Insurance 101

The insurance industry is made up of insurance carriers, insurance wholesalers (distributors), and insurance agents.  There are roughly 15 insurance carriers that offer Indexed Universal Life products, some of which are not competitive.  This leaves 5-7 that offer the kinds of products that would be best suited for our clients.

There are more than 1.5 million licensed agents nationwide.  A large percentage of them are inactive (hold a license but don’t actively sell), another significant percentage are financially unviable (sell a few policies each year), and many sell lines of insurance other than indexed products, arguably the most sophisticated products in the product array.  In the middle there are capable agents who will tell you that what stands between them and greater earnings is the inability to get themselves in front of more qualified prospects.


Wholesalers (also known as BGAs – Broker General Agents, MGAs – Master General Agents, FMOs – Field Marketing Offices, and IMOs – Independent Marketing Organizations) play a crucial role as the ‘connector’ between carriers and agents.  Since carriers do not directly contract agents, they must go through a wholesaler in order to access product.

Wholesalers operate on a margin between the commission they’re paid by the insurance carrier, and they portion they pay agents.  Most compete for agents based on ‘price’ – the commission rates they pass on from the carriers.  Agents will, with little hesitation, move from wholesaler to wholesaler when they are offered a few more commission points.

Providing Value

Beyond the commission structure, most wholesalers provide little added value for their agents other than the relationships they foster.  They do perform some back-office functions like contracting, case management, etc. – but these are largely indistinguishable from one to the next, and an expected prerequisite by the agent community.  A few provide some degree of training, but mostly on product, not on what’s really needed – sales and concept training.  Some provide a basic level of marketing support (lead generation strategies, websites, etc.).  But few, if any, provide enough value that they are able to command exclusivity, or even loyalty from the agents in their stable.

Since many carriers will allow an agent to hold contracts with it through two wholesalers, there is little brand loyalty between agents and their wholesaler.  In fact, most agents utilize more than one wholesaler for a variety of reasons.