Renewal Commissions

[ameneses54]

I found out yesterday that Cigna is offering a flat 6% both for new policies and renewals which is a bump from 4 last year.
What's really bugging me is that my MGA is offering the agent the official percentage for new policies but for renewals only 1%, same thing for Humana. Huge spread, I really don't understand.Is this the regular way MGA handle commissions?
Any insight?

 

[RayNY]

Some MGA/GA's are forced to take a slice of broker comp because the carrier has either cut down or cut out GA compensation. I'm not sure exactly what the GA relationship is for those companies in that state, but I'd guess that's why they're doing that. Quite a few here take a sizable chunk of broker comp, or charge a fee to the member ( http://www.healthpass.com/assets/files/Rate Sheets/4Q14/REGION 2 4TH QTR 2014.pdf is a great example, $4.50 billing fee and $43.25 admin fee if you want an Oxford family plan because Oxford doesn't pay GA's on groups <6. HRINY has a fee as well, and the same GA override rules.)

If the GA doesn't want to give you full comp, ask yourself, is the work they do worth what they're charging? If so, let it slide, they deserve to get paid for working as well. If not, go direct or find another GA.

 

[taterpeeler]

Some MGA/GA's are forced to take a slice of broker comp because the carrier has either cut down or cut out GA compensation. I'm not sure exactly what the GA relationship is for those companies in that state, but I'd guess that's why they're doing that. Quite a few here take a sizable chunk of broker comp, or charge a fee to the member ( http://www.healthpass.com/assets/files/Rate Sheets/4Q14/REGION 2 4TH QTR 2014.pdf is a great example, $4.50 billing fee and $43.25 admin fee if you want an Oxford family plan because Oxford doesn't pay GA's on groups <6. HRINY has a fee as well, and the same GA override rules.)

If the GA doesn't want to give you full comp, ask yourself, is the work they do worth what they're charging? If so, let it slide, they deserve to get paid for working as well. If not, go direct or find another GA.

hey ray... watch your back up there... we shipped you our ebola... stay safe

 

[FLM2]

I found out yesterday that Cigna is offering a flat 6% both for new policies and renewals which is a bump from 4 last year.
What's really bugging me is that my MGA is offering the agent the official percentage for new policies but for renewals only 1%, same thing for Humana. Huge spread, I really don't understand.Is this the regular way MGA handle commissions?
Any insight?

MGA's take advantage of agents all of the time, this is just another horrible example, unfortunately.

They figure that you will wash out and leave business behind, that is why you get almost no commissions on the backend. Most of them have a minimum amount to reach before you get any renewals and paying 1% makes it really tough to get there.

It's also a way for them to make sure you always owe them money on advances as well since there aren't many renewal commissions to absorb a chargeback.

Most MGA's provide nothing of value to an agent other than an advance but even if the advance is needed short term it's a very bad business model for an agent long term. I've never had an MGA relationship work to my satisfaction long term (the closest was Health Choice One because they paid street commissions for 1st year and renewal), you are far better off on a direct basis with each insurance company because you know you will get paid fairly per the company commission schedule.

 

[RayNY]

Tater,

I can't help but laugh. Ebola is 2014's anthrax.

The common flu kills more than 10 times more people every year than Ebola has in the past 40. No exaggeration. (49,000 per year vs. 3339 in 40 years, using WHO figures)

Global Incident Map Displaying Outbreaks Of All Varieties Of Diseases puts things in perspective. Enterovirus is actually here and spreading, and flu season is coming.

 

[taterpeeler]

more people get the flu... ,oo3% die of the flu... 50% die from ebola

 

[houcoogster]

Tater,

I can't help but laugh. Ebola is 2014's anthrax.

The common flu kills more than 10 times more people every year than Ebola has in the past 40. No exaggeration. (49,000 per year vs. 3339 in 40 years, using WHO figures)

Global Incident Map Displaying Outbreaks Of All Varieties Of Diseases puts things in perspective. Enterovirus is actually here and spreading, and flu season is coming.

We lose about 40,000 people a year to roadway accidents in just the US alone. But I don't like the odds with ebola...

 

[ameneses54]

MGA's take advantage of agents all of the time, this is just another horrible example, unfortunately.

They figure that you will wash out and leave business behind, that is why you get almost no commissions on the backend. Most of them have a minimum amount to reach before you get any renewals and paying 1% makes it really tough to get there.

It's also a way for them to make sure you always owe them money on advances as well since there aren't many renewal commissions to absorb a chargeback.

Most MGA's provide nothing of value to an agent other than an advance but even if the advance is needed short term it's a very bad business model for an agent long term. I've never had an MGA relationship work to my satisfaction long term (the closest was Health Choice One because they paid street commissions for 1st year and renewal), you are far better off on a direct basis with each insurance company because you know you will get paid fairly per the company commission schedule.

My MGa has even dropped advances for 2015 so I really can't find any real advantage to be dependent. One exception may be, and I'm not sure if I'm right, is that if you hardly write for a company to which you're subscribed through the MGA there is a lower or null probability the company will ditch you.
Correct me if I'm wrong because this was the main reason I got into the relationship.

 

[FLM2]

My MGa has even dropped advances for 2015 so I really can't find any real advantage to be dependent. One exception may be, and I'm not sure if I'm right, is that if you hardly write for a company to which you're subscribed through the MGA there is a lower or null probability the company will ditch you.
Correct me if I'm wrong because this was the main reason I got into the relationship.

That is an incorrect assumption-none of the major health insurance companies will drop you for lack of production-case in point for me is Cigna, I haven't written any business with them in 2 years and am still appointed (I will most likely write a few cases this year).

Florida Blue is the exception but, as you know, the best thing to do is run away from them as quickly as possible as their CGA's eventually screw all of their agents.

If you want advice, it's this-the MGA won't release you now but after OEP you will have time to let the 6 months lapse so you can get a release and go direct, at which time you can figure out what to do with your current book and will be whole moving forward.

 

[taterpeeler]

flm is incorrect... Assurant will drop you and cigna has production reqirements