Question: Have IFP agent commissions been announced yet?
Answer: I get that question every day and it’s time I deal with it. So here we go. They can’t stall much longer. A highly placed spokesperson for one of the “Big 4” IFP carriers told me that they will announce IFP agent commissions within the next 10 days and their commission will be between 4% to 6% of premium with renewals at the same rate. We cannot assume, however, that all carrier commission rates will be the same. In fact, we could see some pretty dramatic variations in commission rates among carriers. I know this because, carriers had to include agent commissions in their DOI Rate Filings for 2014 and though they are not bound by the fillings, you can assume that’s what they targeted in order to meet their MLR goal. The range among carriers is surprisingly wide: from a high of 7.6% of premium to a low of 2.5% of premium. By the way, I don’t mean to imply that all carriers will pay on a percentage basis. We will probably see some carriers paying a flat fee per member per month. While IFP commissions used to be 4 times higher on average, selling will be a lot easier. Even so, agents may feel like the famous discount seller. When asked how he could afford to sell so cheap, he answered, “I lose money on every sale, but I make it up on volume”.