Scroll down for a discussion on Aetna commission disclosure within the Individual Health Insurance Forum.
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Aetna Policy on Producer Compensation
Disclosure of Producer Compensation Aetna is committed to transparency regarding producer (broker, agent or consultant) involvement and ...
Disclosure of Producer Compensation Aetna is committed to transparency regarding producer (broker, agent or consultant) involvement and compensation in the placement of Aetna’s products and services. Customers should understand the role of any producer in placing or servicing the customer’s business with Aetna and any compensation the producer may receive from Aetna in connection with that customer’s business.
Policy
Aetna requires producers (brokers, agents and benefit consultants) to disclose in writing to a customer, in advance of the purchase of a plan, the nature of any compensation the producer will or may receive or be eligible to receive from Aetna in connection with the placement or servicing of the customer’s business, as well as the nature of any other material business relationship between the producer and Aetna. This requirement is a condition to eligibility under any Aetna producer compensation program.
Upon request, this same information will be available to any customer directly from Aetna. In addition, for customers with more than 100 covered employees, Aetna will provide annually a statement listing the amounts paid to any producer for placement, renewal or servicing of the customer’s business.
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Looks like its their way to push business direct.
Customer: What? You make $700 because I'm placing my insurance through you? I'll save that money and go online and get the coverage.
I don't think Aetna discloses that there is no rate difference, they simply keep the money if someone goes direct. This means it's not transparent, it's a way to cut out the middleman. I'm going to have to go read the disclosure now...
This is the inevitable result of Eliot Spitzer's crusade.
Many large brokers (mainly group) were/are taking kickbacks from the carriers to steer business, even if it's not in the client's best interest. The powers that be want ALL the comp disclosed.
I don't see a problem, is there ever one with complete transparency?
------------------------------------ Don't steal - the government hates competition.
I always tell people what my commission is. It ALWAYS works to my advantage. It is part of my overall sales presentation.
"By the way Susan, clients always wonder what I get paid. I believe in total and complete transparancy with my victims... opps I mean clients (we both laugh). Here is how it works. Blue Cross pays me 20% of the first year premium... but only by month. So when you pay your $200 I get $40... and this goes on for 12 months. So you can see I'm not making a huge commission. After 12 months I get a tiny renewal. Of course you know that I cost you nothing. You can go direct to Blue Cross, but you won't save any money or get a different rate or get a discount... and you won't get ME. All that happens is that Blue Cross makes more money from you... and if you have a problem with a claim not being paid or you have a question about a deductible... you get the priviledge of being on hold with them for an hour.. instead of having me to call. I tell all my clients this... so now you know."
I've never, EVER lost a sale by telling a client how much I make in commission... health, life, or annuity. People WANT to know... and I bring it up so that it is one less objection they may have.
If a client has a problem with the fact that I earn money from helping them, I don't want them as a client in the first place. (And I sometimes tell them that as well. Works well with my upscale clients who understand the value a good agent brings to their kitchen table.)
Our saving grace is the rate doesn't change if they go direct. So just as Al pointed out:
"Susan, your rate is $350 per month whether you go through me or direct with the company. My commission is 20% of your premium however I provide outstanding customer service. If you go direct the company pockets the commission and you get "press 2 to speak with claims" then sit on hold for 15 minutes."
However I DO believe this could hurt a life sale.
"Just to let you know Susan, my commission for the term policy I'm recommending is your entire premium for the first year."
Regarding annuities, I'm not exactly sure your client will be thrilled or understand that you may be making $10,000 in commission off that $100,000 sale.
Our saving grace is the rate doesn't change if they go direct.
However I DO believe this could hurt a life sale.
"Just to let you know Susan, my commission for the term policy I'm recommending is your entire premium for the first year."
Regarding annuities, I'm not exactly sure your client will be thrilled or understand that you may be making $10,000 in commission off that $100,000 sale.
How many people tell clients what commission you earn? I always tell people how I'm compensated via Scott's strategy regarding the monthly cut. Nobody has every brought up my pay because although they may be thinking about it, it's rude to ask.
"Ok Susan, your monthly premium is $400 a month and I will receive $960." Granted you can tell them what you make monthly off the deal, but why do that?
As long as it doesn't impact the premium I see no reason to bring up specific numbers. That's like going up to a small business owner and asking him how much his cut is off the lawn mower he wants to sell me.
If the industry wants to move towards commission transparency, then you might as well allow agents to negotiate premiums for the individual products with each company having their base guidelines.
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"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
To my knowledge, there are no disclosure requirements for individual plans, only group plans & most ERISA plans. If the carrier really expected agents to disclose commissions, there would be a form for the consumer to sign acknowledging such.
On our groups of 100+ the carriers always disclose the commission on the 5500 Schedule A. 50-100 is usually disclosed during the initial sale, when they sign the general app. On small group, we are frequently asked about it, but I don't know that we are required to disclose it.
In group sales, it is generally a wash, every once in a while someone gets pissed, but most don't care and every once in a while it lets us dispel their notions that they pay extra for a broker.
To my knowledge, there are no disclosure requirements for individual plans, only group plans & most ERISA plans. If the carrier really expected agents to disclose commissions, there would be a form for the consumer to sign acknowledging such.
Take your panties out of your crack.
Would you like them back? You told me that I could have them...
If I have to disclose commissions then I am going to disclose my expenses also...
-Lead cost of generating or buying leads to get 85% answering machines each day of my life.
-Hourly cost of my employees
-Commission cost to my employees
-Benefits cost to my employees
-Payroll Taxes
-My real estate taxes and government fees
-Income Taxes
I would need a vary long piece of paper...
Yes sir on your $150/mo Health Insurance plan (that you are going to keep for 6 months) I will make $30/mo at 20%, which is a total of $180 over the 6 month life of your policy.
My acquisition costs totaled above are $400. Therefore I will be negative $220, but I truly appreciate your business.
I can't stress how much I am against disclosure in a market where the commissions have no direct bearing on the price (i.e. they go to another agent or direct and pay the same price). Obviously they have a bearing on the price, that is not where I am going with it.
Marketing is marketing - either pay me 10 to 30% to gather up the heard , or go run millions in ads on t.v. and radio that yield no results. It is FAR cheaper to give me a cut then the carrier to market direct, which historically they have done a crummy job doing. (or we would have no uninsured).
I just see these commissions going down the toilet or "flat fee" per sign up like MA, or some group commissions "per head".
I always tell people what my commission is. It ALWAYS works to my advantage. It is part of my overall sales presentation.
"By the way Susan, clients always wonder what I get paid. I believe in total and complete transparancy with my victims... opps I mean clients (we both laugh). Here is how it works. Blue Cross pays me 20% of the first year premium... but only by month. So when you pay your $200 I get $40... and this goes on for 12 months. So you can see I'm not making a huge commission. After 12 months I get a tiny renewal. Of course you know that I cost you nothing. You can go direct to Blue Cross, but you won't save any money or get a different rate or get a discount... and you InsuranceSolutions123 Agency
Aetna commission disclosure
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