Introduction
It is extremely important to purchase adequate travel insurance while traveling abroad. Many types of professionals, such as Insurance Agents, Brokers, Travel Agents, Tour Operators, Educational Consultants etc., work with people who are traveling abroad for Tourism, Study, Business, or other purposes; these professionals are interested in offering travel insurance products to their customers. Such professionals may already be selling travel insurance products from their home country or they could be looking for better products from U.S. based companies to expand their product options to be more appealing to their customers.
Business practices and government regulations vary in different countries, professionals should understand how selling travel insurance from U.S. based company's works. Some agents are used to selling insurance offline, where the premium is collected directly from the customer and then deposited into the insurance company's account. However, it works quite differently for U.S. based travel insurance.
These FAQs will help answer some questions.
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How does selling travel insurance work?
- The first step is to complete the Contact Us query.
- Once we have received your query we will send you the paperwork that includes the contracts to sell the insurance products.
- After you have completed the paperwork you can send it back to us either by postal mail, fax or simply scanning them and emailing them to us.
- We will sign you up with multiple insurance companies of your choosing and you be will assigned a specific agent number for each company. You may receive emails or postal mail from each of these companies, most will not require a response so you may disregard.
- We will prepare a customized web site and URL for your business, which will include your contact information and your agent numbers.
- Now you can easily sell the insurance products to your customers.
- You will receive commissions directly from the Insurance companies.
What kind of licensing is required?
That depends upon your geographic location (Country, State etc.) and what work you currently do. Once you contact us, we will go through the specific requirements with you.
Commissions
How much is the commission?
Commissions depend upon the specific insurance company and line of products. The paperwork we send you will have the commission percentage specified for various products.
Insurance companies in my country pay commissions in the range of 40% to 50%. You are paying a lot less commission. Why should I sell your insurance?
Look at more than just the commission percentage. U.S. based companies use USD currency and the premiums paid by the customer are usually higher, therefore you receive more commission even with a lower percentage.
Please note that the commissions for regular domestic health insurance, also known as ACA compliant (or Obamacare), for U.S. citizens pays approximately 1% - 2%. Compared to that, the commission percentage for travel insurance is very high. Typically, insurance companies start you at a low rate, then they will increase the percentage slightly as your production volume increases. As a leading brokerage company, we are able to offer you the highest possible commission percentage right away. You immediately receive the benefit of higher commissions due to the volume of our overall business.
Instead of us paying gross premium and then the insurance companies paying us the commission, can we remit the net premium, that is gross premium minus our commission?
No. As far as the insurance company is concerned, the customer is making the payment and not the agent. Therefore, the insurance company needs the gross premium.
Furthermore, no company in the U.S. is allowed to conduct business in that manner.
Premium Payment
What currency is the premium paid in?
U.S. Dollars.
How are payments made by the customer?
The most convenient way to make a payment is online using a credit card or debit card. It is also possible to make a payment with a personal check or cashier's check (demand draft) but it would be a lot slower.
My customers have a credit card and they pay their credit card company in our local currency. How can they make payments in U.S. dollars?
As long as the credit card is a major credit card, such as Visa, MasterCard, American Express or Discover, most of the companies allow them to charge in U.S. dollars. When the credit card company sends their statement, the customer would have to pay in their local currency according to whatever the equivalent amount is for the purchase in U.S. dollars.
What about the currency conversion rate and any loss due to that?
The currency conversion rate would be determined by the customer's credit card company, which we have no control over.
Can the customers make the payment in cash?
No. We don't accept cash payments. A possible solution, would be for you to accept the cash from your customer and use your credit card to make the payment.
Can the customer pay me and then I pay the premium?
Yes, that is fine.
What if my customers don't have a credit card or a debit card?
They can use a credit card or debit card that belongs to a friend or family member and make the payment to them by other means. If they don't have any such person, you can make the payment on their behalf using your own credit card or debit card and collect the money from them.
I may collect the payment from my customer in local currency and later buy the insurance from the insurance company and make the payment in U.S. dollars. What if the currency exchange rate changes by then?
Each insurance company accepts the premium in U.S. dollars as mentioned on our web site and payment must be made at the time of purchase. Therefore, there is really no time gap for currency exchange fluctuations. However, if you decide to leave a big gap between the time you collect the premium from the customer and the time that a premium payment is made to the insurance company, then it would be between you and your customer to deal with currency exchange fluctuation related issues.
The insurance companies I currently work with give us a credit of one to two months. What kind of credit do you give?
As mentioned before, business practices and insurance regulations are not the same in every country. Probably, in your country, the agents collect money from the customers and make payments to the insurance companies. However, in the U.S., customers make a direct payment using their credit card to the insurance company. Therefore, the money does not pass through the agent's books at all. In the U.S, agents receive commission shortly after the premium has been paid.
In any case, the concept of credit in the U.S. does not exist. The premium is required at the time of application, irrespective of who makes the payments.
Customers that pay by the credit card automatically get a credit from their credit card companies. Of course, the exact duration of their credit varies with the specific credit card they have and the time of the billing cycle they are in at the time of purchase.
We deal with corporate customers that demand credit from us. However, you don't provide any credit. In that case, how are we supposed to come up with the payment ourselves during that time?
All U.S. based insurance companies need the premium payment at the time of insurance purchase. Therefore, it would be up to you and your customers to work out such details. Your corporate customers could make the payment with their corporate credit card which may give them some credit. You may decide to give credit to your customers. However, we or any of the insurance companies we work with are unable to give any such credit.
Isn't it easier to make the premium payment in local currency, rather than in U.S. dollars? Why should customers buy from U.S. based companies?
Yes, it is. However, it is much better to take a little effort to make the payment in U.S. dollars while paying the premium. Compared to that, when the customer is in the U.S., think about the hassles he would have to deal with in terms of getting U.S. dollars paid from the insurance company in their home country. It would be much easier for hospitals and doctors to deal with the local insurance company in the U.S. who would make prompt payments in U.S. dollars. It would be much smoother at the time of claim when a large amount of U.S. dollars are required when you are sick or injured in the U.S.
If a particular insurance costs $100 and if I manage to sell it for $125, can you charge $125 to that customer and then give me the extra $25 as well as my commission?
No. Such business practices are prohibited. The customer has to pay $100 only.
We can't make any payments until we get an invoice from an insurance company. For each sale, can you first send us the invoice?
As far as the insurance company is concerned the agent is not making the payment, the customer is making the payment. As the sale of travel insurance is instant and online, there is no concept of an invoice. e.g., when you buy a book from amazon.com or a travel ticket from expedia.com, you make an immediate payment at the time of instant purchase. They don't send you invoices first.
In other words, the sale of insurance and the collection of premium is an automatic procedure which is completed in one step. There are not multiple steps involved.
Insurance companies in my country are very well known to us and to our customers. Why should I sell U.S. insurance?
The insurance companies that you and your customers are familiar with may be well known in your own country. However, are they well known and widely accepted in the U.S., Canada, Europe and other places where it really matters when your customer gets sick or injured and needs medical treatment? U.S. based companies have been in business for a long time, are well-known and accepted in most places.
I am not familiar with your insurance companies and therefore, I don't trust them. Can I keep the insurance premium collected from the customers and keep them with me until the policy expires? I will remit the premium after that. I just want to make sure that my customers get their claims paid.
That is simply not possible. Payment is required at the time of purchase, irrespective of who makes the payment.
Please note that insurance companies make the payments for commissions and claims from the premium they collect. If an agent needs their commissions right away and they also have to pay claims, from where will the insurance company get the money to pay if the agent kept the premiums?
Please note that the insurance business is highly regulated in the U.S. Therefore, the insurance companies are required to make the prompt payment of eligible claims.
