The National Association of Insurance and Financial Advisors (NAIFA) recently released the results from a survey that suggest that the recent minimum medical loss ratio (MLR) requirements in the federal Patient Protection and Affordable Care Act of 2010 (PPACA) are having a negative effect on agent commissions in the health care industry.
The MLR was established to ensure that insurance companies use at least 80% of individual premiums and 85% of group premiums to pay for health care and quality improvement efforts. Insurance companies have claimed that they have been forced to lower commissions to meet the MLR guidelines.
According to NAIFA’s findings, 13% of the agents surveyed stated that their commissions will drop in the coming year.* It was also found that about 11% of those surveyed will be switching from individual to group sales and 4% would be leaving the insurance business completely because of the commission changes.
Just how much have commissions been cut? Well 53% of those surveyed stated that commissions were cut at least 25% or more, and 17% stated that their commissions have dropped an astonishing 50% or more.
To recoup from the losses caused by the lowing of commissions some agents have started charging fees to their clients for services that were originally free. Many producers will not be able to do this however, because several states prohibit the charging of fees if commissions are available to the agent.
If you’re seeing a drop in your commissions for health insurance, now might be the time to add Medicare products to your tool belt. With their steady commissions and the number of baby boomer entering the market place, this is looking to be a very lucrative arena.
Check out our “New to Medicare?” webinar for a primer on everything a new Medicare agent needs to know to start selling in the senior market.
*Only members who are active in the insurance industry were surveyed.