CAHU Aims at Compensation and Warns of Agents Leaving the Industry

by John Hansen

Michael Lujan is the president of the California Association of Health Underwriters (CAHU). In an address to CAHU members on Tuesday, May 17, he spoke about the state of CAHU and the advancements they have made.

Lujan compared these successes to football. In football, there’s the big win, the Super Bowl, and there are the little wins, the first downs that help you get to the Super Bowl. Lujan described various first downs that CAHU had achieved in 2016.

Top Priority: Agent Commissions

The #1 goal of CAHU is to increase broker compensation. According to Lujan, “Broker commissions have slid to an unsustainable level.” They have fought on several fronts for agent compensation.

CAHU has made the case to Covered California that every carrier on the exchange must pay agents. The California Exchange has heard this and taken action to force all of the Obamacare California health plans to pay commissions.

Also, CAHU has been fighting to legally set a minimum floor for agent commissions, so broker compensation does not continue to fall. President Lujan said, “There’s a risk of fewer agents serving.” Based on broker enrollment numbers, Lujan argued that this was a “clear vote that [California consumers] want to be serviced by agents. They want unbiased representation.”

Lujan pointed out that navigators, who can assist with California health care enrollment, are legally unable to advise. This is where agents are very important.

Health insurance agents not only give quotes and help with enrollment, but they ask probing questions in order to understand a consumer’s health care needs. Based on information they receive from a client, they are licensed to offer expert advice to help consumers select the coverage that will best fit their needs.

California Agents Leaving the Market

However, despite the growing need for agents’ expert help and despite the fact that agents brought in the “lion’s share” of enrollments (according to California Insurance Commissioner, Dave Jones), low commissions threaten the agent distribution channel for health insurance in California. Agents are beginning to leave the industry. Lujan says, “By 2018, one in four agents is expected to retire, and this is likely to be steeper in 2020.”

Lujan suggested, “We have to bring in five new agents to replace each one that leaves.” Seasoned veteran agents know the market, know the products and are best equipped to service California consumers. Lujan suggests that it takes five new agents to replace the expertise of one of these seasoned veteran agents.