Exchanges and Agent Commissions

[CHUMPS FROM OXFORD]

If you're in your early 50s and you have made good money, you should have a pretty good chunk of money saved.

I repeat...if you sell predominantly individual health....get out. Yes, I do and I will stay with it. But I am a fool.

 

[Crabcake Johnny]

A few agents I know pretty well that run offices near me are having the last laugh. They are all muli-line, all have small offices with 2 to 3 admin staff. Their clients come in to to see them and I got an envious taste of it when I visited a friend's office a few months back.

His secretary is like an air traffic controller - trying to coordinate the clients coming in. He sells everything and it's one of those local outfits where he sell to the parents, their kids and the kid's kids.
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If you're in your early 50s and you have made good money, you should have a pretty good chunk of money saved.

I repeat...if you sell predominantly individual health....get out. Yes, I do and I will stay with it. But I am a fool.

I wouldn't recommend anyone "get out" now who is currently selling indie health and making it work.

However, anyone planning on going into 2014 blind and without a Plan B isn't planning properly.

 

[HealthGuy]

With every post I get more insights, lets keep this rolling...

 

[GreenSky]

I'm certainly not happy with the demise of agents being able to earn a living in health insurance. But I have to remind myself that the Constitution does not guarantee the industry we choose will exist in the future.

Things change and we must adapt.

Rick

 

[Yagents]

Medicare is basically GI, has standardized "exchange" plans and pays a livable commish. So, I don't see the difference when the exchange launches. They've had Medicare for decades, and it's still complicated. I just don't see how something simplistic can come out of this highly confusing law. Be ready to charge a fee if commish is not there. If we have a hard time understanding things, I'll bet most of america will be lost.
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Read the first comment made on this article. It's a second vote on what I was sayin' below, but he says it better:

Consumer group blasts insurance agents and brokers - The Hill's Healthwatch

 

[YouGotMyMoney]

5% really kills the call center model, and the website selling model.

going from 25-30% to 15-18% for uhc killed most call centers, though they can still sell mini meds @ 30-50% plus $100 app fee and private label stm plans for 30-45% plus $100 app fees.

at 5% there's not enough profit margin for a call center, and forget about cross selling, 99.9% of them are done.

 

[djs]

I'll play devils advocate to Johns math, for the fun of it.
Based on what John presented, most P&C agents would be out of business. With P&C, the trick is to realize that the renewals are worth more than the FYC. Basically, you use the FYC to get them on the books, then from there, the renewals pay the bills.

John's 5% scenerio assumed no renewals. If you get 5% renewals as well, you'll do okay.

If you have 500 clients on the books, paying $180 a year in commission for renewals, you'll make $90K a year, without a lot of new expense. Keep in mind, most P&C agents have more than this.

I've said all along, to survive the future of health insurance agent, you have to think volume and what it will take to do that. It is a complete reset, and unfortunately, the pieces are not in place to really know how to align for the future just yet, but understanding you will need to be setup to service at least 500 clients is step one.

I would also expect the carriers to dump a lot more service work on the agents to get their service commissions. It won't be free money.

Lots of potential glitches moving forward, such as if renewals will get paid, will they get paid at 5%, will they get paid for an unlimited number of years?

Dan

 

[Crabcake Johnny]

From what I understand, and correct me if I'm wrong, but it's near impossible to go indie as a P&C agent. No?

 

[aheff]

As long as agents aren't completely shut out- meaning nationalized/single payer/exchanges that have no agent role/exchange that only pays a horrbily low FYC- as long as those things don't happen, the indy health insurance agent will be alive and well. Our business model will change dramatically, we will have to work smarter and harder, but the money will be there.

 

[djs]

The success rate for indie P&C agents is near 0. It's pretty easy to do, but you have to be well capitalized, much more so than life/health agent.

Moving forward, I can't see health carriers really wanting to work with individual producers that write less than 20 policies a month. These producers have to represent a huge cost to them. In the P&C world, you frequently will have quotas to meet to maintain an appointment with a carrier. I would expect health carriers to be looking at this model as well.

You'll have GA's come out, trying to slice a point or 2 (or half) off of the top, to bundle business to maintain quotas, making it easy for individuals to get started, but hard to make any money.

My guess is you'll see more agent clusters, 3-4 agents working together to write the business and maintain the volume requirements. It will be interesting to see how much the carriers support this model.

Dan