A New Low For ProspectZone?

[TXINSURANCE]

Average lifetime commissions to an agent for a policy range from $750-$900 depending on premium, persistency, and the commission level an agent is at.

The average cost per sale for an inside sales person is just over $120-$150.

That is not to say they do not value agent sales, just that when they spend $180-$220 in marketing expense to get a sale, they would lose too much margin to then also pay commissions out.

I disagree - this does not tell the big picture.

Several reasons why - #1 Marketing.

Carriers direct sale have ALWAYS been more expensive than agent based sales. i.e. why they use us.

Trust me if they could consistently do it cheaper they will. Conversion cost is way higher on carrier direct sales than paying us our commission or they wouldn't do it.

 

[Ken Westphal]

I am not saying it is cheaper overall to go direct versus agent sales, what I am saying is that if they use their marketing dollars to generate the leads and pay commissions than it would not be cheaper.

From their perspective they would double pay if they do the marketing and then also pay commissions.

 

[bill3173]

I am not saying it is cheaper overall to go direct versus agent sales, what I am saying is that if they use their marketing dollars to generate the leads and pay commissions than it would not be cheaper.

From their perspective they would double pay if they do the marketing and then also pay commissions.

There is a lot to what you say, but I've gotten some carrier leads, because the prospective client asked for an outside agent in their area, after talking to an "in house" sales rep.

They throw away a lot of leads, due to the way they're handled and they know it.

I just get a few extras, because I Ka as often as the opportunity arises. I'm not proud of this, but the $$ comes in handy and it makes others feel good about their jobs.

 

[somarco]

The average cost per sale for an inside sales person is just over $120-$150.

Including overhead, benefits, FICA, etc.? That's hard to believe.

If carriers could hit their target growth numbers without agents they would do it.

When BCBSGA considered dumping their brokers a few years ago they also admitted over half their business came from brokers. UHC get's close to 95% of business from brokers.

That's a major shift to try and overcome on their own.

 

[CHUMPS FROM OXFORD]

Let's hope they remember that in 2013.

 

[somarco]

Unless the carriers want to become brokers they are going to have issues trying to get new customers from direct marketing and internal sales.

In the last month I have written 2 policies on people who were told by HO CSR's they would be declined if they applied for coverage. Talk to a BX CSR and ask them how their SmartSense compares to a Humana Portrait plan and they can't tell you.

Five years ago I wrote a lady with KP. She had a good plan with a $2k deductible, reasonable copays that included lab work. Each year at renewal we made minor adjustments to keep her plan affordable then last year no change.

Or so I thought . . .

Seems she decided not to "bother" me and called KP direct. They suggested a Balance plan which had a lower price. The only difference (according to the KP rep) was the Balance plan did not cover maternity.

At 60 years old she decided she no longer needed maternity so she switched.

The first time she used the plan she paid her copay and then was asked to pay another $130 for lab work. Then she had a follow up visit and had another $250 for lab work.

That was when she called me and found out there was a bigger difference in the plan she had before the switch and the new Balance plan. To change back she has to go back through underwriting, something that will not be favorable for her.

I have clients with Humana and Golden Rule who have called HO at renewal to discuss options and they have been told they can save money by changing to plans that discount brand names. Most of the time I have been able to unravel this mess but only when I find out on a timely basis.

HO CSR's are nothing more than order takers who have no clue how their plans work.

 

[Ken Westphal]

There is a lot to what you say, but I've gotten some carrier leads, because the prospective client asked for an outside agent in their area, after talking to an "in house" sales rep.

They throw away a lot of leads, due to the way they're handled and they know it.

I just get a few extras, because I Ka as often as the opportunity arises. I'm not proud of this, but the $$ comes in handy and it makes others feel good about their jobs.

Actually the $120-$150 is pretty consistent, at least at HumanaOne. Think about it, with overhead expenses/licensing each call center associate costs them about $19/hour $152/day. In an 8 hour day the average direct sales person taking inbound calls submits about 2.3 applications, with an average issue rate of 49% (low compensated employees and only one carrier). So each day a direct sales associate will be securing roughly 1.13 policies, which is an average cost per sale of $135.

Again there are definitely other variables, such as average premium yield being lower, as well as lower persistency on direct business.

When I was at Humana, agency was always more profitable than direct, but it was not enough above direct to pay for the marketing expense of generating the leads and then giving them to the agents.

I know that many carriers go back and forth on delivering leads, but I have always thought that at the very least carriers should have some form of lead program in place for at least their top agents, even is they charge for it at a reduced level.

 

[somarco]

Ken, what percent of H1's business is direct vs through brokers? Can't be more than 10% if that.

 

[bill3173]

I don't recommend PZ too much, it's easy for companies like this to sell chumps fake leads.

Agreed, it's easy to sell Chumps fake leads. I sold him a pile last month, and feel a little guilty about it.

I'm thinking of sending him a coffee maker with some of the money that I made of of him.

 

[CHUMPS FROM OXFORD]

At least a coffee maker. That "pile" cost me $550 and I told you I wanted "Viatical" leads, not "Viagra" leads.