Obamacare & Selling Individual Health Insurance in 2013 & 2014

[Ann H]

Ann, do you have an exit strategy in that you think we have a 3-5 yr window?
Sprint til maybe second open enrollment then sell at its high perhaps?
I can see comp going to zero in your 3-5 yr window, but what is your guess for commissions on cases on the books at that time?

Good questions. For me, the exit strategy is to cross sell all the new clients. My husband and I also own another business, and I would consider retiring early (I'm 54 years old). That's not an exit strategy for everyone, but it works well for me. Selling high at the 2nd open enrollment is a good choice, too. Many agents are looking at this as "open hunting season" to build a book of business, then cross-selling and moving their focus to another line of insurance.

As far as commissions, the carriers will be releasing that data soon. It will be lower than we had pre-PPACA, but the premiums will be higher too. Some carriers will play games (like pay on the unsubsidized portion of the premium), or set the commission lower than their competition, but those games always cause lost production, and usually end up in a reversal of their decision.

 

[kahlestyle]

When the carriers go to zero on new cases down the road (which seems to be the consensus here), what is your guess as to what they do with the old cases on the books on commish levels?
Also, have you determined in your strategy which demographic to go after, exchange or non exchange ?

 

[RayNY]

I can see comp going to zero in the 8-12 month window. MLR isn't changing, commissions are paid from profit. Carriers are struggling to make profit across the board right now.

If you can give me a reason, that lawmakers would believe, why brokers are irreplaceable, I would happily believe its a possibility. We're no more essential than car salesman, and the public sees us as even less reputable.

Considering how many (BIG!) carriers have reduced or removed commission already (new business and renewal), I'll assume they will all follow.

 

[Yagents]

Every industry as salespeople, every product needs to be sold. Last time I checked, every car distributorship has salesmen.

Insurance companies are making profits, have you checked their stock prices lately. Keep in mind, I don't require expensive obamacare health insurance benefits, a desk, a computer, sick/vacation pay, FICA/FUTA, etc. We are a far more efficient distribution model, who can actually give advice (and not just service)

 

[Ann H]

Ray, you are in NY, which has been a GI state for years. I can see your viewpoint, since that is the state you are licensed in. And, for the rest of us, that is what our states will be like in 3-5 years if Obamacare succeeds or if we go to one-payer. In AZ (and many other states), health insurance business is 80% broker driven. That won't change overnight. But once the masses are enrolled, and/or if the market compresses to where just 1 or 2 carriers participate in a state, agents commissions will go to zero.

Don't forget the cross-selling potential, the possible emergence of an alternative market like a QUALITY fixed indemnity (not limited benefit), the possibility of a supplemental market when Obamacare suffers benefit cuts (which is inevitable), etc.

As for the question about commission on a current book, it depends on the carrier and your contract with them. If you can get a vested contract, then great. Some carriers won't offer them. Some carriers continue paying on old business even if they terminate the agent for new business, whether it's a vested contract or not. But essentially, when commissions drop to zero, the game is over. You need to cross-sell or be diversified before then.

For the question regarding demographic strategy, exchange or non-exchange, it depends on your state, your current book, and your market focus. If you have a current book of IFP clients, then many to most of them are over 400% of FPL, and you'll need to focus on the private market. If you have a lot of groups in blue collar industry, you might want to help many of those employees with the exchange. If you don't have a big current book, and want to build business, you could probably get a lot of exchange business by putting flyers on cars at Wal-mart and Target. But you might not want that segment. I think every agent needs to do an analysis of his/her own strengths & opportunities.

 

[Yagents]

If only chevy's are sold, I agree with Ann.
If everyone is issued a Yugo (single payor), I'll become a mechanic

 

[taterpeeler]

I have a simple question... forgive me if I sound dumb..... who sells medicare advantage and supplement plans?????? I forgot

 

[Ann H]

I have a simple question... forgive me if I sound dumb..... who sells medicare advantage and supplement plans?????? I forgot

American agent/brokers. Also Canadians. Well, they call theirs a supplement to their universal health care plan, but they sell them like hotcakes. If we go to "Medicare for All" one-payer, a supplement market will surely arise, because the current high-level of Obamacare benefits is unsustainable. It's like a merry-go-round. It all comes full circle.

 

[taterpeeler]

with all due respect Ann you know I knew the answer to my question.... my point was in the cryptic messaging of my post....

 

[Ann H]

with all due respect Ann you know I knew the answer to my question.... my point was in the cryptic messaging of my post....

Yes, I realized it was a rhetorical question. I just thought confirmation of your message (be it cryptic or not) would help those who don't realize that there is business to be had no matter how the government decides to manipulate this. You've always been reminding us of this, and you're right!