Chargeback Insurance for Insurance Agents

[chriswford]

Commission chargebacks can be backbreakers. As others have stated in these forums the commission is not yours until the chargeback period has expired. The reality is most agents are spending the commission as it comes in, hoping that a chargeback does not occur.
If there was a product out there similar to E&O coverage for chargebacks would there be a market for this? My thought is to have a per occurrence limit up to an aggregate annual limit for chargebacks. Clients would sign a disclosure that they don't have X conditions and if they die from that condition in the first year the agent cannot file claim. However, anything outside of those exclusions the agent would be indemnified. The problem of the "bad" things that come with not immediately repaying the carrier is eliminated.
Call this chargeback insurance for insurance agents. If there was a product out there like this, my fellow agents, what would you pay in an annual premium?

 

[sman]

If there was a product out there like this, my fellow agents, what would you pay in an annual premium?

Zero. Go as earned and you don't have to worry about it.

 

[GreenSky]

Zero. Go as earned and you don't have to worry about it.

Or do as SAI does and don't write business.

Problem solved.

Rick

 

[senior-advisor-indiana]

Or do as SAI does and don't write business.

Problem solved.

Rick

Most agents cannot afford to do this....

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If there was a product out there like this, my fellow agents, what would you pay in an annual premium?

I'd pay $60 per year. I would never have my clients sign a disclosure and send to you though. It would be a good way to collect client lists though. Why don't you sell this product to Bankers L&C agents for really cheap and then sell the list of clients to independent agents after the chargeback period is over? You could make a killing.

 

[DS4]

I wrote a med supp for a 4.01.15 eff date, and then the client died on 4.14.15. I rec'd a chargeback.
I would like to buy insurance so this financial hit I took wont happen again in the future.

 

[indienoise]

Wouldn't this be considered a speculative risk?

Anyway, I +1 the as-earned notion. I take commissions as-earned every time, if I have the choice. That said, I know P&C is very different from life/health, but you really ought to be writing (and keeping!) more than you're losing. If not, you need to really take a step back and examine just what kind of business you're writing, vs. what you SHOULD be writing.

 

[GreenSky]

I wrote a med supp for a 4.01.15 eff date, and then the client died on 4.14.15. I rec'd a chargeback.
I would like to buy insurance so this financial hit I took wont happen again in the future.

You should make them buy a small life insurance policy and name you as beneficiary. That way if they are so selfish as to die you'll be covered.

Rick

 

[sshafran]

You should make them buy a small life insurance policy and name you as beneficiary. That way if they are so selfish as to die you'll be covered. Rick

But should they just cover the chargeback alone or the expected lifetime commission we were expecting?

I'd appreciate your advice, thanks in advance.

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We could call it, "Human Commissionable Value."

Sent from my iPad using InsForums

 

[sman]

But should they just cover the chargeback alone or the expected lifetime commission we were expecting?

I'd appreciate your advice, thanks in advance.

Rick doesn't give advice in advance. Only as you've earned it. So if you don't get any advice from him, you'll know you didn't earn it.

 

[leevena]

Commission chargebacks can be backbreakers. As others have stated in these forums the commission is not yours until the chargeback period has expired. The reality is most agents are spending the commission as it comes in, hoping that a chargeback does not occur.
If there was a product out there similar to E&O coverage for chargebacks would there be a market for this? My thought is to have a per occurrence limit up to an aggregate annual limit for chargebacks. Clients would sign a disclosure that they don't have X conditions and if they die from that condition in the first year the agent cannot file claim. However, anything outside of those exclusions the agent would be indemnified. The problem of the "bad" things that come with not immediately repaying the carrier is eliminated.
Call this chargeback insurance for insurance agents. If there was a product out there like this, my fellow agents, what would you pay in an annual premium?

This has to be one of the more ridiculous ideas that I have seen. Good luck with trying to get this off the ground. To begin with, there will be a significant amount of adverse selection, very little data exists that would provide information on the risk, and I agree with an earlier post that trying to get a client to sign would be tough.

Sounds like a job for Larry, Moe and Curly.