The Milwaukee, Wis.-headquartered insurance carrier Assurant Health will no longer pay commissions on new business in certain markets of the United States, a move the carrier calls a sales approach, but some benefit advisers feel is a slight.
Assurant Health has cut commissions on new business in Florida, Nevada, Georgia, Indiana, Michigan, Pennsylvania and Texas. A spokesperson for the insurer says the changes impact individual major medical products, but not the supplemental, short-term medical or small group products Assurant Health offers.
Assurant Health is making adjustments to our sales approach to manage our business appropriately, says Mary Hinderliter, vice president of communications for Assurant.
But Ronnell Nolan, president and CEO of Health Agents for America, says she questions what sort of sales approach removes the sales team.
They have used us to give them the consumers/clients and now they don't need us, she says. Not good.
With carriers such as Assurant Health taking such commission cutting measures and medical loss ratio limits enacted by the Affordable Care Act also threatening broker commissions, Nolan says brokers are fighting all fronts, just trying to survive.
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Assurants Hinderliter says the companys decision to cut commissions on new business is not related to the MLR and Assurant complies with all MLR requirements of the ACA.
We believe the changes we are making will achieve our objective of balancing new sales with profitable growth to meet the long-term commitments to our customers and other key stakeholders, she says.
Fair compensation
Diane Boyle, vice president of federal government relations for the National Association of Insurance and Financial Advisors says the association cant comment on specific carrier compensation practices, but an industry trend toward decreased agent commissions is disconcerting.
Obviously, were concerned about agents being fairly compensated and if this decision by a carrier continues, we imagine it probably would spread, she says.
Insurance companies, she says, are trying to figure out how to manage their budgets and if they are having to include agent compensation in the medical loss ratio, it makes it more difficult to continue those payments.
To the extent that agents are not adequately compensated, are they going to be able to continue to provide service to consumers? That is incredibly concerning to NAIFA and its an issue we continually work on making sure that agents are fairly compensated in order to ensure that consumers have access to professional advice, says Boyle.
Thats really the crux of it, she says. Pushing the agents assistance out of the picture hurts the consumer in the long run.
Reduced services
Seventy-five percent of agents and brokers surveyed by NAIFA have seen their commissions decrease since the MLR went into effect Jan. 1, 2011. An additional 13% say they have been informed by insurance companies that commissions will be cut in the near future.
Nearly a quarter (23%) of the agents who have seen their commissions fall have reduced services for their clients, the NAIFA survey found, while 11% have stopped selling and servicing policies for individuals and 4% have gotten out of the health insurance market altogether.
Most of the agents who have thus far absorbed the hit of the reduced commissions say they wont be able to do so forever. Nearly half (44%) say that if allowed they will charge fees for services they have always performed at no additional cost to clients.
However, Boyle says brokers will have to maintain compliance with state laws and many states prohibit insurance agents who receive commissions from charging fees.
Almost three out of 10 (29%) said they will stop serving individual health insurance clients, and 18% will stop selling health insurance altogether.
