Annualized commissions

[Angelp]

Dave,

That's exactly what I did. My only incentive to go the other route was that I thought commissions would be annualized.

 

[GreenSky]

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.

About 8 years ago, Blue Cross changed their contract to 21/11 (and reducing after) based upon the original premium. They told us that since the average policy is in force for 5 years, we make more money. (Apparently this change was because the company loves us).

Took me all of 20 seconds to realize that will an average premium increase of 10%, we would be getting the royal screw in just under 3 years. However, I was assured that because of the commission change, prices were likely to remain stable.

I stood up in the meeting and announced that I would not write with Blue Shield again until they reinstated the old 20/10 contract - and then walked out. I was VERY surprized that no one followed me. Agents are such lemmings.

They finally reversed this about 3-4 years ago. By the way, they were correct about the rate increases. They did not average 10% - more like 15%.

There is NOTHING a company ever does because they want the agent to earn more. The more we earn, the less they do. The goal of every company is to get rid of agents. Once they find a cheaper distribution source, we're history. (For proof, see PacifiCare).

Rick

 

[J.R.]

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.

I agree. Their needs to be a standardized way for ALL health insurance carriers to accept/reject applications. I don't like the fact that carriers can use a recession to cancel a policy AFTER the fact. That's like a bank telling a client that even though they have had a loan for 1 year their loan is going to be canceled because they found an unpaid parking ticket from 1 1/2 years ago. Oh yeah, they now have to find another bank to obtain a loan while the bank foreclosures. I like to give people the benefit of the doubt and I have no problem switching somebody if we both agree it's the right thing for their situation. I'm not about to switch somebody from a plan that covers everything to a plan that excludes a condition that could be potentially fatal to save $30 a month.

Don't get me wrong. I'm all for an insurance carrier protecting their interest and people who intentionally try to commit insurance fraud deserve everything they get. But to use the incontestability period as an excuse to not switch a client does not take the whole picture into account.

Here's a recent example. I submitted an application for a health plan with one carrier, as well as an application for a life insurance plan AFTER the health plan had been improved.

Health carrier approved the case within 24 hours at Preferred rates, while I found out from the life insurance carrier that they needed more information because something cropped up on their system about 3 anti-depressant medications not listed on the application. Say what?????

"We cannot discuss the details with you about due to HIPAA." "Ah, I see, Well, will Mrs. Clinton allow a 3 way call." "Yes" "Great, I'll call back in 10 minutes!"

Long story short...I yanked the life case and the health case and then had a nice discussion about the repercussions of lying to me and the insurance carrier.

At the time I was shocked and wanted to find out what company both carriers use to verify medications. Apparently the life insurance carrier used a different source for medications that is more accurate. Hmmm...interesting.

 

[Crabcake Johnny]

Bank loan and car loans are good analogies and in fact we popped many a car after everything was signed and dotted if the finance company found a large mis-statement on the app.

Typically all the contracting was done, then weeks later the finance company would review the loan and demand proof of income. If it didn't match the app - car was gone.

Same with mortgages. If they found you committed fraud on your loan don't get too comfortable in your house.

Auto insurance is no different. You're in the city using your aunt's address to get the better rate? Don't have an accident.

There's no "pass" for lying anywhere in life. I saw a college professor recently fired because even after 10 years on the job it turns out he lied on his resume.

The truth of the matter is clients lie on health applications or get "convenient amnesia" because they know if they disclose everything they won't get the policy.

 

[arnguy]

Some insurers are notorious for "post claim underwriting.,"i.e., doing the underwriting when a claim is filed rather than before approval and issuance.

 

[Crabcake Johnny]

All carriers do post claims underwriting. The carrier can pull an APS if they want. Doesn't stop the client from hiding a current condition but not seeking medical treatment until the policy is issued.

 

[Alsky]

There's no "pass" for lying anywhere in life. I saw a college professor recently fired because even after 10 years on the job it turns out he lied on his resume.

I guess Bill C. would be the obvious exception to the rule.

 

[Crabcake Johnny]

he was impeached.

 

[Soaringagent]

Hmm, this is new to me

 

[TXINSURANCE]

I have real strong opinions on this subject.

For starters every carrier has unique applications, wording that even an attorney can not make heads or tails of, and some applications go back 5 years, 10 years, or EVER.

The "EVER" question in my opinion is just flat out dirty business. "...have you ever been seen by a doctor, physician, clinic, received or been advised to have any medical treatment..." Come on now. Lets see I think when I was 3 I stubbed my toe, then when I was 10 I fell off my bike and had stitches on my knee.

I know what you are thinking - but they wouldn't rescind for stupid stuff like that? Or would they? Sure they would. Want some real life examples:

-Knee Surgery - Records pulled, they find one case of slightly elevated blood pressure over a year ago, no blood pressure RX ever. Member claims he was running late, stuck in traffic on the way to the doctor. Policy rescinded. Had the insurance company known a history of blood pressure this in conjunction with another issue (I think he smoked) would have been a decline - Case Rescinded, Knee surgery - not paid.

-Broken leg on child. Records pulled and they mailed back wrong records (father and son had same name) they dug up some dirt on dad (who wasn't even in question) - and rescinded the FAMILY policy not just the individual. Wow. I fought this and eventually they just rescinded the father. The father had a big refund (and I had a big charge back) and we used the money to easily place him with another carrier. However this caused him to have over a 63 day lapse since he was "never a member technically" and he had a 12 month pre-ex.

Both of these examples are from A or higher rated TOP carriers I don't sell small time carriers.

The only solution is:

-Universal standard applications
-Standardized look back periods
-Rescind only for certain reasons
-No "ever" question

CA is trying real hard to not allow rescinds, this is bad press - and like everything else either the industry self regulates and cleans house or the government will. I am seeing far more rescinds due to the increase of Internet apps and non face-to-face sales (people are liars when you don't look them in the eye). Also carriers have installed advanced high tech computers to flag common 1st and 2nd year claims data - this is becoming extremely high tech. Not to mention when carriers are cash strapped they seem to be rescinding more - no connection of course.

Sadly the likely hood of the industry getting on the same page is extremely slim.