Death of A Salesman

Health insurance agents are becoming extinct. With fewer carriers in the market, and rising health insurance costs, many employers, and insurance companies, are questioning the value of health insurance agents/brokers.

United HealthCare announced earlier this year that they will stop paying broker commissions on groups of 100+ employees – .

Instead, United HealthCare will offer to bill an employer on behalf of the agent for “servicing fees” should the employer wish to continue to employ an insurance agent to service their account. One may wonder why the agent can’t bill the client himself. Irregardless, service fees to be paid, if any,  are to be negotiated between the agent and the employer.

The problem with United HealthCare’s recommendation for agents stems from disclosure. For the first time, agents will have to disclose their heretofore undisclosed commissions to maintain their lifestyle.  Can you imagine this dialog?: “Mr. Employer, whereas before UHC stopped paying me commissions on your account, I was making $150,000 per year.  To maintain that, I need a check from you for $150,000 please.”

The question of licensure in Texas arises.  If an employer enters into a direct agreement  of some sort with an insurance agent/broker which stipulates the services to be provided and the compensation to be paid, certain licensing requirements may apply.

If services include analysis and recommendations related to insurance, a Life & Health Counselors License  is mandated in this state.   A Risk Manager License may be required as well since some Life & Health insurance products are casualty in nature.

The trend among employers is to go direct to the insurance company leaving their broker in the unemployment line. Employers who have taken this draconion step have miraculously survived.

One example is the TRS Active Care program. Texas school districts  insured through the  program have effectively eliminated their insurance agent.

Some employers continue to maintain a broker and see a value in doing so. But unfortunately for the broker, the trend is against them. Some understand where the market is heading and are adapting. Others are hanging on hoping to scratch a few dollars from a dying business.

Editor’s Note: The number of Life & Health Counselor Licenses issued in Texas is increasing. In 1997  when we applied there were less than 100 statewide, now there are several hundred.