The big insurance companies are not the only part of the insurance market that’s scrambling to figure out how the Affordable Care Act will affect their business. Independent insurance agents are finding that one provision of the healthcare reform legislation intended to keep consumer premiums down is having a huge impact on their commissions and ability to provide customer service, according to the National Association of Insurance and Financial Advisors (NAIFA).
The PPACA’s Minimum Medical Loss Ratio rules, which took effect at the beginning of 2011, say that insurance companies must spend 80 to 85 percent of premiums collected on clinical services or quality, refunding any amount over this to consumers annually. The point, according to the HHS’s healthcare.gov website, is to force insurance companies to reduce administrative costs and profits.
As a result, 75 percent of NAIFA member agents have seen their commissions reduced since those rules went into effect, according to a poll of 520 NAIFA members conducted last year. More than half said their commissions were down by 25 percent or more. Nearly a quarter of those whose commissions were cut have reduced customer service — like helping clients resolve disputes with insurers — and 18 percent are considering leaving the business.
“As agents are driven out of the marketplace, their clients have fewer and fewer choices for receiving coverage with quality customer service and less opportunity to have plans tailored to their specific needs, said Terry Headley, NIAFA’s president. “These are things agents bring to the table that the government or the insurance companies on their own can’t replace.”