Health Insurance Commissions and the Moral Imperative to Sell Health Care Products
by John Hansen
Don Cooper, TriFlex President, Addresses Agent Fees for Selling Health Insurance Coverage
Don Cooper, an energetic lively insurance agent, began a panel discussion around agent compensation at the CAHU Capitol Summit while sitting next to Jon Tomashoff (from the DOI) and Steve Young (top California health care lawyer). He said, “On this stage, we have over 100 years of experience in the industry. I’ve been [selling health insurance] for 41 years.”
History of Health Insurance Commissions
Cooper gave a little history. He talked about the old Indemnity health care plans that he used to sell. These medical plans paid a 20% health insurance commission and 10% on renewals. He mentioned California group health insurance plans that paid 10-15% for broker compensation and the same for renewals. “In 76-79, we just had indemnity plans. We were used to 20-35% rate increases every 6 months. In 87-88, there were rate increases and carriers dropping.” Then came the PPO’s, the HMO’s, Hilary Care and finally Obamacare.
Regarding health insurance commissions, Cooper said, “California has done well until now. Several other states have had to deal with this before…Agents have to make money if you want quality people in the profession.”
The Moral Imperative to Sell Health Care Products Including Disability
Cooper went on to describe how he entered the insurance profession. He said, “A 90 year old guy hired me.” And that 90 year old insurance agent told Cooper, “Insurance is not a retail product. It’s a product that has to be sold.” Agents have to work to sell health care products, and they have to earn their health insurance commissions.
He continued, “55-64% in the United States don’t have a will. But you can get one for under $100. People don’t like to think about getting sick and dying. In my career, I have only had three people who asked for health insurance. 100 million people in the US don’t have disability insurance.”
Cooper’s point was that consumers need agents to sell health insurance products. They need agents not only to explain these products, but to show consumers how necessary they are. And, if California is going to keep a strong workforce of qualified agents, then fair health insurance commissions will have to be paid by the health plans or by Covered California.
Cooper argued that the #1 cause of bankruptcy is medical costs. He said, “California had one of the best exchanges. 80% of business was written by brokers, not navigators and not assisters.”
“We Charged a $15,000 Fee”
The TriFlex President went on to explain a scenario where he charged a fee for services rendered as an agent. In 1989, he set up several health care products that he sold to a law firm. He said, “We charged them a $15,000 fee, but we saved them $40,000 and got them employee disability insurance…We got half of their population to go to HMO.”
Cooper added, “The #1 cause of mortgage failure is disability.” 49% of mortgage failures were related to disability. “It is a moral imperative for the agent to address life, health and the ability to work.” No matter what the health insurance commissions are, the agent must address the life needs of his/her consumers and sell them the health care products that they need.
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