Reports are coming out that broker commissions are on the decline, and in some cases, have even been eliminated in the individual insurance market. Brokers are understandably concerned and wondering if this means the end of the individual insurance market? The short answer is no.
It is clear that the individual insurance market is experiencing growing pains. So far, over 20 million people have gotten individual insurance since the individual exchanges opened, while many more consumers remain uninsured. It is a nascent market, where insurance companies have had to price their products with little or no prior claims data to go by. Now that we are a few years into the new health insurance landscape and there is credible data, insurance companies will design their products and prices accordingly. Consequently, this period of transition will stabilize.
The good news is that the Affordable Care Act is working. Consumers who previously did not have access to health care are now able to get insurance — and this is a dramatic improvement. The pent up demand for health care services from newcomers will calm over time, as more and more people have ongoing access to insurance. At the same time, health insurance companies will continue to refine their networks, plan designs, and pricing to adapt to the market. Continued competition from existing and new health insurance entrants will also spur more innovation and keep premiums in check. This balancing act will allow for the market to stabilize over time, and health plans will revert back to compensating brokers adequately for the good work that they have been doing in helping millions of consumers find the best plans for them.
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In the meantime, during this transition period, here are five things brokers can do:
Don't panic. There are plenty of insurance companies that are not dropping commissions.
Help prevent fraudulent insurance applications. As the first line of defense, brokers need to support the consumers who are truly eligible for coverage. Brokers can help by verifying their eligibility (that they have legitimate qualifying events,) especially during special enrollment period.
Sell other lines of coverage in the meantime, like dental, vision, life insurance, etc.
Be patient. When the market stabilizes, insurance companies will go back to paying commissions. Until then, take the time to help educate the clients you have about their current benefits, and to improve your processes and technology.
Diversify the market you are serving. Don't focus on one market. Look to tap into a small business market that hasn't been reached before, like the working uninsured. Small group commissions are healthy. Small businesses mostly rely on brokers to help them navigate their health insurance needs. Brokers have an opportunity to educate and provide great services to small businesses.
Despite the time-dependent turbulence the individual health insurance market is undergoing, brokers have provided consistent and steady underlying support to the industry. Brokers must continue to be the steadfast force providing expert attention to the individuals and businesses who are in more need of support than ever before. The indispensable role brokers fill in helping consumers and small businesses have access to health insurance isn't going anywhere and will outlast the growing pains of the individual health insurance market.
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