Under-Age Agents Commissions Affected by Health Care Reform

Jan. 17, 2011 - PRLog -- Starting January 1st a Medical Loss Ratio (MLR), part of the new health care reform law, was instituted regulating that insurance companies must spend at least 80% of their premiums on medical expenses, sharing the remaining 20% between administrative costs and agent commissions.

Under the new health care regulations, up to 50% of insurance brokers’ pay will be cut, which will affect nearly 470,000 under-age market agents.  Some reports show their commissions will drop from 15 to 20 percent to 4 to 10 percent; and, with BlueCross will drop from 15 percent on first year commissions and 7 percent on residuals to 5 percent for both cases.  Golden Rule, a UnitedHealthCare company, is offering a per application bonus, in an effort to keep their agents despite the cut in commissions.

However, in 2014, even without the MLR regulations consumers will be able to find and obtain their own health insurance plans easily and on their own.  Also, insurance agents negotiating rates for those with pre-existing conditions will no longer be necessary as health insurance companies will no longer be able to deny coverage based on conditions.  This, unfortunately, has the potential to make those under-age insurance agents less and less necessary.

However, in 2014 nearly 32 million Americans will have access to health insurance under new health care laws and MLR will have a negative impact.  At a time when consumers need the most help finding a plan based on the changes, there could be fewer agents due to job loss and lower commissions.

Critics of the Medical Loss Ratio say that smaller companies could go out of business, agents will see lower compensation, and customer service will be sacrificed.  However, some supporters point out that industries are always changing and compare these changes in the insurance agency to those of the travel industry.  Travel agents have had to find their own niche in the primarily online travel market; and, therefore, insurance agents will need to do the same.

Some agents will choose to start working in the senior market, selling Medicare Supplements, as these changes have not affected commissions.  President of Precision Senior Marketing (http://www.psmbrokerage.com), a leading insurance marketing organization in the senior market, Lucas Vandenberg said “The decline in commissions in the underage market has agents concerned about their future. That is why it is so important for these agents to consider diversifying their portfolio to focus on the exploding Senior Market. PSM specializes in helping agents make this transition.”  Products available include Mutual of Omaha, Forethought Life, Gerber Life, and Sentinel Life having excellent commissions, ultra competitive premiums, Med Supp/Life combo applications, e-applications, top level service and support, and up to 12 month advancing available.

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Located in beautiful Austin, Texas, Precision Senior Marketing, LLC is a full-service, national insurance marketing organization dedicated to recruiting, servicing, and supporting the best senior market insurance agents in the United States.