What is a Release explanation

What is a Release?

A release is a term commonly used in the insurance sales and distribution industry. It refers to an agent or agency having the ability to leave, move or realign with another FMO. It’s important to understand, and we find that it is frequently misunderstood.

Why can an FMO control my contracts? Isn’t it just up to the agent? 

The short answer is no. An FMO acts as an intermediary entity and performs services on behalf of insurance carriers. These services include, but are not limited to, marketing, recruitment, training, onboarding, compliance, IT and technology development, sales oversight, production, strategy, consulting services and more. Many FMOs incur large costs performing these services and therefore are financially invested in the agent or agency. The insurance carriers allow the FMO to have some limited control or discretion in order to protect their financial investment in performing these services. The insurance company also incurs costs moving or realigning an agent or agency to a new FMO, and therefore does not encourage or wish to promote agents frequently moving back and forth between FMOs. 

What if my FMO doesn’t do anything for me?

When recruiting or looking for new agents, we frequently hear- “My FMO hasn’t ever done anything for me”. It may not be obvious or clear, but we imagine like the example below, that at some point the FMO probably did do some administrative services or otherwise on your behalf. However, maybe it’s not up to par, or the services and needs that you have are not being met. That is understandable and a large reason as to why agents and agencies are looking for a new FMO partner.

How does an FMO spend money on an agent or incur cost?

Here’s a common example: FMO X spends $20,000 to run a digital marketing and direct mail campaign to recruit new agents in a specific state to sell carrier ABC. Agents respond and express interest to contract and sell carrier ABC. The FMO, then typically has a staff member that consults with or manages the agents, the agents contract securely via an online contracting platform, and an FMO staff member engages with the agent and carrier ABC. The FMO staff provides the documentation to carrier ABC and acts a liaison for the agent. Then the FMO staff typically advises the agent how to access carrier ABC resources or do certifications so they can sell and earn commissions as an independent agent. Before the agent has even sold a policy, the FMO may have an incurred cost of $1000 per agent based on marketing, technology, staff wages and more. The FMO does not receive any compensation until the agent sells a policy and has no recourse to recoup these expenses; their only means to recoup the expense is if the agent stays with their FMO organization and sells policies. This is a common scenario and why many FMOs do not provide agent releases.

Is there a specific document needed for a release?

Most carriers will accept a document on the FMO’s company letterhead indicating the specific agent or agency, and it must be signed by the principal agent or authorized personnel in an executive leadership role. The document needs to clearly state that the agent is being “released” and can align or contract with another entity.

Some carriers will have a specific form that needs to be completed by the “top of hierarchy” and if there is an intermediary agency, for example a GA or MGA. If this situation applies, ask a staff member and they will be happy to advise you. 

If I get a release, what language is usually in a release?

It’s common for language to include some restrictions, conditions, or parameters. For example- an agent with a negative or chargeback balance, the new FMO would incur the debt, perhaps a specific date or time of the year, a mention of blackout periods etc.

What if an agent owes money or a chargeback?

If the agent sold policies that cancelled and there is a balance owing, then those amounts can and usually do get passed along to the “upline” or FMO to bear those costs. So typically, an FMO won’t release an agent in that circumstance, because they have limited ability to recoup that expense, except for having the agent remain contracted with their firm and hope that the agent sells future business to offset the expense. 

What is a reciprocal release?

Like the term reciprocate, it means that the current FMO and the new FMO are making an agreement or exchange. This is not an outright full release, it’s more like a release for the agent contingent upon the other new FMO. If both the FMOs agree to it, then the agent can move and realign their contracts.

In basic terms “FMO X” is granting or allowing the agent to move to the new “FMO Y” and expecting that the new FMO will extend the same courtesy in the future if an agent ever wants to leave FMO Y and join FMO X. 

Does Agent Boost Marketing do reciprocal releases? 

No, we think they’re silly, unenforceable and have a whole host of problems. 

Why would an FMO refuse to release an agent or agency?

We may be idealistic, but we believe that most FMOs behave ethically and have a sincere desire to help and support agents. Most release denials are not personal, but financial decisions. Some good reasons that an FMO may choose to deny a release request are the following:

  • The agent has not ever sold a policy and the FMO has only incurred cost. Maybe they will continue to incur costs by holding the agent and they should just let them go. But perhaps the agent can offer a small amount to pay the FMO to offset the cost? It’s worth a shot. Maybe the new FMO would pay it? 
  • The agent has a negative balance or chargebacks that will be passed to the FMO. If the agent leaves then the FMO is stuck with the chargeback and no means to recoup. This would be a terrible idea for the FMO to release the agent.
  • The FMO provided additional marketing co-op or funds to the agent or agency. We’re not referring to an FMO giving someone $300 back 6 years ago. Namely, if an FMO gave out $2500 to an agent to help them grow their business within the past 100 days and the agent asks for a release, it is reasonable for the FMO to deny the request. 
  • Enhanced services. If an FMO went above and beyond their contractual duties to recruit, support, build websites, exceptional administrative services, proprietary or trade secrets etc. it would be reasonable for them to deny a release to an agent or agency.
  • There may be more reason out there, but hopefully you get the idea. There are some valid reasons why FMOs can and should at times deny agent release requests, but we certainly see our fair share of seemingly petty and ridiculous situations. If you have any questions or concerns, please feel free to contact our staff members.

What is a blackout period?

This is a term that many insurance carriers use to reflect a time of year in which they do not process or will not allow agents or agencies to move and recontract with a new FMO. With our core products being Medicare, the blackout periods are usually around Q3 and Q4 in preparation for the Medicare Annual Enrollment Period (AEP). Insurance carriers are stretched for resources during this time, and do not want to reallocate resources to onboard and appoint agents or agencies which are already contracted and can sell for them. They want to focus their resources on product, sales, and support. Like many FMOs, Agent Boost Marketing conforms with this industry standard and follows the carrier blackout guidelines for agent and agency releases.

What if my FMO won’t release me?

As we’ve covered that’s common these days; in fact, we’re finding that it’s rare an agent actually secures a release from their FMO. Not to worry, there is usually a second option or agent self-release option available to move or recontract with another FMO. Most carriers will allow an agent to submit a form, send an email request to a specific inbox, etc. that will provide a notice to leave an FMO and move to another FMO. Typically, the agent can continue to sell and market for the insurance carrier and then process or realign with the new FMO anywhere from a week to a year, depending on the carrier. The most common timeline is 90 days. 

What is Agent Boost Marketing’s release policy?

We have nothing to hide. It’s right here and always included with agent contracting and every onboarding packet ever submitted by an agent. In fact, we request agent initials next to that portion of our contract to ensure that the agent has read and understands our release policy.

Release Process & Policy — In keeping up with industry standards, Agent Boost Marketing will grant agent releases, at their discretion from Jan 2nd – July 15th of every calendar year; we have a blackout period from July 21st-Dec 31st. If a request is made during the blackout period, unfortunately, we have passed our annual release window for this year. Requests will be moved forward until Jan 2nd of the next year. Please understand that during this release blackout period, our time is very limited, and we are busy with Annual Enrollment Period planning sessions, budgeting, certifications and more. Our focus is on supporting our agent distribution and fulfilling our commitments to our insurance carrier partners. During our release window, and to streamline the release process, Agent Boost Marketing will offer agents the ability to pay a $500 administration fee for an unconditional release to offset onboarding, training, and other business expenses incurred by Agent Boost Marketing on behalf of the agent. If Agent Boost Marketing approves an immediate release, a mutual non-disparagement agreement will be executed by both parties. A release letter will then be emailed directly to the agent allowing them to align to another FMO of their choosing. If the agent does not want to pay the administration fee, the agent may follow the carrier’s self-release guidelines to facilitate their alignment with a new FMO. Agent release requests may be submitted to [email protected]. No further actions or requests will be fulfilled by Agent Boost Marketing.