Most captives look to go independent because they’re tired of being told what business they need to write, how much of it they need to write, and who they have to write it through. You want your name on your book of business, and you want to keep your by being able to provide the best rates and the right access, which is what being independent should be all about.
The offer that as an independent agent, you’ll need access to many different carriers, and each type of access offers different pros and cons. Direct codes offer you the most ownership and possibility for bonuses, but if you miss your quote or production requirements it might get terminated. Producer codes can give you access right away, but you miss out on the profit sharing you could otherwise earn if it’s a carrier you use frequently. How can you know which type of access is best for which type of carrier? Here’s a quick guide on how to compare between the different types of carrier access different independent networks provide.
Direct Appointments
To put it simply, a direct carrier appointment refers to a contract between you — the insurance agent — and the carrier. No middle-man, no in-between. Some networks offer appointments but don’t specify that it will be underneath their parent code. Because the contract is between you and the carrier, you are eligible for the most profit sharing, bonuses, and additional compensation options with that carrier.
However, direct appointments almost always come with monthly quote requirements and production requirements. Because you’re appointed directly, the carrier wants to know that you have earned that code. If you miss your production requirements, you might end up with your code being terminated without many options for ever getting that carrier back.
Direct appointments also take the longest time to setup, with some carriers taking up to 8 weeks to process your appointment on their end.
So what does this mean?
Direct appointments might seem like the best option for all your appointments at first because of the profit sharing and bonuses available, but in reality, it’s almost impossible to maintain requirements for every single carrier if they were all direct. A bad month or two and you might lose the appointment that took two months to setup!
As an independent agent, you should aim for getting a direct appointment with your primary carriers or anyone that you know you will write significant business with. This gives you the best chance to earn the most with the carriers you use the most without the fear of missing requirements. Depending on how large your agency is, what your focus is, and what region you’re in, ASNOA recommends somewhere between 5 and 15 direct appointments.
Producer Appointments / Sub-Codes
Without knowing about the production requirements and quote requirements for direct appointments, producer appointments might seem like the worse option between the two. It’s not in your best interest to have an agency that ONLY has producer sub-codes for you to write through, since that removes so much of your ownership, but producer sub-codes can be critical for you to write the markets you want.
Producer sub-codes are best for carriers and markets that you know you want to offer or write sometimes and don’t want the fear of losing. This might be non-standard auto and home carriers, or carriers that offer specific types of business that you write a few times a month. Because a sub-code goes up to a master code that others are losing, you don’t have to worry about hitting requirements because the whole network is pulling together for the requirements.
Sub-codes can also be critical when you need access, but can’t get a direct appointments because the carrier doesn’t offer it. For example, Mercury is one of the largest carriers in California and offers highly competitive rates and coverage — exactly what clients are looking for. But, because of market saturation, Mercury does not offer direct appointments in California. The solution is writing with a subcode from an agency that’s already appointed, or through an aggregator like ASNOA.
In addition to being secure in your access, getting appointed as a new producer can be as fast as two weeks. This is a pretty far cry from the 8 weeks it can take for direct appointments, which means you can get up and writing business so much faster.
So what does this mean?
Producer sub-code appointments might not be your bread-and-butter carriers, but they’re often a crucial part of your agency having the market access that you need to offer your clients the best rates and coverage for whatever they need. If you’re writing a significant amount of money with a producer appointment, it might be good to ask your network about the ability to go direct with it; but, if you’re just using it from time to time to give your clients the best quotes, you’re already using the code for its strengths.
So how do I balance these out?
Having the right mix of codes can make a huge difference in your ability to succeed as an independent agent. The team at ASNOA have heard horror stories where it take three days for a homeowners’ quote because you’re not working through the underwriter of the carrier, but through an MGA, but we’ve also heard horror stories of getting a bunch of direct appointments, missing your requirements, and being back at square one a year into going independent.
So how do you know which carrier offers which? The answer: work with someone who knows the market and can help you make decisions!
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