Independent insurance agents have traditionally provided valuable services to both the clients they serve and the carriers they represent. For years the independent agency system has been the dominant distribution system of choice in a vibrant market.
A once vibrant market is now something much different.
More employers are questioning the value brokers bring and the compensation they earn. Are brokers really that necessary anymore? Is the level of broker compensation justifiable in view of services provided?
More brokers now negotiate their services on a fee basis rather than on commissions. Many employers like this approach as it removes conflicts of interests to a large degree. Compensation is disclosed for the first time and brokers are incentivized to earn their money more than ever.
For health insurance brokers to continue to provide a service and get paid for their efforts, they must adapt. Reliance on commissions paid by insurance companies must be exchanged for reliance of income paid directly by the clients they serve.
The independent agency system can continue to survive if opportunities are realized and seized by experienced and seasoned professionals who are willing to adapt. Otherwise, with fewer younger entrants entering into the profession, successful health insurance brokers will be a rare breed indeed.