Posts Tagged - ‘health insurance brokerages’

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Are Health Insurance Brokers An Endangered Species?

Tuesday, November 30th, 2010

Image: H. Michael Karshis under CC 3.0

In many states, regulators fear that health insurance brokers are falling by the wayside. The healthcare reform law passed this year requires that a certain percentage of premiums be spent on providing medical care, as opposed to being spent on administrative costs.

Some consider brokers as middlemen, standing in the way of affordable health insurance by creating yet another level of bureaucracy. However, they can help people navigate the confusing variety of plans available and shop around–although that purpose may become irrelevant once states get their own health insurance exchanges up and running.

In addition, many brokers may end up out of work if they cannot adapt to the changes in the market and regulatory environment.

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Health Insurance Plan Agents May Suffer Under Reform

Friday, August 27th, 2010
health insurance plan
Image: Jennifer Feuchter under CC 3.0

Although healthcare reform tries to help many, it will end up hurting at least some. For example, the business model of many health insurance brokerages and agencies is in danger.

Provisions involving medical loss ratios, which include agent commissions in the “administrative” category that will be regulated and limited, will have a negative effect. In addition, brokerages may be made redundant by the state insurance exchanges and accompanying websites that must be launched by 2014. On the bright side for them, the National Association of Insurance Commissioners passed a resolution that affirmed the importance of licensed insurance professionals.

With the possibility of a double-dip recession looming, more job losses is obviously a downside. However, industry experts predict that these companies have several options for adaptation. Hopefully, their experience in navigating the complexity of the market and helping people decide on a health insurance plan will still be in demand. Their compensation model may also be adjusted in favor of flat fees instead of commissions.

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