Each insurance firm selects five to twenty FMO partners. Our firm has top-tier national contracts in Medicare, ACA, Life, Annuity, Dental, Short-Term Medical, and Travel insurance. Some FMOs specialize in life insurance, while others specialize in dental insurance. THE CRAZY THING IS THAT ANYONE CAN CALL THEMSELVES AN FMO! With 10–50 agents, many “FMO” offices are essentially just General Agents. They use the moniker FMO to attract unwary agents who are unfamiliar with the industry. There’s no easy way to tell if you’re dealing with the CEO of a large firm or a tiny one with big branding. Many people use the letters FMO in their names, yet they are merely an agency. Does it make a difference? Not at all. If you like them and want to collaborate with them, go ahead and do it. However, I would deduct points for their false name.
Ranks of Distribution
- Insurance Company
- FMO: 1,000+ agents
- SGA: 200+ agents
- MGA: 100+ agents
- GA: 5–50+ agents
- Agent: may be directly contracted to any higher level
By identifying with any level above him/her, the agent does not lose pay. The FMO distributes the override to all levels below him, and the carrier pays the agent directly. Agents choose to work with a variety of agencies because they can obtain training, leads, marketing assistance, office space, administrative assistance, referrals, and other benefits. Alternatively, agents can work directly with the carrier and earn the same commission with no additional benefits. The services that FMOs provide justify their place in the food chain. To earn their override commission, everyone in the distribution chain (GA, MGA, SGA) must deliver services, or agents will leave.
If an agent isn’t getting the care and support he needs, he’ll switch to an FMO where he can get more help expanding his business. The majority of independent insurance agents have 5–20 contracts with a variety of insurance companies. FMO agents are 1099 independent contractors who sell what they want, for whoever they want (a few or a lot of companies), and when they want, unlike captive or career agents who are employed by a carrier and directed what to market and when to work. They may just sell Medicare Advantage plans, or they may also sell life insurance, ACA insurance, annuities, and other products. They choose the things they want to market, and the FMO encourages them to do so.