What Is Direct Carrier Contract? Definition

Why it matters

Direct contracts can mean higher payouts if the agent meets the carrier's production or licensing minimums. Many carriers do not contract small agents directly, so agents often go through an IMO. Compare the commission, advance rules, and support offered in each route. A direct contract does not remove the need for a license and appointment in each state.

Source: naic.org

Related terms

Contract Level: A contract level is the percentage tier of a carrier's commission schedule that an agent is paid. A higher level means a larger share of the premium as commission.
Independent Marketing Organization (IMO): An IMO, or independent marketing organization, is a company that recruits independent agents and gives them access to carrier contracts, training, leads, and support. It is not an insurance carrier.
Contracting: Contracting is the process of signing an agent up with an insurance carrier so the agent can sell and be paid on its products. It includes forms, a background review, and a commission agreement.
Carrier Appointment: A carrier appointment is the approval an insurance company gives an agent to sell its policies in specific states. The carrier registers the agent with each state's insurance department.
Full Contract: A full contract is the highest commission level a carrier offers on its schedule for a given product. Agents with it receive the maximum share of premium that the carrier pays.

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Why it matters

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