Presented by Leonard Berthelsen
There has been a lot of talk and many articles in our trade publications about carriers suspending commission payments for open enrollment in the Affordable Care Act (Obamacare). Is this a trend that the industry needs to pay attention to, or is it affecting just this specific kind of insurance? Interesting to ponder, are you going to lose any sleep over it? I suspect that if you are one of those agents that work in this market, you are concerned about the future. Are they going to expand that to all under 65 major health products, or is it contained in a small amount of the overall business?
There are pros and cons with the Affordable Care Act and many differing opinions on it’s success. There is no doubt that many more Americans are insured today than at any other time in our country’s history. Medicaid expansion has added thousands if not millions of additional covered Americans in addition to the newly insured under the ACA. Regardless of which side of the aisle you sit on, these facts can’t be disputed. What does get disputed is what effect it has on the other forms of insurance available to consumers.
Most of the carriers participating in the ACA have given dismal reports for the last 2 years on premium collection, insured retention, and overall claims experience. It is not a disputed fact that the majority of carriers are paying more out in claims than what they are collecting in premiums from the open enrollment section of the ACA. How long will that trend continue? Time will certainly tell. These same carriers that are reporting significant losses in the ACA open enrollment are looking for all means to “right the ship”, unfortunately, commissions got caught up in that correction.
It appears that this commission suspension is an anomaly at this point and not a concern for panic with regard to the other health related products out there. Should we ignore what is happening to commissions in this group, certainly not. As a prudent business person, we all have to stay sharp to market trends, carrier actions and regulatory concerns. At this point, the carriers need the individual producer as much as the producer needs them. Very few of these carriers have a direct to consumer mentality or a mechanism to take their overall business straight to the consumer. So for the short term, insurance advisors are still needed by the carriers, the consumers and the families they support.
If you have sold in this environment and it affected you financially, let the carrier and the regulators know this. The only way that they are going to know what effect this is having on your livelihood is if you speak up.
Marketing Long Term Care, Disability Income Protection, Short term care and other individual products may be the solution to the shrinking compensation that the carriers imposed on the ACA. Let’s remain strong in the other individual product lines and demonstrate that our profession is truly needed. Reach out to Financial Brokerage at 800-397-9999 for additional information on this subject.