Smaller agencies selling employee-benefit services face increased compliance demands and lower commissions now that the health-care-reform law has been upheld by the Supreme Court, but agents aren’t throwing in the towel just yet.
“For years people have predicted the demise of one aspect of the independent agency system or the other and [said] we were going to go the way of the buggy-whip manufacturer,” says Alex Soto, president and CEO of Miami-based InSource Inc. and former president of the Independent Insurance Agents & Brokers of America. “The fact of the matter is that agents are alive and well, and we have an uncanny ability to find the niches where we can be helpful to our clients.”
One major concern resulting from the new health-care environment is compensation. Because health-care companies are obligated under the health-care-reform law to spend no more than 15-20 percent of premium dollars on administrative costs, carriers will be forced to cut expenses—under which agent commissions fall, according to the current medical-loss-ratio formula. Agents have unsuccessfully fought to have their commissions excluded from the limited administrative expenses.
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