Current Book of Business Safe?

[nolaagent]

After thinking about this a little more...

1) Read your contracts...does it specify if they can change commission on your existing book. If it says they can change commission, but is silent on whether its existing or new business...there's some risk to your existing book.

2) If you're in a market where 1st and 2nd year commissions is 20%+ and 5%+ there's more likely to be a change on the existing book to achieve the 80% MLR.

 

[Dave020]

PacifiCare adjusted comp for MLR effective 10/1/10. 4%/4%. It only applies to new business. Previous book continues at 10% renewal rate and 20% on remaining FYC sold pre-10/1.

Carriers will adjust comp forward on new business to accomodate two things:

1. MLR on new business
2. MLR on existing business

In this case, PacifiCare set 4% straight up to accomplish those two things. Other carriers are already going 4% as well (Anthem in other states) with a FYC bump up at 10%. The 4% figure is determined to balance MLR across both new and existing business.

The bigger question you need to ask is not about retroactive comp changes, but what happens to comp on a blocked book when the client moves to an open plan? Is it considered "grandfathered" business or does the comp drop because the plan change came after commission changes.