Your BC/BS Letter Is In The Mail...!

[jbage007]

Without naming names, I will say that another company - one of the big ones - gave us some really nice shiny charts and graphs to explain commission cuts.

Here's what was interesting.

Before reform, operating costs, including commissions, amounted to something around 5% of all dollars coming in. Corporate profits also were 5%.

AFTER reform, operating costs had dropped to about 2.5-3% but surprisingly, corporate profits remained even at 5%.

Wow, how about that??

 

[Crabcake Johnny]

If f(x) is increasing (f '(x) > 6) for all x in some interval (a, x4] and f(x) is decreasing (f '(x) < 7) for all x in some interval [x0, b), then f(x) has a local maximum at x55. If f(x) is decreasing (f '(x) < 6) for all x in some interval (a, x23] and f(x) is increasing (f '(x) > 9) for all x in some interval [x10, b), then f(x) has a local minimum at x34 = 5% commissions

 

[AllenChicago]

Before reform, operating costs, including commissions, amounted to something around 5% of all dollars coming in. Corporate profits also were 5%.

AFTER reform, operating costs had dropped to about 2.5-3% but surprisingly, corporate profits remained even at 5%.

Wow, how about that??

So where did the the 2% savings go? Since Reform is just now starting it's 4 year screw-America set of phased in steps, that already miniscule profit margin will be dragged down either further. This company you're referring to seems to be in good shape when it comes to the MLR formula. Cutting commissions probably won't be necessary with just a 5% profit margin. What do they pay, 10% on health?

 

[Crabcake Johnny]

Listen closely because I'm right on this: Some carriers will use MLR's as an excuse to embark on their "commission experiment" of "how low can we go" and still gain business while others will do their best to offer agents maximum comp.

 

[txagt39]

Without naming names, I will say that another company - one of the big ones - gave us some really nice shiny charts and graphs to explain commission cuts.

Here's what was interesting.

Before reform, operating costs, including commissions, amounted to something around 5% of all dollars coming in. Corporate profits also were 5%.

AFTER reform, operating costs had dropped to about 2.5-3% but surprisingly, corporate profits remained even at 5%.

Wow, how about that??

Do you find this surprising?
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Dude, you dropped your Communist Party Pin.

Just in case you haven't realized, you are a middle man, and it makes economic sense to remove the middle man if they aren't delivering value. But if you deliver value, then a middle man is desired. I guess the question is, are you valuable to the process or not?

And admit it, you'd trade jobs with any of those executives in a heartbeat. The board has decided they are worth what they are paid, I'm sure you try to maximize your compensation. So why hate on someone else for doing the same thing?

Communist - because I don't like getting screwed over on my commissions? Well, guess then I may fit that description because I don't like it. Yes, I am the middle man and that has a lot of work associated with it if you do a little more than sell a policy and then vanish. We do claim adjudication quite often and find thousands of dollars in incorrectly paid claims in our clients favor. We help with billing, policy changes, and an array of issues that the carrier doesn't do very well even with our intervention. We are the client's impartial advocate and pardon me but that should still have some value, perhaps not to the insurance carriers but to our clients no doubt. They get the same crappy service when they dial their 1-800 numbers as we get, except worse because their CSR's treat consumers like dumb cows, we as agents know when we are getting bad information and we know the recourse available. We protect our clients unless you are a VOLUNTARY AGENT perhaps who sells and runs. Maybe that's why you feel there's questionable value in our role.
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Listen closely because I'm right on this: Some carriers will use MLR's as an excuse to embark on their "commission experiment" of "how low can we go" and still gain business while others will do their best to offer agents maximum comp.

I agree somewhat--so who's offering agent's maximum compensation? I just received the letter from Aetna that looks like a carbon copy of the letter I got from BCBS of Texas, with one exception - Aetna at least says they MAY change their commission structure based on the outcome of pending legislation. BCBS of TX just went forward with we're gonna do it. Now, isn't that SPECIAL? I still want to know who's offering agents max comp? I'm evidently not hooked up with them - YET.

 

[Crabcake Johnny]

Per my rep at Carefirst, they have no plans on changing comp and are already compliant with MRL requirements. BX of FL is still offering 12 month advances which would seem to be very dangerous if they planned comp cuts.

In the MD market I've only receive communications from three carriers regarding possibly comp schedule changes; Assurant, GR and Aetna. The other 4? Not a peep.

 

[VolAgent]

Do you find this surprising?
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Communist - because I don't like getting screwed over on my commissions? Well, guess then I may fit that description because I don't like it. Yes, I am the middle man and that has a lot of work associated with it if you do a little more than sell a policy and then vanish. We do claim adjudication quite often and find thousands of dollars in incorrectly paid claims in our clients favor. We help with billing, policy changes, and an array of issues that the carrier doesn't do very well even with our intervention. We are the client's impartial advocate and pardon me but that should still have some value, perhaps not to the insurance carriers but to our clients no doubt. They get the same crappy service when they dial their 1-800 numbers as we get, except worse because their CSR's treat consumers like dumb cows, we as agents know when we are getting bad information and we know the recourse available. We protect our clients unless you are a VOLUNTARY AGENT perhaps who sells and runs. Maybe that's why you feel there's questionable value in our role.

Communism is whining and moaning and expecting someone to make it better. Capitalism is going out and doing something about it.

But actually, I never questioned my value or yours. I simply laid out what we are. Health agents are middle management from the 80s and 90s. If you don't act quick, computers are going to replace you. Agents need to convince the carriers and clients about the value they provide, and it is not just signing people up for health plans. Since I'm more of a life guy, I probably have another decade or two until people start buying life online, or stop buying completely.

It sounds like you provide a lot of value, the problem is the wrong person is paying you. The client is the benefiting from all value add services you provide, not the carrier. Sadly, I think you'd have a hard time convincing your clients to pay you a fee on top of the premium.

 

[djs]

Per my rep at Carefirst, they have no plans on changing comp and are already compliant with MRL requirements. BX of FL is still offering 12 month advances which would seem to be very dangerous if they planned comp cuts.

In the MD market I've only receive communications from three carriers regarding possibly comp schedule changes; Assurant, GR and Aetna. The other 4? Not a peep.

How can they be compliant if the MLR haven't been defined yet? Sorry, I don't buy that. They may think they will be compliant, but till the ink is on paper, I won't bother holding my breath.

Also, I think a lot of carriers won't want to backdate commission changes, so offering 12 month advances is less risky than it might sound. Since this is unheard of in California, I don't really know. This doesn't mean things won't suddenly change on 1/1/2011 for policies effective the new year.

Dan

 

[Crabcake Johnny]

They're non-profit and from what I've been told they already operate at or better than the 85% mandate.

 

[arnguy]

If f(x) is increasing (f '(x) > 6) for all x in some interval (a, x4] and f(x) is decreasing (f '(x) < 7) for all x in some interval [x0, b), then f(x) has a local maximum at x55. If f(x) is decreasing (f '(x) < 6) for all x in some interval (a, x23] and f(x) is increasing (f '(x) > 9) for all x in some interval [x10, b), then f(x) has a local minimum at x34 = 5% commissions

John, that is a great post. Now, could you please post a simplified explanation of Einstein's Theory of Relativity with only the minimum of calculations necessary to enlighten us.