Will Commissions Go Lower?

[kgmom219]

Any lower, and I move on to other products. I'll leave it.

Some Blues Plans Further Reduce Broker Commissions, Beef Up Internal Sales | AIS Health

Online insurance exchanges, combined with in-person assisters and navigators, have created a variety of new distribution channels through which individuals and small employers can buy coverage. Blues plans and other carriers "feel they are in a position to reduce commissions and tell agents they can take it or leave it," he says. "Some of this is tied to MLR, but the larger issue is reducing overall expenses, and broker commissions are seen as low-hanging fruit."

Well. That was depressing,

 

[AllenChicago]

BX doesn't need agents in a GI market. Look at the handful of states that (prior to 2014) had GI and you will see Blue as the dominant player with a couple others sharing the remaining 15% or so of the pie.

They have every intention of creating a virtual monopoly going forward in the IFP market and that will be accomplished sooner rather than later.

Might be a few hires for career agents, but the independent agent planning on earning any kind of $$$ from BX is not in touch with reality.

Somarco, your astute analysis gives some insight into why our IL BX is promising 6% level for three years. They have no intention of fulfilling it, if you're right. Reminds me of the little electric rabbit zipping along the rail in front of the dogs at the racetrack. They never catch him, but some (literally) die trying!


From what I've seen in the past 3 years, it's not just the health insurers that are making cuts. Life, Critical Illness, Injury plans...all of them are either cutting up front commissions, or reducing the amount of years that renewals are paid.
ac

 

[kgmom219]

This may be a Texas thing (or I may be misinformed), but we don't see commission changes on previously sold policies. If I wrote a Select Blue Advantage policy 10 years at 15% and its still on the books, I am still getting 15%. So the way I read it, the policies I sold this year at 6% are going to pay me at 6% for the 36 months. If they change the contract next year to 5%, I will make 6% on my 2014 policies and 5% on the 2015 policies. It won't be retroactive to policies already on the books. My two cents.

 

[AllenChicago]

This may be a Texas thing (or I may be misinformed), but we don't see commission changes on previously sold policies. If I wrote a Select Blue Advantage policy 10 years at 15% and its still on the books, I am still getting 15%. So the way I read it, the policies I sold this year at 6% are going to pay me at 6% for the 36 months. If they change the contract next year to 5%, I will make 6% on my 2014 policies and 5% on the 2015 policies. It won't be retroactive to policies already on the books. My two cents.

Wow..you're still getting paid 15% on your BA policies from 2004? Probably not 15% on the CURRENT premium, but that's encouraging news nevertheless. Hopefully the HCSC Blues are not going to be as cutthroat as some of the others we read about.

BTW.. Prudential and Conseco used to pay 15%-20% renewals on current premium for a particular year. Was a nice little way of keeping income ahead of inflation. Probably helped drive them out of the health business though.

Even though the HCSC Blues apparently honors their contract overall, it doesn't feel as secure as the contracts where the agent signs and a company officer countersigns. The BCBS-IL contract is a single-page editable .pdf document.
ac

 

[number9]

Any lower, and I move on to other products. I'll leave it.

Some Blues Plans Further Reduce Broker Commissions, Beef Up Internal Sales | AIS Health

Online insurance exchanges, combined with in-person assisters and navigators, have created a variety of new distribution channels through which individuals and small employers can buy coverage. Blues plans and other carriers "feel they are in a position to reduce commissions and tell agents they can take it or leave it," he says. "Some of this is tied to MLR, but the larger issue is reducing overall expenses, and broker commissions are seen as low-hanging fruit."

I've been doing this for over 25 years. I've seen some brutal commission reduction the most routinely brutal has been Reg-Blues. These were before the federal government and the exchanges have gotten into it. The more this gets turned into a commodity, the less of a need for an agent and the less we will get paid. Individual and small group will be hard to make a decent wage per hour worked in the future.

 

[kgmom219]

Wow..you're still getting paid 15% on your BA policies from 2004? Probably not 15% on the CURRENT premium, but that's encouraging news nevertheless. Hopefully the HCSC Blues are not going to be as cutthroat as some of the others we read about.

BTW.. Prudential and Conseco used to pay 15%-20% renewals on current premium for a particular year. Was a nice little way of keeping income ahead of inflation. Probably helped drive them out of the health business though.

Even though the HCSC Blues apparently honors their contract overall, it doesn't feel as secure as the contracts where the agent signs and a company officer countersigns. The BCBS-IL contract is a single-page editable .pdf document.
ac

Oops. Its not 15% anymore. Its either 10, 7 or 5, depending on the product.

And just a reminder, HCSC is still non-profit. Along with Florida. I think that makes a difference.

 

[somarco]

wait until their non-profit status is taken away,

Very few of the Blue's are non-profit any more. Most are stock companies (ala Anthem Wellpoint) and a few are mutuals. I believe SC Blues are mutual.

 

[moonlightandmargaritas]

Very few of the Blue's are non-profit any more.

Florida Blue is the last real crown jewel of the "non-profits". People continue tripping over themselves in an attempt to acquire...

So far, no dice.

 

[kgmom219]

These are the ones I am 100% sure are non-profit:

Illinois
Texas
Oklahoma
New Mexico
Montana
Florida
Michigan
Alabama


How you can be non-profit with almost $1 billion in profits is beyond me, but HCSC does it.
Alliance for Advancing Nonprofit Health Care

 

[Yagents]

Add Arizona to the list