I have recently expanded into other areas of my business. I was doing a heck of a lot of mortgage protection (life insurance) the last 3 years, BUT with the market slowing down, I have had to explore other arenas of insurances. I have begun to do small business group health insurances recently thinking it would pay quite well and keep me prospering during the housing drought. Well, it was a COMPLETE SHOCK to realize my cut would ONLY be 8%. Now granted, I'm BRAND NEW to the group insurance world BUT 8% sounds awfully low to me. ANYONE else feel this way?
8%. You're doing good. You want an even bigger shock? Write a small group plan with UHC. You'd wish you had the 8%. There's no free money in health insurance. You have to work your ass off, anybody tells you differently, they've already done that at some point.
Well, it was a COMPLETE SHOCK to realize my cut would ONLY be 8%. Now granted, I'm BRAND NEW to the group insurance world BUT 8% sounds awfully low to me. ANYONE else feel this way?
CUT to 8%.... that's a 100% increase for most of us in small group!
------------------------------------ [COLOR=blue]I am not a vegetarian because I hate meat... I'm a vegetarian because I hate plants![/COLOR]
Well, it was a COMPLETE SHOCK to realize my cut would ONLY be 8%. Now granted, I'm BRAND NEW to the group insurance world BUT 8% sounds awfully low to me. ANYONE else feel this way?
Classic supply and demand, man.
The pay as little, or as much (depending on which side of the fence you're on) as they have to.
Guess what? If people didn't sell it for the comp offered, eventually they'd have to raise it.
------------------------------------
[COLOR=blue]Don't steal - the government hates competition.[/COLOR]
1. There is much less work "per enrolled employee" as the group gets larger. Larger companies have dedicated HR or benefits people who know how to navigate the system and can block some of the more intensive service calls and questions of smaller groups.
2. Since more money is at stake, the competition is much more fierce. Therefore, the market demands that the commissions not be too high, or someone else will come in and undercut you.
3. Since you have to send a 5500, they see the actual dollar amount of your total compensation. You have to be prepared to justify that number.
I disagree with that concept. I get the same percentage whether or not it's a single or a family of 8.
To me, it smells like the carriers structuring it so the broker doesn't make a great deal of money off a large group.
Nothing could be farther from the truth. By and large, with almost every carrier, large group commissions are set by the producer! That is right, you decide what your comp should be.
In MD, you get the same commission % for selling a two person group as you do for selling a 49 person group. That is an even wider variance than your example. Individual premium may average $300 Family may be $800 (Random numbers) A two person group may have $1,000 in monthly premium, a 49 person group may have $25,000 in premium, in which case you get 25x the commission you would get on a 2 person group.
At some point, that can't keep going on forever. If you have a 200 life group and you take 5% of the premium, then that could easily be $65,000 in commission per year. Of course, the commission does not go down the next year, it goes up, as the premiums do. As groups get larger, it is hard to justify to yourself and your client why you are taking such a big piece of the pie.
Yes, you have to file a 5500 and send it to the firm. One of the line items is the total compensation. It doesn't say 3.5%, it says $39,500 or whatever. It really jumps out at you.
Middle market is defined differently by different people, but in a word, yes. The truth is that many business owners never see the 5500, it often gets filed by the cfo or the hr director and that is that.
Many companies expect it and understand what the market pays, but it is not unheard of for an owner or a CFO to negotiate the commission donward.
Most of my career was working large group and MelMunch is correct. Virtually all self-funded business is subject to "broker-discretion" on how much is paid... but since it is fully disclosed to the client, it is a double-edged sword.
In small group, some carriers (United for example) will allow a bump up from the standard % of fixed PEPM, BUT the client has to sign acknowledging the bump up.
In Shock
Linear Mode
