Viktor Frankl lived in Austria and during the pre-war years became a physician specializing in neurology and psychiatry. In 1942, along with his wife and parents, he was deported to the Nazi Theresienstadt ghetto. In 1944, both he and his wife were imprisoned at the Auschwitz concentration camp. By the time of his liberation in 1945 he had lost his wife and was the family's sole survivor.
You may be wondering what any of this has to do with the group insurance agent. The short answer is: more than you think. Shortly after the Americans liberated him, he wrote the book Man's Search for Meaning. I want to focus on one short quote from that book: "Everything can be taken from a man but one thing: The last of the human freedoms - to choose one's attitude in any given set of circumstances, to choose one's own way."
Over the first two months of 2013, I have already had the privilege of speaking to four different chapters of the National Association of Health Underwriters. In addition to having the opportunity to talk with the attendees one-on-one, I have had the good fortune to receive many telephone calls from readers of this column. I have found that agents tend to fall into several camps as they move into the new and uncharted territory of tomorrow.
The largest of the groups are those agents who continue to attempt to do business using the same methods that they have used for the past 10 years. What is most unfortunate about this group is that many of these agents believe that they have changed their model because they offer what they refer to as "value-added services." The reality is these "value-added services" are less of a change in the business model and more of a vehicle for "buying" the business.
The second group is the incredibly small number of agents that are truly changing their model. Within this group are agents that have started to successfully charge fees in addition to the commissions that they are paid for the sale of insurance products. And before you say, "But that's not legal in my state," I encourage to contact your Department of Insurance and ask this question: "If I provide non-insurance related services in addition to selling insurance is there anything barring me from charging fees for those services?" The answer in almost all states is that you are free to engage in more than one business, so fees are legal as long as they are for non-insurance related services.
The agent's role
To understand this concept, let's begin by defining the job of the insurance agent. An insurance agent gets paid for sale and service of insurance contracts. If you are providing services such as an online portal for HR information it is important to recognize that that service has no connection to the sale and service of health insurance, and fees for that service are perfectly legal. If you are offering single-source billing, fees are a legitimate option.
When I was in Dallas, I met an agent who had taken a rather innovative approach to commissions on groups of 50 or more employees. In Texas, as in many states, commissions on groups of 50 or more are negotiable. His approach includes a discussion of all compensation, including the compensation on ancillary and voluntary benefits, along with the services that the employer really wants. Using this approach to the marketplace, he is writing more business and generating more revenue than ever.
The last five words in the Frankl quote are "to choose one's own way." Those agents that have started to successfully charge fees in addition to commissions and that Dallas agent have chosen their own way. They have built a new sales model that guarantees that regardless of what happens with PPACA and the exchanges their future is assured.
Last month, I had the opportunity to sit on a panel at the Mississippi Health Underwriter's Symposium. One of the last questions was related to the medical loss ratios and whether agent commissions might be excluded from the calculation. While NAHU is working on this issue, my response was to tell the group that the MLR issue was simply a distraction. Commissions reductions have been occurring for more than 10 years and agents should have already started planning for lower commissions a long time ago. Those agents, like the one in Dallas, that have created a new model are less concerned about the MLR.
Let me share another Frankl quote: "When we can no longer change a situation, we are challenged to change ourselves."
Far too many agents are using PPACA as an excuse to avoid actively marketing for new business. Several weeks ago, I was in Raleigh for a meeting at the Department of Insurance. As we were walking back to our cars, one agent stated that keeping up with PPACA was taking up a lot of her time. Every time that I hear this I am amazed, because so much of PPACA is still unknown. And what is known is not all that complicated. While there is no doubt that PPACA has an impact on the group medical marketplace, as agents, our primary job is to help our clients and prospects achieve their objectives through the use of insurance products. We can do that without getting bogged down in government regulations.
As long as we allow PPACA to occupy our time we are abdicating our power to control our own future. And the future of the insurance agent has never been brighter - albeit different. I will close with a quote that I read from John Tamny in the Feb. 10, 2013 Forbes: "Entrepreneurialism speaks to the disruption and the overturning of the existing commercial order."
My advice is to let other agents continue to operate their business as they always have, because in so doing they are allowing outside forces to dictate their future. You should experiment with new models and create your own future.
Schlesinger is an independent consultant focused on helping benefit professionals double their income. Reach him at (336) 777-3938 or through getmoregroupclients.com.
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