Selling med supps in Wa. State

[WaStateAgent]

Looking for advice on selling med supps in Wa. State as compared to other states. I have picked up about 25 med supp clients over the past couple of years and I am thinking about diving in full time. I was hoping to get some input as to whether it is viable with the low commissions here in Wa. State. My typical sale is Cigna Plan G for 169.49 per month which works out to $15.25 per month in renewals and $183 first year commission at 9% commission.

The upside in Wa. State is Guaranteed Issue as long as they have a supplement in place. That makes for an easy sale. We also have lifetime renewals at the same 9%. I think I could sell 20-30 per month if I use DM and I do have enough money set aside to keep this up for for quite some time or at least until renewals kick in.

I have also had good client retention. I have only ever lost a client due to death.

My question to you agents who have been around awhile is if you think this is a road worth taking or is there a better path like concentrating in Oregon. Thanks for your input.

 

[Bevo]

It all comes down to your client acquisition costs and how much risk (cash) you're willing to put in to find out, then maintain.

I would do some test runs on the DM then check your CPA, do the math, and go from there. If it's a CPA you can live with at the half comp in WA with your marketing costs then go for it. But keep in mind the GI also makes it easier for other agents to snag clients from you. So at the lower comp and GI I'd set up great retention processes.

There are about 35 better states than WA or OR in my opinon, and I live in OR a few months a year and don't really go for business here or in WA other than our online traffic.

 

[WaStateAgent]

Thanks Bevo. Just the type of feedback I was looking for. Cigna is the price leader here in Wa. and has remained there for quite some time so as long as I put them in the best plan I should be able to keep them, at least until there is a drastic change in pricing. We don't have as many carriers here because of all the nutty rules. I figure my CPA is going to be FYC. I might make a little profit but it is all about trying to make twice as many sales as I could in other states because of the GI rules and build my renewals.

 

[Bevo]

I figure my CPA is going to be FYC. I might make a little profit but it is all about trying to make twice as many sales as I could in other states because of the GI rules and build my renewals.

If you have a relatively easy and predictable way of getting clients for WA FYC in large numbers (emphasis on EASY, as in nearly twice as easy as say, other states) then it's worth it and I'd put the hammer down. Yes it's half comp, but if you can acquire them with little effort at FYC which is also half, you're still building up great residuals. Revenue is revenue!

On the other hand if you're struggling to get them, or find your marketing is hit or miss and cannot be dialed in, then I'd go for the normal comp states. Keep us posted I'm interested to see how you do.

 

[Travis Price]

9%? That is not good at all. I thought I had it bad only getting 3 years of level commission in MI.

 

[Thomas NW]

9%? That is not good at all. I thought I had it bad only getting 3 years of level commission in MI.

If I remember correctly, that 9% is permanent and when the the premiums go up, you get the 9% commission based on the new (higher) amount. Still not too exciting...

 

[somarco]

I have never written business outside of GA but somewhat familiar with other states. WA has either a birthday rule or anniversary. Regardless, replacements are GI as you stated.

Generally states that are GI do have lower commission.

In a situation like that you are only selling rate. As long as you can keep finding low rate carriers you could be OK. But if you get lazy your clients can roll away to another carrier that comes in at a lower price.

Never really impressed with Cigna but if you like them, OK. And GI states usually only have a handful of carriers. Not a bunch of carriers beating down the doors to write 100% GI business.

9% lifetime is nice. What you give up on the front end you can make up long term . . . if you can maintain your client base.

 

[WaStateAgent]

Somarco, thanks for the input. I appreciate it. Here in Washington, we can replace anytime we want as long as they have a supplement currently in force and it is GI. That is a big plus and cuts down on headaches. As for Cigna, I like them because they have the best prices and have had the best prices for quite some time so I feel safe about not getting replaced.

Med supps here in Wa. State will only make sense if I can write up twice as many as I could in other states. What kind of return (sales) do you guys usually get on a 1000 dm drop.

 

[LostDollar]

(caveat, not an agent)

It seems to me that the lifetime commission element could remove a lot of the sales pressure I read about in the threads here, that comes from having to recycle clients through new carriers in order to maintain your cash flow. All you have to do is monitor overall carrier pricing in the state and service the needs of your customers.

There have been threads where agents discussed the pros and cons of having assistants in the office. Many agents seem to come down very strongly on one side or the other. The negative concern being that the assistant will leave and steal a bunch of clients. My current supplement agent has an office staff and I find that useful as a consumer because if I have a question I can talk with the assistant in the office and not interrupt the agent in the field.

If you are in the camp that thinks it is ok to have an assistant and you could create a step increase in customer base that would support both you and an office assistant, I think you could have the potential to address the concerns other agents are expressing here about customer turnover by setting the basis for even more solid customer service and communication than you are able to provide now, leaving you more free to develop sales plans.

In addition, a big step increase in active customer base might also give you the possibility of an increase in business from referrals which would reduce your direct mail costs necessary in the future to maintain your business volume.

I don't know how to quantify it, but it seems like being able to be in the Medicare market with guaranteed renewals not subject to annual AHIP recertification would also have some value.

Based on comments I see agents making, I would also suggest that as you increase your customer base, you try to find a way to do it with more than one carrier. This is not a jab at CIgna, rather it is a response based on comments I have seen by agents who have been cancelled by a carrier or whose primary carrier suddenly came into the market with an obscene price increase. You know better than I how real or unreal those concerns would be for your particular market.

 

[Travis Price]

In MI, it guarantees that you're shopping the rate for the customer every year. It can be a good and bad thing.