If you're currently selling health insurance or looking to get into the field, you need to be aware of the changes due to health care reform and how to make the proper adjustments to your business. Before reform, agents earned an average commission of 20% with many companies advancing nine months to one year. Those days are over.
Due to the MLR requirements effective January 1st 2011, rulings have been cut. So what did the MLR requirements have to do with decisions? MLR, or medical loss ratio requirements forced health carriers offering individual health insurance policies to spend 80% or more of collected premiums on health care, not administrative costs. To make the math easy, this means a carrier that was spending 65% on administrative costs has 15% worth of cuts to make.
The bottom line is agreements across the board have been cut by an average of 50%. So how can you stay in business with a 50% cut in pay? There are a few ways with the proper knowledge and insurance training:
1) Concentrate on carriers that are offering bonus programs. As an example, you can average 15% or even more by selling for carriers that are offering a flat additional fee per application based on the number of applications submitted or carriers that pay a higher commission percentage based on production.
2) Concentrate on carriers that are off the highest commission, however, in order to make sure those carriers are competitive you may have to sell in other states. We do not recommend selling an uncompetitive carrier in order to get more commission. As an example, if there's a particular carrier that's offering better compensation, simply run quotes in a variety of states to see where they're most competitive.
3) Cross-Sell. You can boost your responsibilities significantly and help your client by offering a variety of products such as accident plans, critical illness and life insurance.
If you're looking for commission advances to get off the ground, the first two suggestions will not do much good. The reason is you're going to have to sell for months in order to qualify and receive a bonus check or step up to the higher commission level.
You'll have to concentrate on our third suggestion – selling ancillary products such as accident plans and critical illness since they offer advances as well as most life insurance carriers. The bottom line is do your homework, run quotes for the carriers in your state then compare commission schedules and seek out as much insurance training as you can handle to become an expert in your field.