Expect a 30-50% Reduction of Commissions - from BCBS of SC

[chp]

I attended a meeting today held by the bigwigs of Blue Cross Blue Shield of SC. Direct from the VP's mouth, to all agents in the meeting:

"There will be very significant changes to the individual health insurance market.

"Expect 30-50 % commission cuts on all individual policies beginning in Jan."

"I apologize for all of this, but again, high volume agents should be ok."

Other comments:

"only the strong will survive"

"I believe the highly efficient high volume agents/agencies will still be able to make a good living".

I had a "private" chat with the VP, he makes it clear that if you are selling only individual plans, you better diversify...

I will be working on my resume for the rest of the week. I do a very good amount of production, but I am not taking a 30-50% pay cut.

 

[AllenChicago]

Our Illinois BCBS leadership said the same thing about commission cuts, but added that premiums will be increasing significantly enough to negate the cut in commissions.

 

[Full Throttle]

Our Illinois BCBS leadership said the same thing about commission cuts, but added that premiums will be increasing significantly enough to negate the cut in commissions.

Sounds good on paper. Real world: if premiums increase 50% to offset the commission decrease, 25% to 50% of my book or more vaporizes. Many are barely hanging on already, and there is no subsidy help until 2014.

 

[somarco]

if premiums increase 50% to offset the commission decrease, 25% to 50% of my book or more vaporizes.

"Grandfathered plans" should be OK for a while. New business is in the crapper, especially if they have kids under 19.

 

[AllenChicago]

Sounds good on paper. Real world: if premiums increase 50% to offset the commission decrease, 25% to 50% of my book or more vaporizes. Many are barely hanging on already, and there is no subsidy help until 2014.

Below is an excerpt from a "Special Bulletin" sent out to Producers from the President of Blue Cross/Blue Shield of Illinois earlier in the year. A 50% premium increase is only the beginning if the actuarial analysis is anywhere near target. (BCBS-IL is owned by Health Care Services Corp)

"Oliver Wyman’s Actuarial and Health and Life Sciences Practice recently provided an analysis for the Blue Cross and Blue Shield Association (BCBSA). The analysis estimated the effect of the proposed health care reform on insurance premiums and shows the total effect after reform is implemented. The intent of the analysis is to demonstrate the impact that these proposals will have on premiums in the states Health Care Service Corporation serves, to provide information that policymakers can use to better shape health care reform legislation and to urge members of Congress to carefully consider the consequences of the proposed legislation. Following is the executive summary that briefly explains the analysis, as well as an attachment containing details of the study. However, here are some key findings:

1. Health care coverage in general becomes less affordable.
2. In Illinois, there is a 119 percent jump projected."

-AC

 

[chp]

BCBS pays 20% in SC

 

[669comche]

A 30% - 50% cut in commissions I think is rather positive.

If you are on 20% right now your commissions would go down to 14% - thats still doable.

The kicker is going to be the advance period.

$400 x 9 month advance x 20% = $720

$400 x 12 month advance x 14% = $672

And this assumes no increase in the rate.

Thats only a $48 decrease in commission.

 

[aheff]

If it is only a 50% commission cut, I'd be very happy. The problem for me, in the short term, is loss of under 26 crowd. The problem in the long term is competition from exchanges.

 

[669comche]

Why? Do you write a lot of under 26's?

I avoid those like the plague.

Even child only policies are a PIA.........they are just individuals that I choose not to help.

 

[djs]

A 30% - 50% cut in commissions I think is rather positive.

If you are on 20% right now your commissions would go down to 14% - thats still doable.

The kicker is going to be the advance period.

$400 x 9 month advance x 20% = $720

$400 x 12 month advance x 14% = $672

And this assumes no increase in the rate.

Thats only a $48 decrease in commission.

Why do you assume advances will go to 12 months? Heck, how do you get advanced? For health, that doesn't happen in California. Also, why did you assume only a 30% decrease? Just curious on that part.

Also, you're math is off when you get to month 10 and you don't get the monthly commission on the policy.

Dan