Phil Hauck's TEC Blog

Sunday, February 28, 2010

Changing Role of Health Insurance Agents

Traditionally, the role of the insurance agent for most smaller companies has been to scour the marketplace annually or every other year for a cheaper deal, including plan changes that lower the cost. For this, the agent is paid a commission ...ranging from 1%-3% for larger companies, to about 5% for smaller companies ... and sometimes significantly higher than that the first year.
However, there is a likelihood that the agent's role will increasingly morph to being a consultant on a wider range of programs that can mitigate insurance costs ... and to get paid a fee for providing that consulting. Right now, companies want advice on how to cost effectively approach the Wellness/Fitness programs that can create better health and productivity. Much of what companies currently do is sold to them by the providers, and is cost in-effective or at least not cost-justified. They need an expert who can sort the productive from the non. Agents will have to figure out how to price this additional role.
Another influence will be federal/public pressure to continue to reduce the product distribution costs inherent in an insurance company's administrative costs. Currently, the biggest element is that 5% commission charge. There will be pressure to reduce it.

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