Annualized commissions

[Dave020]

They offered my schedule "A" which is the traditional 20% 1st year and 10% renewal, as earned contract.

And schedule "B" which is 21% 1st year and 11% renewal. The catch is that schedule "B" is based on first year premiums so if your clients premium go up in year 2 you will still be paid based on yr 1's premiums.

This is standard with BSC, you choose which schedule of commission you want--for a while they only offered "A" but got a lot of pressure to go back to "B".

Neither A nor B offer advanced or annualized commission. They both pay as earned monthly.

This isn't a big deal to me since people are always going to shop for new coverage once their premiums are increased.

Well, that depends. Currently Cross is raising large March 1 and Shield has no rate increase Feb 1 this year.

People who shop price (and the agents who help them) need to remember two critical words before they get all premium happy...."contestibility period".

Everytime someone jumps a plan for premium they open the window to a new 2-year lookback period, even if they change policies within the same carrier. I think we've seen enough with the retroactive recissions in the last 12 months in CA to know that this is not always the greatest idea.

 

[Crabcake Johnny]

That's actually not correct. Most people will keep what they have and simply take the rate increase. I call every client at the time of renewal and regardless of the carrier they'd rather stay put. A few will indeed want to explore other options - but not most.

 

[Dave020]

That's actually not correct. Most people will keep what they have and simply take the rate increase. I call every client at the time of renewal and regardless of the carrier they'd rather stay put. A few will indeed want to explore other options - but not most.

BINGO! Most common answer I get when I address the (gulp) increase is something like "well, I just assume that's what it costs".

People know that buying health insurance and all it involves is a hassle. Most will stay put unless the rate increase is severely excessive.

 

[J.R.]

This is standard with BSC, you choose which schedule of commission you want--for a while they only offered "A" but got a lot of pressure to go back to "B".

Neither A nor B offer advanced or annualized commission. They both pay as earned monthly.



Well, that depends. Currently Cross is raising large March 1 and Shield has no rate increase Feb 1 this year.

People who shop price (and the agents who help them) need to remember two critical words before they get all premium happy...."contestibility period".

Everytime someone jumps a plan for premium they open the window to a new 2-year lookback period, even if they change policies within the same carrier. I think we've seen enough with the retroactive recissions in the last 12 months in CA to know that this is not always the greatest idea.

If an applicant has been honest and doesn't have any major issues that AREN'T listed on the application how important is the 2 incontestability period in reality? It seems that someone who isn't aware of that rule and is hiding something would be more concerned.

Perhaps you could provide the board with an example or two to illustrate your point.

 

[Crabcake Johnny]

The carriers use the "fraud" language in order to review the claim even 10 years after the policy is written:

Incontestability
In the absence of fraud, all statements made on the enrollment form will be deemed representations and not warranties. After coverage has been in force for two years, no statement made in any enrollment form (unless fraudulent) will be used to void your coverage.

So a client could honestly forget to put something on the app however the carrier's attorney will argue that the omission was intentional therefore fraudulent.

 

[Dave020]

Blue Cross CA settled a $1M retro recission fine in 2007 (would have been bigger if it went to court)

Blue Shield CA faces a $12.5M retro recission fines in 2008

PacifiCare faces $1.33B in fines including retro recissions in 2008

I agree that if the client is upfront then there should be no problem. Key word here is "SHOULD". Case in point, someone I know applied for BSC plan listing seasonal asthma as diagnosed by the doctor. You have asthma, here's your puffer, use it if you need it, have a nice day. Case should have been rated, but was declined. Turns out that the APS revealed that doctor had not advised patient but had annotated patient's medical records to include "emphysema".

What if they hadn't APS'd and something happened in the window? They don't always APS, it depends on condition and severity. This one only got APS because it was last physical and they wanted to check the asthma plus the results of the physical for BP, Height and Weight (BMI). Carrier told me that they probably would not have APS'd just for the asthma if BMI were in normal range.

The thing for me is, most people have no idea what is in their medical records. Doctors can and do write some crazy sh*t in there and often don't tell it to the patient.

 

[J.R.]

The carriers use the "fraud" language in order to review the claim even 10 years after the policy is written:

Incontestability
In the absence of fraud, all statements made on the enrollment form will be deemed representations and not warranties. After coverage has been in force for two years, no statement made in any enrollment form (unless fraudulent) will be used to void your coverage.

So a client could honestly forget to put something on the app however the carrier's attorney will argue that the omission was intentional therefore fraudulent.

Valid points. If the client intentionally omitted something then IMHO they deserve what happens. We're not exactly talking about recessions based on paper cuts though, so I think the potential savings and benefits MAY warrant a change if the clients is aware of his or her options.

 

[Crabcake Johnny]

Go ahead, as a policy holder, and prove in court that your omission wasn't intentional. And remember, while you're fighting it all of your claims are denied.

 

[Angelp]

Just wanted to let you know that you are correct about the annualized commissions. After reading some of your replies I decided to call BS and verify. I was told that the representative that explained the commission schedule to me misinformed me.

 

[Dave020]

Just wanted to let you know that you are correct about the annualized commissions. After reading some of your replies I decided to call BS and verify. I was told that the representative that explained the commission schedule to me misinformed me.

As attractive as the 21/11 schedule might be, I would suggest that you seriously consider the 20/10 with increase option. You may find that you keep business on the books with one carrier longer than one year and you certainly want to get the highest commission payout for your work.