One of the major changes under the Patient Protection and Affordable Care Act (PPACA) will be the mandated creation of state insurance exchanges by 2014. The exchanges will be able to craft plans for individuals and small businesses that were previously paying higher premiums or unable to afford coverage.
The presence of the exchanges has some P&C agents who deal in Life & Health coverage concerned that clients will drop them in the belief that selecting coverage through the medical exchange can be done without the guidance of an agent.
To fend off this fate, it will be incumbent on producers to make sure their clients know that the professional services and advice delivered by agents won’t be matched by the planned insurance exchanges.
“Some [clients] might drop their agents,” says Brannon Brooke, principal of New Braunfels, Texas-based TCOR Insurance Agency Ltd. “But I still think we provide enough value to our clientele that they would end up working with us on a fee basis.”
Employers, he says, will discover that employees still need to be enrolled in the plans and that claims still need to be managed—a task brokers perform already, justifying their fee.
“I think there is more value that the employer [gains] from using brokers than just placing the coverage,” says Brooke. “That is our emphasis on the total cost of risk. We do a lot for our clients that provides additional value.”
The most likely health-exchange scenario, Brooke predicts, is that small groups may be tempted to try the exchanges on their own, “but I think the larger groups are still going to want the assistance of the broker. They trust us to lead them through that point of ‘What do we need to do next?’ We have that kind of relationship with our clients.”
“I’m not worried about the exchange taking business away from agents,” adds Timothy Russell, principal of The Russell Agency LLC in Southport, Conn.
As president of the Professional Insurance Agents of Connecticut, Russell says he and a group of other agents met with the head of the state’s exchange—and the takeaway from that meeting was that the exchange “will need producers more than producers need the exchange. I’m not worried about producers being edged out.”
“It’s a challenge I look forward to,” Brooke adds. “It keeps the business interesting and keeps us on our toes. Some of the smaller shops that don’t want to keep up with all the changes will probably go by the wayside. Those with one, two or three accounts may end up losing the accounts that they have. But for those of us who are in it as a profession, and not a hobby, it benefits us to have these kinds of changes.”