The industry better be careful about what they ask for. I am not a fan of excluding producer comp from the MLR for the reasons stated below.
CCIIO lets insurers exclude some producer comp from MLR calculations | LifeHealthPro
Lorenz lists seven conditions that insurers and producers must meet if insurers want to exclude producer comp payments from MLR earned premium.
The seven conditions:
1. Under the law of the state in which the policy is issued, the producer is not a representative of the issuer.
2. The consumer is not required to use an agent or broker to buy insurance, and the consumer can buy the coverage directly from the insurer.
3. Consumers who use producers select, retain and contract with the agents or brokers on their own.
4. Consumers negotiate and are responsible for paying the fees or commissions separately and apart from the premiums.
5. The issuer does not include the agent or broker fees or commissions in rate filings.
6. The policyholder voluntarily chooses to pass the fee or commission through the issuer and is not required to do so, or the policyholder pays the fees or commissions directly to the agent or broker.
7. The policyholder issues the 1099 to the agent or broker, if a 1099 is required.
CCIIO lets insurers exclude some producer comp from MLR calculations | LifeHealthPro
Lorenz lists seven conditions that insurers and producers must meet if insurers want to exclude producer comp payments from MLR earned premium.
The seven conditions:
1. Under the law of the state in which the policy is issued, the producer is not a representative of the issuer.
2. The consumer is not required to use an agent or broker to buy insurance, and the consumer can buy the coverage directly from the insurer.
3. Consumers who use producers select, retain and contract with the agents or brokers on their own.
4. Consumers negotiate and are responsible for paying the fees or commissions separately and apart from the premiums.
5. The issuer does not include the agent or broker fees or commissions in rate filings.
6. The policyholder voluntarily chooses to pass the fee or commission through the issuer and is not required to do so, or the policyholder pays the fees or commissions directly to the agent or broker.
7. The policyholder issues the 1099 to the agent or broker, if a 1099 is required.
