Others will take the fee from your first commission.
So, now you might be thinking, wow, this sounds like a lot.
That’s where we come in, here at Ritter Insurance Marketing.
On our website, Ritter IM.com, we’ve got online contracting and help resources.
Getting contracted with all the different products that you believe you’ll need can be both time consuming and frustrating.
Each carrier has their own process, requirements, and processing time, so planning ahead is important.
As I mentioned previously, choosing the right products for your area and your clients is crucial. It’s always a good idea to have different options that fit each specific need, but it’s also important to not over-extend at first.
Here’s what we recommend, and how we can help.
Create a list of the contracts that you want to start with and reach out to your regional Ritter specialist with any questions you may have.
Set realistic expectations regarding processing times.
Rushing through submitting a contract on October 14 tends to backfire and may cause major delays in processing.
Make sure you plan ahead when possible and contract early.
However, if you need to add a new carrier at the last minute, be aware that every effort will be made to process contracts as quickly as possible.
That being said, even carriers can fall days, or even weeks, behind in the month leading up to AEP.
Next, obtain the contracts via the Ritter Platform.
A tremendous amount of information is provided regarding contracting by accessing Ritter’s Certification Center.
Review each contract closely to verify what you will need.
Each one includes cover sheets with detailed contracting instructions.
Our goal is to help you submit a complete contract the first time, preventing delays.
That being said, before submitting contracts, check and double-check your contracting and attachments.
Keep an eye on your email and voice messages, too. We’ll reach out in the event that something did not come through clearly or if an additional piece of information is needed.
After your contracts have been submitted, you can check your contracting status with Ritter! We provide you with the means to monitor the process of each contract, information on the contract statuses, and an explanation of what each status means. We’ll also have that info in the resources section of this module.
Allow for between 24 and 48 hours processing between stages. However, during extremely busy times of the year, those time frames may be extended based on increased volumes through carriers and our own internal processing.
That was a lot of information, I know.
Contracting is a detailed, important part of getting ready-to-sell, but you don’t have to do it on your own.
Resources are available at your fingertips through Ritter’s online help center, or by contacting your regional specialist.
If you need help, reach out! We look forward to hearing from you.
For now, head on over to the next lesson, so we can talk about certification.
See you there!