Role of General Agents
Important Intermediary Between Brokers and Carriers
What is a General Agent?
A General Agent (often referred to as a GA) is an insurance agency that partners with insurance carriers to market and distribute the carrier’s products through the network of independent brokers and agents developed by the GA. As such, the GA is highly engaged in the critical role of liaison or intermediary between the broker or agent and the insurance carrier.
Why are General Agents Used?
Primarily for two reasons
First, for most insurance carriers, dealing directly with the thousands of brokers and agents that may be found in the geographic area they represent would impose numerous logistical and administrative challenges. Through the appointment of an appropriate but restricted number of vetted, capable GAs, their burden marketing and servicing the coverages and programs they provide is significantly more manageable.
Secondly, the typical independent insurance broker or agent may interact with and represent a wide variety of clients, spanning small, medium and large companies, some with multiple locations across many states and a plethora of unique and challenging demographic, structural and financial characteristics. As it would be difficult for many of these brokers to possess the knowledge, resources, carrier contracts and administrative capabilities to adequately service the entire spectrum of their client needs, the GA can bridge the gap and provide the necessary and valuable support needed.
What Services Does a General Agent Provide?
As such, the GA is typically contracted by the insurance carrier to provide a range of services to their brokers and agents. In addition to the services required to be provided by the carrier, GAs frequently include additional value-added services, selected with the primary goal of assisting the producer service their clients. These responsibilities vary among GAs, but typically include:
- Carrier product knowledge
- Detailed quotations and proposal information
- Delivery of carrier rates and annual renewal information
- Additional carrier resources including underwriting rules, eligibility requirements, etc.
- Assistance with sales presentations and benefit enrollments
- Information on client strategies regarding the evolving nature of compliance and industry regulations
- Assist in the timely and accurate submission of any required materials or data to the carrier, including a review or audit, if necessary
- Follow through tracking on any case or service issues submitted by the producer
- Access to selectively chosen and contracted vendors to provide brokers with additional client-based resources
- Providing assistance in the development of client strategy development and solution research
- The servicing of all general and technical issues for carriers represented
The agent or broker is further advantaged by working with the GAs team of tenured, elite industry professionals who are highly accomplished at understanding the complexities of the group health insurance market, solving difficult benefit related strategic dilemmas and the development of long-term, evolving employee benefit solutions.
How Does the Role of the General Agent Impact Broker Disclosure Requirements?
Although some carriers may give brokers the choice to use a GA or work with the carrier directly and others may choose not to employ GAs at all, the reality is that in many markets throughout the country the GA method is utilized. In the geographic areas of New York, New Jersey and Pennsylvania, for instance, it is most likely the health insurance broker utilizes the services of a GA to access health insurance carriers. The broker’s client may or may not be aware of the role played by the GA however, as the GA essentially plays a “back office” or “transparent” role in most situations.
For the services it provides, the GA receives compensation from the insurance carrier. If a carrier or the GA requires it, the broker typically include this compensation in their disclosure document to the client. If neither the carrier nor the GA requires the compensation to be disclosed, the broker has the option to include or exclude the GA compensation.