- Staff
- #41
Exchanges and Agent Commissions
- Thread starter Crabcake Johnny
- Start date
I agree that renewals are a true asset in this business. So are the referrals that come from that block of current business. Now, with FYC being lower, count on there being fewer "newbie" agents who can survive the first few years in this business, and count on fewer call centers, and fewer agents just trying to make a fast buck off questionable products at higher commission levels. One of my carrier reps stopped by Friday, and he told me that every week he hears from agents who say they are exiting the business. I told him to weed out the irreputable brokers, and have some of his reputable brokers call me so I can buy the book of business. I'm serious. I see a dip coming, and then a recovery. I've been in the business 31 years. I remember when group health commissions were 10% level. Then came HIPAA with Guarantee Issue for groups. Commissions dropped to 5% level, and yet we survived. There was a dip. There was a max exodus of agents. But those who survived the dip saw greatly increased premiums (which increased the commission dollars even though the percentage remained 5% level). It also increased the volume of business coming into the group market from those who couldn't get underwritten in the individual market.
So, with a good base of professional expertise, some assets, and a solid book of renewing business, you can make it. You just need to see through the short-term into the inevitable recovery. We need to be ready for change, and then another cycle of change. Competition will be less for a little while. However, once we get through the first few years of lessened competition, we need to watch out for the new competition. There will be people who don't have a history in underwritten health insurance, but who can explain tax subsidies and standardized plans pretty well. There will be an influx of those people into our industry, I'm afraid. I think we're looking at competition from tax accountants who also have an insurance license, and other intelligent people like those who formerly were real estate agents or mortgage brokers, for instance.
Everything we do will change, and if we change with the seasons we will be okay. Even without PPACA, our industry was destined for change anyway. One of the prior posters stated it well when he said that almost every industry is going through change right now. Look what happened to real estate, mortgage brokers, bankers, construction workers. In AZ we were hit hard by the real estate bubble and bust, and every industry that is tied to construction is hurting big time, from carpet installers to roofers to architects. People lost jobs and felt painful declines in income, for sure, and it happened to them very fast. They delivered your pizza for a while, and then most of them got back on their feet by moving into new fields, or a modification of their old field. What happened to them was an implosion of their market. At least we have warning about what's coming to us, and we have time to adapt. It's like a tornado hanging over Kansas. We can see it coming, predict it's path (and it's changing path according to what happens in DC and state government), and we have a chance to outmaneuver it. Heck, we have a chance to go INTO an area that others are running OUT of and cleanup after the storm. Only those who seriously analyze the storm's path, and the new opportunities it leaves can do it. Otherwise we'll be destroyed by it.
I don't know much about the lead system, since I only bought leads once in my career, and that was about 25 years ago. I sell off leads from my website and also from referrals. But then again, I do mostly group health insurance and have a block of business from which to get those referrals. So, my case may be different, and I feel for those of you who talk about the cost of acquiring a prospect and a sale. But I think the lead system is bound to change as the volume of agents drop. Many agents are already saying they are getting more calls from prospects. I hope the future will be better for those of you who use lead vendors.
So, with a good base of professional expertise, some assets, and a solid book of renewing business, you can make it. You just need to see through the short-term into the inevitable recovery. We need to be ready for change, and then another cycle of change. Competition will be less for a little while. However, once we get through the first few years of lessened competition, we need to watch out for the new competition. There will be people who don't have a history in underwritten health insurance, but who can explain tax subsidies and standardized plans pretty well. There will be an influx of those people into our industry, I'm afraid. I think we're looking at competition from tax accountants who also have an insurance license, and other intelligent people like those who formerly were real estate agents or mortgage brokers, for instance.
Everything we do will change, and if we change with the seasons we will be okay. Even without PPACA, our industry was destined for change anyway. One of the prior posters stated it well when he said that almost every industry is going through change right now. Look what happened to real estate, mortgage brokers, bankers, construction workers. In AZ we were hit hard by the real estate bubble and bust, and every industry that is tied to construction is hurting big time, from carpet installers to roofers to architects. People lost jobs and felt painful declines in income, for sure, and it happened to them very fast. They delivered your pizza for a while, and then most of them got back on their feet by moving into new fields, or a modification of their old field. What happened to them was an implosion of their market. At least we have warning about what's coming to us, and we have time to adapt. It's like a tornado hanging over Kansas. We can see it coming, predict it's path (and it's changing path according to what happens in DC and state government), and we have a chance to outmaneuver it. Heck, we have a chance to go INTO an area that others are running OUT of and cleanup after the storm. Only those who seriously analyze the storm's path, and the new opportunities it leaves can do it. Otherwise we'll be destroyed by it.
I don't know much about the lead system, since I only bought leads once in my career, and that was about 25 years ago. I sell off leads from my website and also from referrals. But then again, I do mostly group health insurance and have a block of business from which to get those referrals. So, my case may be different, and I feel for those of you who talk about the cost of acquiring a prospect and a sale. But I think the lead system is bound to change as the volume of agents drop. Many agents are already saying they are getting more calls from prospects. I hope the future will be better for those of you who use lead vendors.
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- 10,275
"I wouldn't recommend anyone "get out" now who is currently selling indie health and making it work."
Actually, I say that tongue and cheek, hoping there will be nobody left except me.
Actually, I say that tongue and cheek, hoping there will be nobody left except me.
- 3,352
Why would any state need licensed navigators (insurance agents) that make a commission selling exchange plans? If GI states like NJ, NY, and MA have an exchange with NO commissions, why and how can we assume 5% is even going to be talked about? How does anybody make a red cent in MA, NJ, NY selling GI plans? I have NEVER understood that market. Again, if no commish in those states, why would there be commissions to be made anywhere else? Seriously? I know the med sup market is GI and there are commisions, but why would the under 65 market go THAT way? Who says?
- Thread starter
- #45
- 14,808
Renewals and a block of business at 5% when the exchanges hit will be great for current agents.
Getting into the indie health business will be next to impossible without 50K to 100K of liquid capital. And if you have that much capital why in the hell would you want to sell indie health at 5%.
We talk about P&C and honestly, I don't know anything about that market. I know a Nationwide owner - he tried to get me into his office to sell auto and told me he only concentrated on corporate P&C accounts.
I'm only left to infer that household accounts are the icing on the corporate account cake - bring us back to that it's impossible for an independent "home based" P&C agent to survive selling to households.
Getting into the indie health business will be next to impossible without 50K to 100K of liquid capital. And if you have that much capital why in the hell would you want to sell indie health at 5%.
We talk about P&C and honestly, I don't know anything about that market. I know a Nationwide owner - he tried to get me into his office to sell auto and told me he only concentrated on corporate P&C accounts.
I'm only left to infer that household accounts are the icing on the corporate account cake - bring us back to that it's impossible for an independent "home based" P&C agent to survive selling to households.
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Other markets have GI or exchanges WITH commissions (like Idaho, for instance). Some states are already forming legislation for commissions in the exchange (was it Iowa that just required it?). There will be business outside the exchange, likewise. Already there is admittance from NAIC commissioners, consumer advocates, and even framers of PPACA that agents need to be paid fairly to bring business to the exchange because the "inside the exchange" market will suffer adverse selection and possible implosion. Undoubtedly some states will make their exchange non-commissionable, especially at the beginning, but they'll suffer the consequence and will probably rectify that error. That's a "dip" that only the strong can survive. If that's your state, perhaps you need to get a non-resident license in another state and adapt your sales model to anything but F2F.
- Thread starter
- #47
- 14,808
I can see a little BtoB action if the exchange hits during OEP. I'd probably do well but unfortunately the Republik of Maryland is making a motion to ban agents from the exchange.
Less competition for current agents, but very bad news for GA's and those who recruit agents as part of their business model.
- Thread starter
- #49
- 14,808
Less competition = more business per agent has proven to be a myth. Individual health agents have made a mass exodus from the field but the few remaining agent friends I have who are still selling haven't seen a single extra app due to less competition.
Ouch. I didn't know that. It's a very good point, and a trend worth watching.
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I'm going a little bit off the subject, but my "crystal ball" tells me that exchanges will be a big flop anyway. All government websites get that way.
One of the problems is that they MUST include all data without weeding out the irrelevant and inappropriate. For instance, the healthcare.gov page that allows you to look up health plans in your zip code is a big failure for AZ. It shows plans from carriers that I never knew were even selling IFP!! The customer would go to this site, see one of those plans and pick it, without knowing that it wasn't a major carrier. Have you seen medicare.gov?? Try to pick a plan off that website, please!
Another problem is that most people will consider the "exchange" like buying your underwear from Goodwill's Thrift shop. They'd rather not. This may not be the impression at first, but it's bound to get that way. Those over 400% of FPL will have no incentive to buy in the exchange. Why wouldn't they go private and get the help of an professional advisor/insurance agent? I think being inside the exchange will be like taking the bus to work. People with money won't and people without money will hate it. There will be service issues inside any exchange that doesn't have professional advisors. Problems galore, I'm afraid.
But let me amend my comments to say that I'm from Arizona. I can't say the reaction will be the same in more liberal states. I hope I'm correct in my assumptions, but it's just my "crystal ball".
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