Insurance Agent Forum

[AgentPipeline]

Ok... We all hate big rate increases (anything North of 13%). But what is most important?

Low rates for the first three years and then a big rate increase.

Or

Higher rates (10% above lowest) and lower rate increases each year.

From the FMO side, we run into agents that only want the lowest rates in the state with a competitive commission (20%). If the rates aren't the lowest, agents won't consider the company unless there are other features (underwriting or commissions) that are unique.

On the other side, there are always companies that come into a state with higher rates (10% above lowest) that claim to have low incremental rates increases.

So, which one do you sell most to your clients? Low Rate or Low Rate Increases...

Thanks for the input...

[senior-advisor-indiana]

Can you name any companies that have low rate increases? I can't. I here that Cont Life of Brentwood has done well in Missouri. I worked for a captive company that came out with higher rates and guess what. They have the same if not bigger increases than the low ball companies.

So rate + commission is important. UW paid lower commissions hoping to keep the rate increases down. Well that didn't work. Guess they just wanted to cut our pay.

[midwestbroker]

As agents we want it all...low rates, low increases and high commissions.

How do you know what the next increase will be? No one knows. Sure, you can look at how they have done historically (anyone know how to do that?) and use that as a model, but that does not mean there isn't a big rate hike in the future.

One way to look at it...

BCBS Plan F in my area is $135 per mo.
United World is $88.

Even if United World has a 16% rate increase (to $102.08) that is still less then BCBS. Let's say that happens again the next year and UW goes to 118.41, that is still less then BCBS. Eventually they may be neck in neck, but until that happens the client is less out of pocket by around $1150 over the 3 year period.

[MedSuppPro]

Originally Posted by AgentPipeline

... there are always companies that come into a state with higher rates (10% above lowest) that claim to have low incremental rates increases.

So, which one do you sell most to your clients? Low Rate or Low Rate Increases...

I would hope that nobody sells future rate performance. Carriers, FMOs, and agents should never sell future rate increases. Unless it is in writing that the rates are guaranteed.

I know some carriers and agents will argue "attained" age vs. "issue" age. That seems ok -- though never pans out to the consumer's benefit. They all go up!

MedSupps are a common standardized commodity. I've seen seniors change plans and doctors over $2 bucks a month savings. The consumer is often the driving force for shopping for lower rates. Some will stay with the more expensive plan after they trust a carrier. Most will bolt if underwriting allows.

I personally like levelized commissions because a 6 year only commission is counter intuitive. In six years the rates are climbing and the client is less healthy (more service). So by dropping renewals off after 6 years it only leads to a MA or if possible a MedSupp replacement, if in the clients best interest.

American Republic got this -- the automatically raised my commissions for my block that added Part D plans back in 2006. On balance American Republic has out performed the others over time.

[dandan]

Companies evidently don't care about the med supp agents. You make 18-23% on a 65 yr old, premiums steadily increase 6-7 yrs down the road your renewal drops.

Your not supposed to roll business but if you don't somebody else will and you lose completely. As your client ages and their health declines, they are stuck unless like was stated above, they move to an MA plan.

When I started in the Med Supp business I was making 50% first year commission and 20% renewal.

MO has quite a racket going, coming in with low ball rates, and lets face it thats what the client wants. Then heavily increase premiums, develop another company within with low ball rates cut agents commissions if you roll them to the new company!! blah blah blah

[AgentPipeline]

Makes sense to me... Agents want to have the lowest rates with a competitive commission.

But when is the commission too low? Over the last few years, we've seen companies come in with high loss-ratio plans that offer agents very low rates and very low commission.

Companies offer different commission levels in each state, but what commission level is too low?

18%, 15%, 12%, 10%...

[senior-advisor-indiana]

15 is definetly too low. 18% is iffy. 20% is a good number. Of course, I would like 25%. United World proved to us that cutting commissions does not save on rate increases.

I'm not sure if it was the FMO's screwing the agent on commission or United World. I would guess it was 99% of the FMO's because I found one that gave me 3% more than the others were offering. Heard the same old story from the 99%. They won't let us pay above 15%. MY ASS!! I found it.

[elder]

There are 4 direct brokers with 21% with MOO, and ALL business goes through them, the next level is 19%, then 17% and finally agent level is 15%. Wait until ANTEX hits the streets, even lower. The agents made it happen, they sold it. The can is open . . . Moo's mistake was allowing their clients with original MOO to transfer to UW and also taking anyone off of a MA as open enrollment. The big question is will they still do the same with United Of Omaha this fall?

No offense intended Mike, but I've not heard of an 18% contract anywhere. I am @ the same level as Gordon Mrktng. Mind sharing that info?

[senior-advisor-indiana]

Not sure what info you want? I got my contract through an annuity brokerage. 18% for 8 years, doesn't matter though because I only sell it to people who ask for it. I'd rather sell Admiral for 21%.

[dandan]

Well, here we go again!

[Frank Stastny]

Rate increases, ya got ta love em.

If companies stop having rate increases I would have to dramatically change my marketing strategy. Rate increases have made me successful. They also make Med Supps a whole lot easier to sell.

If company "A" has a rate increase, every prospect I have talked to in the past several years, who told me they had company "A", becomes becomes a steaming hot lead. If I don't sell them, shame on me.

If companies were smart they would base the agent's commissions on the current premium, not based on the premium when the policy was sold and not dramatically cut the agent's commission after the first several years. They would lose less business and agents would provide much better service. (Insurance companies really don't like agents very much.)

I believe that California is the only state that pays commission on increases. I'm sure Rick can provide more details on that.

[Russ]

Originally Posted by Frank Stastny

If companies were smart they would base the agent's commissions on the current premium, not based on the premium when the policy was sold....

That is so true.

I also hate how most companies cut the agent completely off after 10 years of commission(MoO). AARP cuts off after 6.

[Frank Stastny]

Originally Posted by Russ

That is so true.

I also hate how most companies cut the agent completely off after 10 years of commission(MoO). AARP cuts off after 6.

One would think that if an agent busts his ass providing excellent service to his clients and they stay with that company for more than six years, in most states, the company would reward the agent instead of "punishing" him.

We are the "redheaded step-children" of the insurance industry.

I have to go and clean out the barn. At least my goats appreciate me.

[GreenSky]

Originally Posted by Frank Stastny

I believe that California is the only state that pays commission on increases. I'm sure Rick can provide more details on that.

The companies that are (or were) CA based pay commission on increases but I rarely use them because there are lower cost alternatives for my clients.

In addition, the birthday rule gives my clients a GI ever year into the same or lesser plan so I am not concerned about how long the commission will last. No company thus far has been the lowest priced for more than a year or so.

Rick