Are Employee Benefit Agents a “Need” or a “Cost”?
The Debate Over Agent Commissions Continues
Here is an interesting article with regard to the value that is being placed on the role of having a representative. As it currently stands, the compensation that an agent receives is currently being counted as part of the overhead of the insurance company. Should it? Are we working for the insurance company? Or are we working on our client's behalf to find them the best Insurance Carrier, the best coverage and negotiate the best price on behalf of our client, the Business or the Individual.
Many say that when Obamacare is fully implemented, it will force most of the agencies out of business because of one of two reasons. The first being that employers will drop coverage and pay the penalty for not carrying coverage and have their employees purchase through the Healthcare Exchange. The second being that as we are now seeing, the compensation being paid to agents, in some cases, is being cut drastically. We have seen in the individual market that compensation has been cut in half. When you are dealing with an individual, of course, you have to deal in volume in order to cover just your overhead. Since compensation is being cut so much, it will force agents and agencies to send people to figure everything out on their own within the exchange.
The true value of the agent is that if they are being unbiased, which our agency is, and not swayed by bonuses or other enticements, then you will get great guidance. Your guidance is just a part of the cost of doing business. If the insurance company has to count that as part of their overhead, then you will see this guidance slowly dwindle away. Since you choose to work with an agent, it is typically understood that you have hired us to represent you. Therefore, this is where the compensation should be placed. The same is true of most products that you buy. Whether it is building, a piece of equipment, the services of an advertising agency, etc. If you told Caterpillar that they had to spend 80% of the cost of their equipment on the equipment and pay sales staff, support staff, research and development staff, et al out of the remaining 20%, then you would most likely have poorly made equipment and very little help in choosing what would be best for your needs.
I finish this entry with a link to the article that Senator Jay Rockefeller is referenced in saying that our commissions hurt consumers. I ask the Honorable Senator to his local Social Security office and ask for assistance with deciding on which Medicare plan he should enroll in.
Here is the article, courtesy of The Life & Health National Underwriter.
