Health Insurance Agents Doomed – Carriers To Go Direct?

WASHINGTON, D.C., Nov. 22, 2010 — The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) expressed disappointment with the interim final rule on Medical Loss Ratios (MLRs) released by the U.S. Department of Health and Human Services (HHS) today. The rule includes agent and broker commissions as ‘non-claims costs’ when calculating an insurer’s MLR as part of the new health care reform law.

“The Big ‘I’ is disappointed with the interim final MLR rule, and we are extremely concerned that this rule will lead to severe market disruption, especially in the individual and small group markets,” says Robert Rusbuldt, Big “I” president and CEO.

Throughout the process, the Big “I” has urged the National Association of Insurance Commissioners (NAIC) and the HHS to exclude agent commissions from the MLR calculation. The Big “I” has argued that these agent commissions are passed 100% to third parties and are therefore pass-through payments that should not be included in the formula. While acknowledging the potential impact of the MLR standard on agents and brokers and including that impact as a factor in considering whether a particular individual market would be destabilized, HHS did not appropriately exclude agent commissions and fees from the MLR calculations.

“The Big ‘I’ is very concerned that the MLR provision of the new health care reform law will have a devastating effect on the private marketplace and that consumers will be negatively impacted,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs. “After hearing from various interested parties if HHS does not fix this language before the rule is final, we hope that Congress will step in and revise the MLR formula through the legislative process.”

Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: